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What should I know about Islamic Estate Planning?

Almost 3.5 million Muslims live in the United States. However, many of them are not well-versed in the requirements of Islamic estate planning. Therefore, they need to work with a professional estate planner or the Islamic estate planning services Wassiyyah to create their estate plan.

Islamic estate planning can be very complex. This is because the inheritance rules in the Islamic religion differ from secular inheritance rules. However, some basic principles apply to all Muslims. For instance, if a Muslim has no will and dies without having an Islamic Will, his/her estate is distributed according to the Intestacy rules of the country.

The Faraid inheritance laws are based on Holy Quran, Surah An-Nisa. These laws determine the quantum of shares allotted to legal heirs. It also considers the number of surviving relatives. In Islam, inheritance rules are even more strict. If a husband and wife have a daughter, her share of the estate would be 1/2 of the value of the husband’s estate after debts, expenses, and bequest is paid off. If the husband has a son, then Sons can inherit residue after a fixed share is given.

In Islam, there are two types of estate plans. The first is the Islamic Will, which protects minor beneficiaries. However, it also reduces probate time and makes wealth distribution easier. This type of estate planning includes the appointment of executors. In addition, it transfers the estate to organizations as a Testamentary Bequest. Depending on the type of estate, the heirs must follow the Islamic Wills instructions.

The second type of estate plan is the Trust or Waqf. The testamentary bequest is mostly given to needy people who cannot provide for themselves. Waqf and Testamentary bequest are both different. A testamentary bequest can be part of Waqf. The Waqf we discuss here is for an individual or a family, but there is a Waqf for different communities. In Islam, the Waqf for the community also helps Muslim children get an education.

Wealthy Muslims should consider giving back to the community for continuous charity rewards. They can do so by organizing a charity through a Testamentary bequest. Alternatively, they can sponsor education students. They can also organize a multi-fund structure with Shariah-compliant investments.

In Islamic estate planning, it is important to understand the Islamic inheritance laws before you draft the final documents. This is especially true for Muslims who are wealthy. You should also check whether your investments are Shariah-compliant. If they are not, you may not be able to achieve your tax-saving goals.

Keeping records of debts is also very important. It will help the beneficiaries to manage their debts. A comprehensive estate plan should also include funeral and burial decisions. In addition, all good plans should be reviewed periodically.

Some basic practices are commonly used in Islamic estate planning. These practices are intended to help Muslims implement the most effective estate planning methods. These practices include the following: determining a sufficient liquid asset, making an updated list of assets, the right time to execute the planning, the right price, the right person to administer the estate, the right cost to transfer the estate, the right way to distribute the estate, and the right way to protect non-heirs.


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