Please refer all my previous articles regarding this at the first place.
If you are Muslim, you cannot transfer all your estate as you like to anyone you like, even if you can, you can only freely give out freely up to 1/3 of everything.
Nevertheless, Muslim basically cannot fully utilize a will, but Will is still very important. The will is to nominate anyone trustworthy to administer your money / property after you die. If you nominate someone on a will, the nominated person won’t get the estate, but he will just be the Executor to administer the estate.
This is extremely critical ! If you don’t, you will go through a hell of procedures.
If you ever read my previous posts, you will know how clever Hibah is as a way to escape the Faraid Law that chains you. With Hibah, you can transfer anything to anyone you desire.
Therefore, both Hibah and Will are very important tools for you.
Let us look at Insurance and Takaful (Islamic Insurance). Participants get a total amount of compensation if bad things occur. Assuming that the participant will give a sum of money to his heirs. Here the allocation by Hibah, and executors to take the role. Let say the male participants made grants of compensation to his wife, then she would get the entire property through Hibah without the need to be distrbuted to all heirs via faraid. This is because the Hibah / gift is made when the participant is still alive.
If no Hibah is made. In this case, if participants elect his wife as executor (trustee)on will, the wives will divide compensation to the heirs according to the consent of all beneficiaries or in faraid.
The dripping sweat, energy, time and love that poured out to the family is a must for every parent. Homes, land and other property owned will be given to their children someday. Lately there have been a variety of problems arising in connection to estate tussle or marginalized parents.
The process of changing the name house / land from parent to child is made to facilitate home ownership in the event of death. After the name change, the problem arises when the house / land are sold by children without parental consent.
To overcome this problem, the parents can make Hibah documentation. Hibah documentation was intended to protect parents and children. The absolute right of possession over the assets are still with parents as long as parents are still alive and the Hibah can be revoked anytime. But if parents die, assets don’t have to go through the faraid system. Hibah documentation that is made is based on Islamic Shari’a law and in accordance with civil law. As such it can be adopted by both the law in Malaysia. By making the Hibah documentation, house / land don’t require change of name. The change of name was only made after death.
This information is very important if you are among the following:
- are indebted
- lack of asset – you only got KWSP and a house
- many property
- still have mom and dad – who are eligible for the inheritance
- have more than one wife
- children are still below 18 years old
- all your children are girls
- and others that I might miss
Anyone who dies and if he is one of people that I listed above, will be in trouble for distribution of his estate. Oh yes, the problem is of course the remaining heirs. For money, many will declare themselves as the rightful heir, even if they do not care about us while we were still alive. If they are the legitimate heir, the rights and no one can stop them getting the prescribed by law.
However, we can plan to avoid the pitfalls use takaful / insurance plus Hibah instrument. To facilitate your understanding of this concept, I’ll give you a scenario for problems that occur (based on a true story) and how takaful / insurance plus Hibah can solve it.
The story of Oga Tatsumi (not his real name)
Mr. Tatsumi, a young executive had a wife, Hildegarde and sons who were young. He did not have a lot of savings in the bank or Amanah Saham Bumiputera. He only has an apatment and savings in bank. Misfortune struck the family when Mr. Tatsumi has been involved in an accident and died. MRTA Insurance claim was used to settle the housing loan, then complete repayment. EPF nominee is Hildegarde, so do not wait too long the money is safely received by the widow of Mr. Tatsumi.
Next phase of the problem begins.
Widow of Mr. Oga Tatsumi , Hildegarde, did not understand that all the assets of the estate of her late husband is and should be distributed in accordance with Faraid.
KWSP money is not much, it was to be attributable according to faraid, Hildegarde only can get 1/8 of the total assets (money KWSP & home)
Oga Tatsumi’s mother can get 1/8 & his dad get 1/8.
The problem is the house. It cannot be cut into pieces to be distributed to each heir. If it is cash, it can be easily distributed. The only way is to convert it into cash by selling the house. If the sale price would have been lower since it is a sale in hurry. With little sales proceed from the house, Hildegarde can’t even give much to Oga Tatsumi’s dad and mom, worse she even get little.
In the above case, it seems like the mother and father Mr. Ahmad too ‘resolved’ and selfish as to claim their share. Regardless according to faraid, they deserve and are entitled to the estate of late Mr. Oga Tatsumi.
In this case Mr. Oga Tatsumi was fortunate that he has a son and also a little inheritance. If it involves a large amount, it will even more complicated. If he only has a female child, then the estate, part of it will go to his uncle.
Takaful / insurance plus Hibah solutions :
Let say Mr. Oga Tatsumi had takaful grant scheme (RM62 per year for protection RM50, 000) and named his wife, Hildegarde as the grantee. When he died, the wife got all 100% of the money. The wife may use the money to redeem in cash for the property claimed by the other heirs.
Filed under: Financial Planning, Inheritance / Estate, Insurance, Islamic Economy
