Applying Islamic Inheritance shares to Assets
Updated: Dec 7, 2022
Assets any wealth you own, including but not limited to money, house, land, recreational properties, investments, jewelry, belongings, whether movable or immovable, capital or non-capital properties, real or personal, ancestral or non-ancestral properties. Islamic succession law is very broad, and it covers anything you own. The single dollar you own as cash or in the bank consider an asset. A Muslim cannot distribute other than the Islamic law of inheritance (shariah). Eventhough, there is a great benefits, and wisdom in the Islamic inheritance divisions, many considers rigid, strict, and difficult to follow. You can not discover the real beauty unless you learn and that's why, we encourage you to join our Islamic Inheritance course offered through Wassiyyah academy. Not having Islamic Wills or Trust can result in losing many opportunities, including debt fulfillment, financial or wealth obligations, charitable donations of non-heirs division, inheritance opportunities instead of Intestacy, and salvation. All these opportunities will be bypassed without an estate or succession plan. Muslim succession law needs a better understanding before devising the inheritance shares, as certain deductions (i.e., debts, expenses, taxes, testamentary bequests, or other obligations) must be done before inheritance distribution.
There is no distinctions between moveables and immoveables or between real and personal property or estates. The estate available for the Islamic inheritors consisted of all the assets of the deceased that remain after the payments of debts, expenses, islamic obligations and bequests. Each inheritors entitlement is expressed in terms of a fractional share and attaches in specie to the various properties which make Islamic inheritance. - Succession in the Muslim Family, Chapter 3, Primary heirs, P-40, by N.J. Coulson
Applying Islamic Inheritance shares to Assets
After successfully finding out each share as per Islamic succession law, you can apply the Total share to assets, funeral, administration and legal expenses, zakat, taxes, debts, and bequest to calculate the final assets that go to inheritors per the equation shown above. Bequest refers to the value between 0.1 to 0.33 i.e., allowing not more than one-third of total assets.
It includes cash, house, land, business assets, and investments. However, it excludes the joint owners' assets under the Right of survivorship. It will also exclude any assets, investments, or insurance where the beneficiaries are designated. It is not straightforward to cover these assets unless you create an individual or family Trust or another estate plan, depending on your situation. To learn more about asset types and their implications, watch the video "Joint or Co-ownership in Islam" under the YouTube channel "Wassiyyah."
Legally and reasonably, executors or trustees' should account for all funeral expenses. You can exclude Burial expenses if the funeral expenses are paid through private companies (arranged in advance by a deceased person) or by local Muslim congregations or associations.
An Executor or trustee can account for all legal costs, including probate fees or other expenses that may incur for settling assets. It may sometimes be challenging to account for these expenses in advance while finalizing the shares for inheritors. So, the executor or trustee may decide on the holdback amount (i.e., typically 5-15% of total assets in general) along with consultation with all inheritors. This way, the executor or trustee does not have to go back to the inheritors asking for money in a shortfall. An executor or trustee can pay the remaining amount from holdback to the inheritors.
This is considered a religious debt or obligation and is payable as soon as possible. The Executor or Trustee can gather information about how much Zakat, Kaffarat, or other remaining obligations need to pay, then he or she can pay for the deceased. There is a difference of opinion about "Zakat" or "Zakah," you should note.
This may include personal income tax, business tax, inheritance tax, estate tax, or other tax payable. It is encouraged to gather all documents beforehand. The executor or trustee can contact the Income-tax provider as specific income-tax rules must follow for the deceased person's final tax return. Paying taxes must be handled carefully; otherwise, the executor or trustee will be legally and religiously incompliant due to outstanding debts.
This does not include only personal debts but all commercial or industrial debts too. Loans, Mortgages, Lines of credit, or any outstanding payments must be paid in full. You will rarely find a situation in today's world where a deceased person does not own any liabilities. It is a legal responsibility for an Executor or Trustee to inform creditors by declaring through advertisements, especially for those left with large assets. It is unfortunate sometimes that people left with enormous debt have nothing left for inheritors to distribute. Every Muslim must make an effort to pay off debts in their lifetime or think before signing up for any debts.
The bequest must be paid immediately before inheritors get their share. The Executor or Trustee can easily find out from either Islamic Will or Trust how much bequest a deceased has declared. In some situations, the debt may turn out to be more than the bequest; you should seek an Islamic scholar's opinion before making any decision in this regard.
We gave details about the Sunni Islamic Inheritance rules that can be applied to any situation irrespective of the number of inheritors or Residuary as long as you stick to the principles, you would be able to calculate Islamic Inheritance in any given circumstance.
Allah, the Most Glorified and the Most High, knows the best. As a human, We are limited to everything and can not perceive it in totality...