Estate planning is the process of managing one’s assets, such as your monies or properties, while you are still alive, in preparation of the unfortunate event of your death or unforeseen circumstances. Some examples of how you can plan your estate include writing a will or buying life insurance plans.
If you are a Muslim, or a non-Muslim who is thinking of converting to Islam, you may want to know how being a Muslim impacts you as you plan your estate. This is because there are notable differences between civil and Islamic estate planning in Singapore.
In particular, this article explains the differences in:
- Requirements for making a will
- Appointment of an executor for you will
- Restrictions on giving away assets
- Life insurance issues
Requirements for Making a Will
Under civil law, wills are governed by the Wills Act. According to the Wills Act, for a will to be deemed valid, 2 witnesses aged 21 or older of any gender must be present, among other requirements. Both the witnesses must also not be a beneficiary of the will.
Apart from the Wills Act, a Muslim person’s will must also comply with the provisions in the Administration of Muslim Law Act.
For an Islamic will to be deemed valid, it must be signed in the presence of 2 Muslim males who are 21 years old or older, who are not beneficiaries of the will, or persons related to a beneficiary, or a person who has an interest in the will. By his tradition, the Prophet encourages that the witnesses be non-Muslims.
It is, however, a norm today that the witnesses are in fact Muslims. If you are unable to obtain 2 male Muslim witnesses, you can have 4 female Muslim witnesses, instead. As there has not been a test case in the courts, we still recommend that the witnesses to your will be male Muslims, who are 21 years of age and above.
Muslims are also only allowed to will away up to a maximum of one-third (1/3) share of their net asset value to a non-waris. This is the most important rule that all Muslims need to know. This restriction means that Muslim testators cannot will away more than a one-third (1/3) share to a non-beneficiary, as the remaining two-third (2/3) share must always be reserved for the rightful heirs.
Additionally, testators are also not allowed to will any portion of the estate to a person who is already included as a waris under Fara’id principles.
A non-waris is someone who is not your immediate/extended family member (e.g a colleague from work) and can be a real person, an entity, or a non-Muslim. So, if for example, you wish to will away your assets to a colleague in your firm, you cannot give them more than one-third (1/3) of your net asset value.
On the other hand, a waris (beneficiary or heir) is someone who will inherit your assets, regardless of whether you write a will. This includes your immediate (and in some cases, extended) family members who are automatically entitled to a share of your assets.
If you are unsure of who your waris are or will be, you can use the inheritance trial calculator on the Syariah Court website (click on the “Inheritance” tab > “On-line Trial Calculation”) and key in certain details about your family. From there, you will be able to find out who automatically inherits your assets and the specific proportions of those assets.
Please note, however, that the outcome of the trial calculations on the beneficiaries’ respective proportions are computer-generated and are subject to changes made by a President of the Syariah Court before the actual issuance of the same to its applicant. Otherwise, a qualified Syariah lawyer will also be able to advise you on who your waris are.
Appointment of an Executor for Your Will
It is not a requirement but it is always recommended to appoint an executor for your will. An executor is someone who has been nominated with the legal responsibility to handle a deceased person’s remaining assets. This person would preferably be someone whom you trust to carry out your final wishes within the will.
Upon a Grant of Probate being granted to the executor named in the will, the said executor will be formally appointed by the Family Justice Courts.
Non-Muslims can appoint anyone 21 years of age or older, who is not a bankrupt, to be an executor of their will.
Similar criteria apply to Muslims as male executors are not compulsory but it is recommended for executors named in the will to be Muslim males.
While there are also no restrictions to non-Muslims being executors as well, it is well-recommended, to ensure that the executors are aware of the hierarchy of payments to be made from the estate before distribution to its beneficiaries, such as funeral and burial expenses, debts and obligations to God (zakat, fidyah, kifarah, Badl Haj, etc.) as well as debts and obligations to mankind (loans, credit cards, advance payments, etc.).
Restrictions on Giving Away Assets
Under civil law, there are not many limitations or restrictions on the giving away of assets. Generally, assets can be given to anyone as long as the bequest made was clear and defined.
For Islamic wills, however, there are quite a few restrictions on how Muslims may give away their assets. For example, Muslims are not allowed to give away more than one-third (1/3) of their assets to a non-waris.
Some restrictions of the rules over the proportion of assets received by the waris include, but are not limited to:
- Sons get twice the share of daughters
- Priority for children and parents – wives get less than the children and parents
- Brothers get more than sisters
Note that if you are a Muslim and you do not want to be governed by such restrictions, you must renounce your religion. Simply not practising Islam is insufficient.
Life Insurance Issues
For Muslims, life insurance has a vexed history. In many jurisdictions or schools of Islamic thought, any instrument of insurance is considered to be haram (Arabic term for “forbidden”) because of the element of chance involved. This is because whether insurance payouts are made depends on situations such as whether you live or not, or whether certain conditions happen to you. Buying insurance may thus be seen as increasing the chances of a negative event, such as death, happening to you.
However, the Majlis Ugama Islam Singapura (MUIS) has made a fatwa stating that life insurance is a valid form of hibah (contract), specifically a delayed hibah like nominated CPF monies, and Muslims can go ahead and buy it if they wish to.
Importantly however, MUIS also advises Muslims not to cause injustice in distributing their inheritance. For example, you must not nominate all your assets to one person, such that other rightful beneficiaries are deprived of your inheritance. In the same vein, the status of a Muslim will, that was prepared with the intention of depriving a beneficiary from receiving his or her rightful entitlement to the testator’s estate, is haram.
The process and impacts of estate planning of a Muslim can be confusing as Islamic law has more restrictions and certain stringent inheritance rules as compared to civil law.
If you need help with either civil or Muslim estate planning in Singapore, please do not hesitate to contact me.
This article has been co-authored by Mr Norhakim.