Heirlooms, Not Heir-Dooms: Navigating Assets and Family Ties

When discussing the management of inherited assets, as Muslims, we know it is closely related to the laws of Faraid (inheritance) established in the Quran.

The Faraid distribution method establishes five primary heirs: the spouse, sons, daughters, mother, and father of the deceased. These five have the right to inherit the deceased's assets based on the distribution specified in the Quran.

However, the number of heirs can increase or overlap depending on whether eligible heirs are still alive or have already passed away. If an heir has passed away, the inheritance rights will pass to their heirs if the assets left behind have not been distributed.

But sometimes, the concept of Faraid can be confusing because many of us need help understanding and delving into the concept itself, which includes justice, kindness, and compassion, rather than just dividing assets.

Although we are obligated to follow Faraid, discussions can be held among heirs to agree on how the assets should be distributed, as long as it does not unfairly disadvantage any eligible heir.

The process of distributing inherited assets, according to Faraid, must also follow the procedures established in the country.

When someone passes away, their assets will be frozen temporarily while the claim process is carried out by eligible heirs.

The process of appointing an executor (wasi) is sometimes time-consuming because there may be no consensus among heirs to appoint one, and finding someone willing to be an executor can be challenging, considering the time and cost involved in the claims process.

As a result, problems arise in managing inherited assets, such as frozen assets or multiple layers of heirs, which can cause the assets left behind to lose value since they cannot be used by the heirs.

This situation can be particularly difficult for heirs, especially those who depend on the inherited assets for their livelihood.

Faraid is not the issue if examined closely, as it is a beautiful and just system when implemented correctly. However, the attitude of heirs can sometimes delay the claims process.

Disputes, greed, and self-interest can lead to a slow and complicated asset distribution process and cause some heirs not to receive their rightful share.

Even sadder is that many do not realize they are unfairly treating other heirs and continue to bear the sin of depriving others of their rightful share of the inherited assets, especially when it involves the wealth of orphans.

For example, some heirs refuse to vacate the inherited property and wish to avoid managing the assets according to Faraid, which prevents other heirs from receiving their share.

As a result, asset distribution is delayed, and when eligible heirs pass away, the process becomes even more complicated, potentially leading to prolonged disputes among heirs.

Adopted children may also not receive any assets because they are not considered eligible heirs despite their significant contributions to the deceased's wealth.

Families without sons often face difficulties due to the interference of the deceased's extended family members, making it challenging to manage the assets for other heirs.

How to Manage Assets to Prevent These Issues

Therefore, as asset owners, we must remember that no matter how substantial, the wealth left behind may only benefit the heirs if appropriately managed while we are still alive.

As such, asset owners are strongly encouraged to use various Islamic-approved methods of asset management such as Wasiat (will), Hibah (gift), Amanah (trust), and Wakaf (endowment).

Through Wasiat, an individual can bequeath up to 1/3 of their assets to non-heirs, and if they wish to bequeath more, it must be approved by the heirs. This allows asset owners to protect the rights of adopted children, for example.

Wasiat will be executed after the owner's death and must be distributed before the Faraid distribution.

Hibah, on the other hand, is a gift to heirs or non-heirs while the owner is alive, and the assets given as gifts are not included in the estate.

At present, many financial institutions/investment firms offer Conditional Gifts, such as ASNB's Amanah Hibah. This facility benefits heirs as they can claim the Hibah before the assets are distributed, according to Faraid.

On the other hand, Amanah is when an owner establishes a special fund or account to manage their assets for heirs. Heirs will receive their respective shares based on an agreed-upon trust document.

Establishing a trust fund is highly suitable for protecting minor heirs to ensure they receive their shares and are not taken advantage of.

Wakaf, on the other hand, is a form of asset transaction that provides continuous benefits to the endowment creator and the beneficiaries for an extended period as long as the endowment exists and contributes.

The advantage of Wakaf is that the endowment creator continues to receive ongoing rewards, even after passing away, as long as the beneficiaries and the community can enjoy the benefits of the endowed assets.

Owners can use all these asset management methods to manage their assets while they are still alive to protect and simplify the claims process for their heirs.

This does not mean we reject Faraid; instead, we use various other methods allowed in Islam to ensure that our heirs are not left begging.

However, do not rely solely on naming individuals, as the named individuals are actually executors (wasi) and must continue distributing the assets following Faraid. This mistake has caused many heirs not to receive their rightful shares because the named individuals refuse to fulfill their responsibilities as executors.

So, manage your assets properly while you are alive to protect your heirs left behind.