Do you know that, unlike most Singaporeans, the Interstate Succession Act does not apply to Muslims in Singapore? That means that the regular laws on asset handling of deceased is irrelevant to most Muslims. There is in fact another set of laws when it comes to Muslim inheritance, much like how certain laws on marriage, divorce and food applies to Muslims only.
Unfortunately, the laws of inheritance for Muslims can be quite daunting to understand even to Muslims. The Syariah Court of Singapore has essentially solved that problem by creating an online trial calculator for you to use. However, the Faraid Calculator only covers half of the basics.
In this article, we cover the very basics of what asset distribution means to Muslims.
Muslim Inheritance Law: The Origin
The law of inheritance stems from the verses of the Quran. There are at least three verses giving specific details on inheritance and shares. There are also plenty of hadith or Prophetic traditions that cover the laws of Muslim inheritance.
In essence though, when a Muslim dies there are four duties which need to be performed. They are:
- Pay funeral and burial expenses.
- Paying debts of the deceased (there are many aspects to this debt, both financial and spiritual).
- Determine the value / will of the deceased (which can only be a maximum of one third of the property).
- Distribute the remainder of estate and property to the relatives of the deceased according to Shariah Law.
Assets can include:
- Housing property
- CPF Savings
- Insurance payout
- Shares of stocks
- Cash savings
- Movable assets such as gold, jewellery and cars
Debt and Inheritance
If you notice in the list above, immediate funeral and burial expense, as well as all other debts, takes precedence over asset distribution. Muslims believe that settling debt is an important aspect of Islamic finance. That obligation that DOES NOT end when a person is deceased. Hence, the administrator of the inherited asset must ensure, to the best of his ability, that the deceased debts are paid for.
This debt, of course, will include your mortgage liablities. If you have been paying your home loans using CPF though, you are covered by your Home Protection Scheme insurance. However, it is still a good idea to speak to your financial advisor to strategise a financial plan to protect your family from other liabilities that you may have.
Muslim Inheritance Law: Pro Male?
Another thing that you may notice about the Muslim inheritance law is that it tends to heavily “favour” the male members of the family. If the deceased man has a wife and is childless, for example, she only gets a quarter of the inheritance. If there are children, the wife gets only an eighth (1/8). Even if the man has children, it does not mean that the wife and children gets all the inheritance. Without a son, the deceased father or brother will instead have rights to a share of the inheritance.
There is a strong reason for this arrangement: Muslim males are obligated to support and ensure welfare of the female members of the family. This obligation includes financial support. That means that upon a Muslim man’s death, the deceased sons/father/brothers/uncle has to financially support the deceased wife and daughters in his absense. Hence, the distribution of asset is structured so that the male family members are able to cope with the sudden financial obligations that they find themselves with.
This is opposed to practices of pre-Islamic days, where the women of the family have absolutely no rights over over the assets of their deceased husband or father. This obligation for financial and welfare support is not forever, however. It ceases for the wife after three months of the deceased passing; as for the deceased daughters, once they are married.
Generally, the deceased will is a great tool in easing the process of inheritance distribution. However, in Muslim inheritance law, there are additional laws to consider before the will becomes executable. For example, the will can generally affect only one-third of the asset division. That means two-thirds of the assets have to be distributed via faraid calculation.
Also, the will cannot include the names of the people who already qualifies as an inheritor of the estate. Hence, the instruction of giving additional share on top of what had already ordained will be ignored by law.
However, that does not mean that the will is without merit for a Muslim. The will is useful in planning out distributions of asset for those who naturally do not qualify for the inheritance. These include adopted children or children born out-of-wedlock. If you are planning to leave some of your asset to charity organisations, the will is also handy in executing your wishes. The will is also powerful for married Muslim women; they are able to dispose off their asset by will, with or without their husband’s consensus (a Muslim man has no actual rights over the wealth that she owns and earns).
CPF and Other Asset Nominations
Although the Muslim inheritance law is pretty specific, it does not override the general Civil Law of the country. Hence, certain assets may be excluded from inheritance distribution. For example, jointly owned properties under the Land Titles Act fall under the Civil Law, hence the surviving joint owner(s) gets the right to the property upon the deceased death. In fact, the Islamic Religious Council of Singapore (MUIS) issued a fatwa on joint tenancy to support this.
Other examples of overriding legislation includes CPF Savings and life insurance payout, in which the nominees will fully inherit the assets.
We often advise our Muslim clients to seek professional advice when it comes to matters of inheritance. There are multiple layers involved in understanding each aspect of asset distribution and several legal implications to consider. It is all part of your personal financial eco-system that needs proper planning and strategy in order to ensure a smooth flow of assets to where and how you want it to be.
About The Author
Armen Rizal Rahman
Armen’s interest in finance and investment was sparked in 2012 when he came across articles about the sub-prime mortgage crisis and how it almost crashed the entire world economic system.
He has since extensively read on the principles of Islamic finance and Shariah investing. He has also previously operated a gold and silver investing business. He credits his background in the creative industry as allowing him to be able to digest the “boring” aspect of finance easily, and seeks to use his skills to communicate others on economic literacy.