The Uni­ver­sal­ity of Faraid As The Ba­sis of Es­tate Dis­tri­bu­tion for Mus­lim

IN­TER­EST­INGLY, ONE OF THE MOST SPE­CIFIC VERSE IN TERM OF EX­E­CU­TION AND PRO­POR­TION IN THE QU­RAN IS THE VERSE RE­GARD­ING FARAID OR ES­TATE DIS­TRI­BU­TION.

Insurance - - CONTENTS - Text Amir Ba­hari | Messrs Ba­hari & Ba­hari

SOURCES OF FARAID

The source of Faraid can be found in verse 4:11, 4:12 & 4:176 which list down the quan­tum of dis­tri­bu­tion for the le­gal heirs.

Al­lah in­structs you con­cern­ing your chil­dren: for the male, what is equal to the share of two fe­males. But if there are [only] daugh­ters, two or more, for them is two thirds of one’s es­tate. And if there is only one, for her is half. And for one’s par­ents, to each one of them is a sixth of his es­tate if he left chil­dren. But if he had no chil­dren and the par­ents [alone] in­herit from him, then for his mother is one third. And if he had broth­ers [or sis­ters], for his mother is a sixth, af­ter any be­quest he [may have] made or debt. Your par­ents or your chil­dren – you know not which of them are near­est to you in ben­e­fit. [Th­ese shares are] an obli­ga­tion [im­posed] by Al­lah. In­deed, Al­lah is ever Know­ing and Wise.

An-Nisa 4:11

And for you is half of what your wives leave if they have no child. But if they have a child, for you is one fourth of what they leave, af­ter any be­quest they [may have] made or debt. And for the wives is one fourth if you leave no child. But if you leave a child, then for them is an eighth of what you leave, af­ter any be­quest you [may have] made or debt. And if a man or woman leaves nei­ther as­cen­dants nor de­scen­dants but has a brother or a sis­ter, then for each one of them is a sixth. But if they are more than two, they share a third, af­ter any be­quest which was made or debt, as long as there is no detri­ment [caused]. [This is] an or­di­nance from Al­lah, and Al­lah is Know­ing and For­bear­ing.

An-Nisa 4:12

They re­quest from you a [le­gal] rul­ing. Say, “Al­lah gives you a rul­ing con­cern­ing one hav­ing nei­ther de­scen­dants nor as­cen­dants [as heirs]”. If a man dies, leav­ing no child but [only] a sis­ter, she will have half of what he left. And he in­her­its from her if she [dies and] has no child. But if there are two sis­ters [or more], they will have two-thirds of what he left. If there are both broth­ers and sis­ters, the male will have the share of two fe­males. Al­lah makes clear to you [His law], lest you go astray. And Al­lah is Know­ing of all things.

An-Nisa 4:176

Faraid in one word equals dis­tri­bu­tion. In one sen­tence it refers to spe­cific quan­tum for spe­cific le­gal heirs as stated in the Qu­ran.

In Faraid, the dis­tri­bu­tion is fixed. Thus, it guar­an­tees cer­tainty in the quan­tum to be re­ceived by the le­gal heirs.

Faraid is only ap­pli­ca­ble upon the death of a per­son. His as­sets will be dis­trib­uted to his le­gal heirs.

Faraid is ap­pli­ca­ble only af­ter de­duct­ing the rights and obli­ga­tions as­so­ci­ated with the es­tate of the de­ceased. Some of the rights might in­clude the fol­low­ing:

1) The right of the spouse un­der Jointly Ac­quired Prop­erty (Harta Sepen­car­ian)

2) The right of cred­i­tors for the pur­pose of set­tle­ment of debt

3) The right of nom­i­nees i.e. to re­turn the as­sets to the right­ful own­ers

4) The be­quest made to non Faraid ben­e­fi­cia­ries (up to 1/3 of the es­tate) which is le­gal and ac­cept­able

5) The set­tle­ment of Nazar (vows) if any

6) The set­tle­ment of Zakat and Hajj, if any

Faraid fa­cil­i­tates the dis­tri­bu­tion process be­cause ev­ery Mus­lim is aware of their rights about it.

Faraid pro­motes plan­ning be­cause if a per­son con­sid­ers other for­mula of dis­tri­bu­tion other than Faraid, then it is im­per­a­tive for a per­son to con­sider other es­tate plan­ning tools such as Wasiat, Hibah, Trust, for­ma­tion of com­pa­nies and off shore Trust to en­sure that the prop­er­ties are dis­trib­uted ac­cord­ing to his wishes.

The beauty in Faraid dis­tri­bu­tion is in the plan­ning part of it. The chal­lenge is in fig­ur­ing out who should be get­ting which as­set.

As a dis­tri­bu­tion tool, Faraid is as Es­tate Plan­ning so­lu­tion which is sim­ple and easy to fol­low. It is a di­vine guide for Mus­lims.

Faraid as a dis­tri­bu­tion tool ap­peals to hu­man wis­dom and logic ac­cord­ingly.

From the in­surance claim per­spec­tive, there can be three sce­nar­ios:

a) In­surance claim with­out nom­i­na­tion

In cases of in­surance claim with­out nom­i­na­tion, the pay­ment would be made to the Ad­min­is­tra­tor(s) who will act as a trustee to dis­trib­ute the pro­ceeds as per Faraid Dis­tri­bu­tion. The rea­son is that the in­surance pro­ceed is deemed to be part of the es­tate of the de­ceased.

b) In­surance claim with nom­i­na­tion

In cases of in­surance claim with nom­i­na­tion, the pay­ment would be made to the Nom­i­nees who will act as trustee to dis­trib­ute the pro­ceeds as per Faraid Dis­tri­bu­tion. The rea­son is that the in­surance pro­ceed is deemed to be part of the es­tate of the de­ceased as the nom­i­nees would be deemed as mere Trustee for the es­tate.

c) In­surance claim on Ab­so­lute As­sign­ment

In cases of in­surance claim on Ab­so­lute As­sign­ment ba­sis, the pay­ment would be made to the As­signee of which the pro­ceeds would be deemed to be­long to the As­signee and not part of the de­ceased es­tate. The rea­son is that Ab­so­lute As­sign­ments is a le­gal in­stru­ment that en­sures the in­surance pro­ceeds are ear­marked for the ben­e­fit of the nom­i­nees.

In Faraid, the dis­tri­bu­tion is fixed. Thus, it guar­an­tees cer­tainty in the quan­tum to be re­ceived by the le­gal heirs.

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