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Session 4
Faraid & Family Legal Issues
Dr. Haji Abdul Aziz Hassan, Founder, Aziz Hassan & Co
WEALTH IN ISLAM
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( To Him Allah belongs all that is in the heavens
and all that is in the earth for He is the Most High
and Most Great ) Al Quran - Surah Ash (42:4)
From an Islamic
perspective, everything
belongs to Allah and we
are but mere trustees..
FARAID DOCTRINE
3
This is the Islamic Law of Inheritance. By verses 11, 12 and 176 of
the Surah An-Nisaa’, all the rights of the inheritors are specifically
stated. Faraid Distribution cannot be circumvented unless all
inheritors agree and even then the consent must be after death,
not before death of the testator.
FARAID DOCTRINE–
QURANIC SOURCE
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SURAH AN-NISAA :
11, 12 & 176
The Rights Of Children And Parents To Inherit
“Allah (thus) directs you regards your children’s (inheritance): to
the male a portion equal to that of two females: if only daughters;
two or more, their share is two thirds of the inheritance: if only one,
her share is a half: for parents, a sixth share of the inheritance to
each, if the deceased left children, if no children, and the parents
are the (only) heirs, the mother has a third, if the deceased left
brothers (or sisters), the mother has a sixth (the distribution in all
cases is) after the payment of all legacies and debts. Ye know not
whether your parents or your children are nearest to you in benefit.
These are settled portions ordained by Allah and Allah is All-
Knowing, All-Wise”
Surah An-Nisaa’, 4:11
FARAID DOCTRINE
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Surah An-Nisaa’: 11
The Right Of The Husband And Wife, Brothers And Sisters To Inherit
“In what your wives leave, your share is a half, if they leave no
child; if they leave a child, you get a fourth; after payment of
legacies and debts in what ye leave, their share is a fourth if ye
leave no child, but, if ye leave a child they get an eighth: after
payment of legacies and debts if the man or woman whose
inheritance is in question has left neither ascendants nor
descendants, but has left a brother or a sister, each one of the two
gets a sixth; but if more than two, they share in a third: after the
payment of legacies and debts; so that no loss is caused (to
anyone): thus it is ordained by Allah, and Allah is All-Knowing, Most
Forbearing”
Surah An-Nisaa’, 4: 12
FARAID DOCTRINE
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Surah An-Nisaa’: 12
The Rule Of Inheritance To The Estate Of A Deceased Person Who
Has Left As Heir Neither A Descendant Nor An Ascendant
“They ask thee for a legal decision. Say: Allah directs (thus) about
those who leave no descendants or ascendants as heirs. If it is a
man that dies, leaving a sister but no child, she shall have half the
inheritance if (such a deceased was) a woman, who left no child,
her brother takes her inheritance if there are two sisters, they shall
have two thirds of the inheritance (between them): if there are
brothers and sisters, (they share) the male having twice the share of
the female, thus doth Allah makes clear to you (His law), lest ye err.
And Allah hath knowledge of all things.”
Surah An-Nisaa’, 4: 176
FARAID DOCTRINE
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Surah An-Nisaa’: 176
(i) ‘Ashabul-Furud’
Those whose shares are specifically stated in the
Quran;
(ii) ‘Asabah’
Those who are entitled to the balance of the deceased
estate but whose shares are not specifically stated;
and
(iii) ‘Dhawil-Arham’
The residual third group who are blood-relations but
who do not belong to either groups (i) or (ii).
CLASSIFICATION OF
HEIRS
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CLASSIFICATION OF
HEIRS
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ASHABUL FURUD
(Quranic Heirs)
MALE FEMALE 1. Husband
2. Wife
3. Father
4. Mother
5. Grandfather
6. Grandmother
7. Daughter
8. Son’s daughter
9. Full sister
10. Consanguine sister
11. Uterine sister
12. Uterine brother
ASABAH BI AL-
NAFSI
(in his own right)
1. Son
2. Father
3. Brother
4. Uncle
ASABAH BI AL-GHAYRI
(in the right of another)
1. Daughter with son
2. Son’s daughter
with son’s son
3. Full sister with full
brother
4. Consanguine
sister with
consanguine
brother
ASABAH MA’A AL-
GHAYRI
1. Full Sister(s)
together with either
daughter(s) or
son’s daughter(s).
2. Consanguine
sister(s) together
with either
daughter(s) or son’s
daughter(s)
ASABAH
(Residuary Heirs)
RIGHTS OF SUCCESSION
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Blood
Relationship
i.e. father,
mother, son
& daughter
Marriage
Valid
marriage i.e.
husband &
wife
Islam
Because in default of other
heirs, the general body of
Muslims represented by
Baitul-Mal, becomes entitled
to the estate of the
deceased Muslim
FARAID HEIRS
11
GENERALLY
NOT EXCLUDED
FATHER
MOTHER
HUSBAND
WIFE
SON
DAUGHTER
FARAID HEIRS AND
SHARE RATIOS
12
Faraid
Wife
1/4 1/8
Husband
1/2 1/4
Father 1/6
1/6 +
Residue
The deceased has children
Deceased has daughters
only or is childless
In the presence
of son only
In the presence of
Daughter, the son
will get double portion Son
Residue
2:1
Daughter
2/3
1:2
1/2
Daughter will get half in the
presence of son
Daughters only in the absence of son Only daughter and in the absence of son
Mother
1/3
1/6
The deceased is childless
The deceased has children
The deceased is childless The deceased has children The deceased has children
The deceased is childless
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SIMPLE CALCULATION OF FARAID
FARAID CALCULATION
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Case : A man died and leave behind : a) Father
b) Mother
c) Wife
d) 1 Son
e) 1 Daughter What is the Faraid ratio for each heir?
FARAID CALCULATION
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APPLICANT’S NAME NRIC A 1234
DATE: 03.09.2005 GENDER MALE FEMALE /
PLEASE FILL IN THE NUMBER OF HEIRS
WIFE
SON
DAUGHTER
MOTHER
FATHER
PATERNAL GRANDFATHER
PATERNAL GRANDMOTHER
MATERNAL GRANDMOTHER
SON’S SON
SON’S DAUGHTER
SON’S SON’S DAUGHTER
SON’S SON’S SON
FULL BROTHER
CONSANGUINE BROTHER
UTERINE BROTHER
FULL SISTER
CONSANGUINE SISTER
UTERINE SISTER
1
1
1
1
1
FARAID CALCULATION
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ZAR PERUNDING PUSAKA SDN BHD
49-1, Wisma Aziz Hassan, Jalan 2/27F, Seksyen 5
Pusat Bandar Wangsa Maju (KLSC), 53300 Kuala Lumpur
Tel : 03-4149 1115, 4149 1880 Faks : 03-4142 4962
Date : 3.9.05
APPLICANT’S DETAILS
Name : A (Man) NRIC No : 1234
INFORMATION OF HEIRS
Heirs Faraid Ratio Common Denominator
1 Father 1/6 12/72
1 Mother 1/6 12/72
1 Wife 1/8 9/72
1 Son 13/36 26/72
1 Daughter 13/72 13/72
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RESPONSIBILITIES AGAINST THE
ESTATE BEFORE DISTRIBUTION
Rights and claims against the estate of a deceased
Muslim are as follows (ranking in priority) :-
a) Settlement of the deceased’s burial (in moderation).
b) Payment of debts which shall include zakat,
uncompleted hajj, nazar (solemn pledge) and debts
to other people and financial institutions.
ESTATE DISTRIBUTION
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c) Claims against the estate (to be settled by the
administrator or heirs of the estate) e.g. the Hibah
(uncompleted) and the Wasiyyah (Note: Some local
jurists have also included the matrimonial property
rights (Harta Sepencarian) in this category).
d) The balance if any, according to the Faraid.
ESTATE DISTRIBUTION
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FAMILY INHERITANCE
DISPUTES
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FAMILY PROBLEMS IN
ESTATE ADMINISTRATION
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ISLAMIC WEALTH
DISTRIBUTION &
PRESERVATION
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ESTATE PLANNING(DISTRIBUTION OF ASSET TO ONE
GENERATION)
LIFE TIME DISTRIBUTION
DISTRIBUTION UPON DEATH(AFTER SETTLEMENT OF DEBTS)
HIBAH GIFT
DIRECT TRUST/FOUNDATION
HARTA SEPENCARIAN
WASIYYAHBALANCE OF ESTATE
ACCORDING TO FARAID LAW BY WAY OF DEED
OF FAMILY ARRANGEMENT (DFA) SUBJECT
TO CONSENT OF FARAID HEIRS
FAMILY PATRIACH
(ASSET OWNER)
LEGACY PLANNING(PRESERVATION OF ASSET AND
DISTRIBUTION TO MULTIPLE GENERATION)
ASSETS ENDOWED BY OWNER DURING LIFETIME/UPON DEATH THROUGH DFA
FAMILY TRUST/FAMILY FOUNDATION
FAMILY CONSTITUTION
FAMILYOFFICE
DIRECT HOLDING
ASSETS
FAMILY HOLDING COMPANY
NON-BUSINESS
ASSET
BUSINESS ASSETS
MANAGE-MENT
CONTROL
PASSIVE MANEGE
-MENT
INCOME PRODUCI-
NG ASSETS
NON INCOME
PRODUCI-NG
ASSETS
ISLAMIC WEALTH
DISTRIBUTION & PRESERVATION
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ESTATE PLANNING
(DISTRIBUTION OF
ASSET TO NEXT
GENERATION)
LEGACY PLANNING
(PRESERVATION OF
ASSETS AND DISTRIBUTION
OF BENEFITS TO FUTURE
GENERATIONS)
FAMILY PATRIACH (ASSET OWNER)
ESTATE PLANNING
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ESTATE PLANNING
(Distribution of Asset to
the Next Generation
LIFE TIME
DISTRIBUTION OF
ASSETS
DISTRIBUTION OF
ASSETS UPON DEATH
(AFTER SETTLEMENT
OF DEBTS)
LIFE TIME DISTRIBUTION
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LIFE TIME
DISTRIBUTION
GIFT
DIRECT TO
DONEE
ENDOWED TO
TRUST/
FOUNDATION
HIBAH
IMMEDIATE
TRANSFER
TO
RECIPIENT
DELAYED
TRANSFER
( AFTER
DEATH)
LIFETIME DISTRIBUTION
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HIBAH (LIFETIME GIFT)
• TRANSFERRED
• NOT TRANSFERRED
CHALLENGES
• FEAR OF LOSS OF CONTROL
• HIGH STAMP DUTY PAYABLE (1% OF FIRST
RM100,000, 2% UP TO RM500,000, 3%
THEREAFTER)
• PROPERTY ENCUMBERED
DISTRIBUTION UPON
DEATH
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AFTER DEATH DISTRIBUTION
OF ASSETS
(AFTER SETTLEMENT OF DEBTS)
FIRST, HARTA
SEPENCARIAN
(MARRIAGE
COMMUNITY
PROPERTY)
THEN,
WASSIYAH (GIFTING OF ASSET
TO NON FARAID
HEIRS LIMITED TO
1/3 OF ESTATE)
FINALLY,
BALANCE OF
ESTATE
DISTRIBUTION
ACCORDING TO
FARAID LAW
DISTRIBUTION
ACCORDING TO
DEED OF FAMILY
ARRANGEMENT
DEED OF FAMILY
ARRANGEMENT
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Needs-based Justice Distribution
• memorandum of wishes (wasiat pesanan)
Family Wealth Distribution Master Plan (before and
after death)
• may include wealth preservation assets for transfer to
family wealth holdings companies
• must be consented by all beneficiaries
• before and after death
•rights under the faraid waived
• if endorsed through a court order under a testamentary
document, NO STAMP DUTY IS PAYABLE
LEGACY PLANNING
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ASSETS ENDOWED
BY OWNER DURING
LIFETIME/UPON
DEATH THROUGH
DEED OF FAMILY
ARRANGMENT
FAMILY
FOUNDATION
/
FAMILY
TRUST
LEGACY
PLANNING
(PRESERVATION
OF ASSETS AND
DISTRIBUTION OF
BENEFITS TO
FUTURE
GENERATIONS)
FAMILY ASSET HOLDING
STRUCTURE
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FAMILY
TRUST/FAMILY
FOUNDATION
DIRECT
HOLDING
ASSETS FAMILY
HOLDING
COMPANY
NON-
BUSINESS
ASSETS
BUSINESS ASSETS
INCOME
PRODUCING
ASSETS
NON
INCOME
PRODUCIN
G ASSETS
MANAGEMENT
CONTROL
PASSIVE
MANAGEMENT
FAMILY OFFICE
FAMILY
CONSTITUTION
govern
manage
manage
This presentation should not be regarded as offering a complete explanation of the matters
referred to and is subject to changes in law. It is not intended to be a substitute for detailed
research or the exercise of professional judgment. Labuan IBFC and MFPC cannot accept
any responsibility for loss occasional to any person acting or refraining from action as a
result of any material in this presentation. The republication, reproduction or commercial
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