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Shariah CompliantWills & Trusts
Presentation by Todd Gallinger
Gallinger Law
Phone: (949) 862-0010 Fax: (949) 861-6582
Email: [email protected]
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Overview
California Wills & Trust Law
Effect of Will
Revocable Trusts Probate Avoidance
Federal Estate Tax
Irrevocable Trusts
Shariah Compliant
Islamic Distribution
Limits on Power of Trustee Burial/Other Instructions
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What is a Will?
A legal document that specifies how yourestate is distributed as well as your desiredburial rituals.
Everyone should have one!
The Prophet Muhammad (pbuh) is reported inBukhari as saying, "is not permissible for any Muslimwho has something to will to stay for two nightswithout having his last will and testament written andkept ready with him .
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If You Dont Have a Will
Your property is distributed intestate,according to the laws of the state you live in.
Your closest relative decides on how youare buried, problematic if you have non-Muslim family members.
A Court decides who takes care of yourminor children.
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What Belongs in a Will
How to distribute your property.
Who will supervise your estate.
How you will be buried.
Who will take care of your children.
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How to Execute a Will
In California, 2 ways:
Holographic will Written entirely by hand
Signed and dated
Standard will Witnessed by two people who will not inherit from you
Signed and dated
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What is Probate?
Probate is the process by which aCourt supervises your estate.
Takes a long time (6 months +). Expensive (4% of estate or higher).
Public, because it is in open Court.
Required in CA if estate is worth morethan $100K or real estate more than$30K is owned.
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Probate-Avoidance Trust
Also called a Revocable Living Trust
Revocable means you can cancel or modify itat any time, you keep control
Low administration & set-up fees
Strongly recommended if you own real estateor property > $100K
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Trusts: Two Types
Revocable or Living Trust For avoiding probate
You keep control
Irrevocable Trust
For avoiding taxes Must give up control
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Funding The Trust
Necessary for both Revocable &Irrevocable Trusts
Easy for Personal Property, writeyourself a receipt gifting to the Trust
For Real Property, need to executedeed & file with the County
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The Estate Tax
Also called the Death Tax
Up to 50% of the value of your estateover the threshold limit
Threshold currently changing year toyear.
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The Changing Estate Tax
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Avoiding the Tax
Need an Irrevocable Trust, Irrevocablemeans it is permanent, cannot be changed or
cancelled.
Must be a split interest, meaning you cannotkeep benefit and day to day control.
Expensive to set-up and administer, butcheaper than the tax!
Avoiding the Tax
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Irrevocable Life Insurance Trust (ILIT)
Charitable Remainder Trust (CRT)
Charitable Lead Trust (CLT)
Many others, consult an estate planningattorney for more information
Types of Irrevocable Trusts
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Up to 1/3 of your estate can be gifted tocharity. Any amount can be gifted during life,
including using an irrevocable trust. Rest goes to relatives in two classes:
Those with set shares (spouse, parents, siblings).
Those who get the remainder (children, with males
taking twice the shares of females).
Islamic Distribution, Pt. 2
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Living Will or Advanced Healthcare Directive
Powers of Attorney
Life Estate
Homestead Declaration
Insurance
401(k) gifts
Many more!
Other Estate Planning Tools
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Presentation by:
Todd Gallinger
Gallinger Law
20 Truman, Suite 109
Irvine, CA 92620
Phone: (949) 862-0010 Fax: (949) 861-6582
Email: [email protected]