Islamic Wealth Planning

Despite the current state, I was so persistent on attending the above stated course with my girlfriend which we have applied few weeks back. Mother had a cold war with me because i insisted on going. However, my dad allowed me to go so i went eventually but of course, i made a deal with my parents that i will cab to and fro plus Girlfriend is always around me. I knew i shouldn’t have pushed myself so hard because the first day, i felt so different in class and Orchard. I couldn’t focus that well and i kept holding on to my Girlfriend whenever we go. But Alhamdulillah, the second day was better. I focused throughout and i managed to had my leisure time but in my slow motion self.

I believed some of my readers have background knowledge on this but do comment too, to add-on, so that i can learn along the way. It may be a long post ahead because i believe it is something good to be share but however, if you can have a chance to attend, please feel free to go to MUIS website under ADIL. Sharing is caring, so here it goes. Bismillah and I hope whatever i share can assist us in one way another but don’t take it as a whole either because i am just a human seeking knowledge still.

Day 1

First day was basically talking about the ethics of Islam in terms of financial giving. The principles of it too. Especially on the importance of serving your family first and securing the welfare of your dependents without denying the right of your beneficiaries. So Faraidh was discussed during class and as much as there are other Islamic instruments we could use to financially distribute our assets, Faraidh is wajib and Ustaz said we should do it despite Scholars have stated other instruments or ways we could use to plan our wealth distribution because my girlfriend asked, ‘since there are other means of instruments, can i choose not to faraidh at all?’

As ladies and wife in the future, whatever property that is being Faraidh, we are not entitled that much. I shall not state the entitled portion because eventually, it got to depend on the situation you are in taking into account the people around you (parents, siblings, children, grandchildren etc). However, male will always receive more one way or another. Children will receive more especially son because rightfully, they should be taking care of their parents somehow but provided they are grown up but money is root of all evil, usually parents are left behind to suffer. That is why we are humans and it is so important to cleanse our heart and fill it with good vibes and intention to prevent us from doing something bad. In summary, Ustaz always emphasised on how importance we should serve our family first and make sure our intention is right and clean.

Day 2

The second day was more interesting because we went into the various instruments that is available and Ustaz explained according to the Contemporary Fatwas in Singapore. So before going into the different instruments. It is important to understand the type of wealth that need to be distributed according to Faraidh and which is not included to be Faraidh.

• as long as the ownership or beneficial interest of a particular asset has been transferred while you are still alive to another individual (eg. your spouse), it is counted as a gift during your lifetime and not counted as your estate, therefore, it is not to be included in the final wealth to be faraidh
• when the transfer of the ownership is only done upon death or after death of the individual, it is counted as an estate and must be distributed according to faraidh (but this also subject to any presence of wasiyyah which is a will made by the deceased when he/she was still alive. For this, there are two conditions for it but i shall not elaborate on it to prevent confusion)

We touched on the above for quite  a long time because as long as we don’t get it, we can never understand the rest of the part. Next, we touched on the different availability of instruments for us to used to plan our wealth accordingly. I shall break it down and do a summary of it in my own layman term from how i understand it and of course, with my notes in hand now.

1. Nuzriah. Ustaz do not really favour this in view of on how it works. It is like you make a vow (promise) to do something but if you don’t carry it out, you need to do some penalty payment in form of feeding of 10 poor people or providing proper clothing in Islamic way. Plus, Ustaz said if anybody were to do this in Singapore, if family members are not happy it can be brought to court for challenge. So i shall not elaborate further
2. Hibah ‘Umra. It is a way of granting the right of usage of the asset to a  person but upon death, it will need to be return back to the owner to be faraidh. Example, Baba told Shipship to use that Condo and make it like Shipship’s own house but when Baba dies, the house will be given back to Baba. Get it?
3. Hibah Ruqba. This is one of the quite popular instrument used and it’s applicable for us especially when it comes to HDB joint-tenancy, something i will be working on soon for security of my future. Why is it applicable? I will state in another part – joint tenancy. Hibah Ruqba is a transfer of ownership upon death of the gift recipient after death of giver. Hence, if giftee dies before giver, the gift will be revoked and no transfer will be effected. Example, Didi made hibah ruqba of an asset to Fufu but Fufu die first, so the hibah ruqba do no exist anymore and the asset belong solely to Didi. Get it? (I think i made it more confusing with the horrible names, hahah)
4. Wakaf. It is a wealth transfer that can benefit the specific group of people either you specify the people (your love ones) or generally (charitable organization)

Joint Tenancy

As we all know, when we apply for house, it will be a joint-tenancy (50-50) unless a couple decide a different percentage. Hence, if during your lifetime, neither of the party actually express any hibah/nuzriah stating that the surviving second owner may receive the whole property then the joint owner is not considered religiously as the sole owner of the property. Thus, the remaining 50% of the house need to be distributed according to faraidh. This is where hibah ruqba seems more applicable because we can never predict who will pass on first. So i believe this is something every couple should look into. If you already done so, Alhamdulillah but if you have not and just came to know about it just like me, i hope you will secure your future for your spouse and children because out of many assets, our house is the most expensive asset that we could ever have. The more we should plan it well because life is so unpredictable. You will never know who in your family will come to demand for their rights over the remaining 50% of the house and that can cause unhealthy emotional and psychological stir for your spouse and children since shelter is one of the most important basic need. However, Ustaz also state that in certain situation whereby selling the house just so it can be faraidh will harm the dependents, MUIS will help to defend this cases to the extend that only when the right period arrive, then the house will be sold to be faraidh. But i believe none of us would want to see this happen to our love ones when we pass on right? Thus, distribution of estate need to be delayed if there is potential harm or danger to any of the beneficiary (one of the few ethics).

Joint Account

All of us mostly have joint account with our love ones. I do too until i got confused with all my account numbers. Based on the Fatwa committee, if you and your joint owner, knows how much you contribute entirely to the account, the you got to follow the contribution of the deceased to the account and faraidh the share. But if undetermined, it will be taken as 50-50 and hence, the 50% will be distributed as faraidh. However, if you hibah/nuzriah your part, then it will never be faraidh.

But in legal perspective, the second owner can withdraw the money but in Islamic perspective, still need to be faraidh unless you make a hibah/nuzriah.

CPF nomination

I believed everyone knows that the minimum sum will increase along the years and i doubt we can ever see or feel it at times. However, based on the latest updated Fatwa. Nomination is a valid instrument of transfer of CPF monies during lifetime and therefore, if no nomination is made, it will be distributed according to inheritance certificate. Hence, nomination is like a hibah in Islam.

However, the Fatwa advice muslims against nominating if your intention is to unfairly deny beneficiaries from getting the CPF monies through the law of inheritance (faraidh). Since faraidh seems to give wife and daughter a very small percentage. But this eventually draws down to each individual, if you want to nominate because you know it can secure your dependant a future, then by all means. Our religion is not so rigid, but actually its us, the people.

For zakat payment, Ustaz said that we don’t have to include CPF in until you have  a lump sum of payment that last a year with you.

Insurance Nomination

I had many burning questions when it come to this section because i believe all of us always have this thought of insurance is forbidden in our religion. This includes investments, endowment etc. So i know i need to ask this but before i could, he already answered all our question. However, before i can state what his view was, i shall say this. It actually draw down to individual again. If you are someone who is very strict and only view things one direction, then no matter what you will never find a definite answer. We are living in a very globalized century now and our daily needs differ than thousand years of ago. So we need to depend on situation, adapt accordingly too but of course, we got to make sure that it is not against the Syari’ah law too if not, we will end up making something wrong as right which is sinful. Plus, your intention must be right too.

So Ustaz said, that it is okay to have insurance because he have one himself and we actually need it for our medical expenses. It is like many group of people paying for the scheme and also agreed that when a person need that pool of money for their medical expenses, they will use from that pool of money and when you, yourself need it too, it will be done in a similar way. If no insurance, and you end up in  a very helpless state, it will make matter worse and of course, our religion do not even encourage us to be in that kind of situation. As for the investment, Ustaz verbalised that you entrust your money to this financial advisor, and how the money is being roll etc, it’s not your concern because sometimes you do that investment for usage of your future and security. As long as the money you get you don’t use it for some negative things like liquor usage or hanky-panky he said. He did said sometimes ignorance is a bliss. But then again, it draw down to individual. So i had one question, ‘life insurance has death benefit and if an individual passed away, family can claim the death benefit for eg 500k, wouldn’t that be wrong to have  a pool of money due to someone death?’ and his answer was, ‘it is not wrong because that 500k can be given to your dependant and beneficiaries to carry on their life in the right manner rather than you see them suffering and begging money or doing something wrong instead just so you could get money. It is harsh to say that you get that much of money because of someone’s death but just see it from another view. It is okay as long as your intention is right and you’re not doing something against the syari’ah law’. I hope this clarify any doubts we all have but if you heart is still not contented, then you can always seek answer till you feel okay?

This is the based on the Fatwa 2012, views on conventional insurance. Our Islamic scholars have different views on permissibility of conventional insurance. Hence, i won’t deny that if i asked another Ustaz/Ustazah they may be actually against it. So i believed our Islamic scholars may find this a debatable issue. However, the next few views are something that i see similarity in which made me decide to have insurance/investment etc.

• due to the changes of the economic circumstances that require an individual to plan his/her finance and family/dependent needs
• due to demographic trends and family structures
• there can be a hindrance or limited options to low and middle-income level people to do investment
• each individual muslim is responsible in choosing an insurance scheme which best fulfills the requirement of the Shariah, based on the views of the Muslim jurists that he/she is most convinced with.

Therefore, i strongly believe, we all view things differently. Hence, do something you feel it is a need for your security and you are most convinced with.

For insurance nomination, there are two section – revocable nomination and irrevocable nomination. A revocable nomination means upon death, the asset will be counted as estate and be faraidh. However, irrevocable nomination is a valid hibah and the owner is allowed to own the proceeds and do not required to return it to estate to be faraidh. Irrevocable nomination only apply for spouse and children. Nobody else. Once you make that nomination, you can never revoked it. So think twice because there is a case of a divorce couple, whereby the husband nominate the ex-wife and the payout was given to the wife instead. Yet again, Fatwa advice against making nomination with the intention of causing injustice towards beneficiaries (faraidh).

Zakat is also wajib for us, so if you have insurance, you pay zakat according to your surrender value.

Establishing Trust for Dependent with Special Needs

This is a new Fatwa which is not really known yet to the public. Apparently we are the second group to come across it through a small sharing class. However, this is meant to protect the special needs children. Therefore, its meant for parents to do the necessary preparation during their lifetime with the amount of wealth they have to secure the future of their special needs children. This to happen is to actually work hand in hand with Trustee company so as to build a care plan for the dependent.

So that sums up my two-day course. It was beneficial to me and my girlfriend. We had our own discussion and exchange of views to see if what we understood was right. We eventually had a talk about financial talk whereby i will always advice my girlfriend to start all the necessary preparation now to secure her own financial stability as an individual because life is hard. As for now, i shall continue with my own preparation and further seeking of knowledge. As much as i am just 24, its way better to do the preparation now rather than regret later. My dad started all this at age of 18, i wish i started earlier but i am glad i already did. Time to educate my other half because he need to knows about it too.

I hope it did help and thank you for reading nearly 2800 words essay. HAHAHA. After hours of writing this, i deserve to rest because this giddiness is taking over me. Time for me to go slow and just rest more. However, looking forward in attending random courses with my best half. So much love for this lady of mine yet i also need to think of my maid of honour package already.

Lots of love,

Ms SR