Plan Islam » Probate for Muslims

Islamic Inheritance: Disclaimer and Assignment

Ahmed Shaikh — Wed, 28 Apr 2010 01:13:45 +0000

When you have a probate, you have a circumstance where the decedent had the obligation to distribute assets based on the Islamic Rules of Inheritance. In all likelihood, that obligation was not fulfilled and some sort of injustice is being done.

It is now the obligation of the persons receiving this wealth to then distribute this wealth in accordance with the Islamic Rules of Inheritance. Assets will pass based on the state intestacy statute or some other ill-conceived formula, family members can make it right. Simple? Not really. This is true even if everyone agrees redistribution is the right thing to do.

When you receive property, it becomes yours. Then you give it to someone at your own direction, it becomes a gift. That gift may have tax consequences. The term used for such a gift is an "assignment" in the inheritance context.

Another term is "disclaimer." This is a legal "thanks but no thanks." The property is treated as though the person making the disclaimer does not exist. This is generally not treated as a gift by taxing authorities. Unfortunately, in the inheritance context, particularly if you wish to direct inheritance based on the Islamic Rules of Inheritance, you are looking at an assignment.

The lesson here, plan before your death. If your family member is already deceased, you will need to consider the tax ramifications of getting and giving away inheritance to make sure you are following the Islamic Rules of Inheritance.

Guide to Islamic Inheritance up on our website

Ahmed Shaikh — Tue, 20 Apr 2010 16:12:12 +0000

Our guide to Islamic Inheritance is now available on our website. Its lengthy, though not as lengthy as the original that we have been distributing at workshops the past several months. I hope to make additional information on Islamic Inheritance and awqaf available to website readers and subscribers on a continuing basis.

A look back at Estate Tax returns and a look forward to the unknown

Ahmed Shaikh — Tue, 15 Dec 2009 05:04:14 +0000

Congress has not yet established what the estate tax will be beyond the unsustainable "Bush tax cuts." The last year of this regime is 2010. Of particular interest to anyone who wants to plan their estate, the tax is completely abolished that year. In 2011 it comes back to levels seen in 2001 and touches those with assets that exceed $1,000.000.00.

On December 3rd, the US House of Representatives voted to keep the current, significantly less expansive system that touches a smaller group of Americans. The current exemption amount is $3,500,000.00. Since 2001, when the Bush tax cuts became law, the exemption amounts- the amount of assets a person has that is exempt from the estate tax, has gone up. As a result, the number of people filing estate tax returns has gone down. A recent IRS publication examines these returns. Among the tidbits you will find:

The number of estate tax returns fell from 2001 to 2007, from from 108,071 to 38,031.

The number of very wealthy estates, those the publication defines as having more then 3.5 million increased from 9,440 to 14,281.

Limited Partnership interests increased over that time, but not as much as I would have guessed. The amounts held by decedents in limited partnerships increased from 2 billion to 6 billion. This seems like a small number given how much time the IRS seems to spend on partnerships.

Other conclusions were fairly obvious, particularly as it relates to asset values having gone down and what that means for estate tax returns. If you want to read the IRS publication yourself, check it out here.

Posted via email from Ahmed Shaikh’s stream

What is a probate?

admin — Thu, 24 Sep 2009 16:34:54 +0000

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