Islamic law, also known as Sharia law, is based on religious principles and values that are derived from the Quran and the teachings of Prophet Muhammad. Sharia law provides guidance on all aspects of life, including inheritance and estate planning. In this blog post, we will discuss how an estate is divided under Islamic law in the event of death in an Islamic law country.
I. The Principles of Inheritance under Islamic Law a. Distribution of Inheritance
- Under Islamic law, the distribution of inheritance is based on the Quranic principle of fixed shares.
- This means that each heir is entitled to a predetermined share of the estate, based on their relationship to the deceased.
- The fixed shares are calculated based on the Quranic formula, which takes into account the number of heirs and the relationships between them.
b. Priority of Heirs
- Islamic law gives priority to certain heirs over others, based on their relationship to the deceased.
- The first priority is given to the spouse, followed by children, parents, and siblings.
- If there are no eligible heirs in any of these categories, the estate may be distributed to more distant relatives or even to the poor.
c. Prohibition on Disinheritance
- Under Islamic law, it is not possible to disinherit an heir.
- This means that even if the deceased has a strained relationship with a certain heir, that heir is still entitled to their fixed share of the estate.
II. The Process of Estate Planning under Islamic Law a. Wills and Testaments
- In Islamic law, the deceased can leave a will or testament, but it cannot be used to alter the fixed shares of the heirs.
- A will can only be used to distribute any residual assets that are left over after the fixed shares have been distributed.
b. The Role of Executors
- Islamic law allows the appointment of an executor, or wali, to administer the estate and ensure that the fixed shares are distributed correctly.
- The executor must be a trustworthy and competent individual, and may be appointed by the deceased before their death or by the court after their death.
III. Practical Implications for Expats Living in Islamic Law Countries a. Understanding Local Laws and Customs
- Expats living in Islamic law countries should be aware of the local laws and customs regarding inheritance and estate planning.
- They should consult with a local lawyer or religious scholar to ensure that their estate plan is in compliance with Islamic law.
b. Special Considerations for Non-Muslim Expats
- Non-Muslim expats living in Islamic law countries may be subject to different inheritance laws than Muslim expats.
- Some countries may allow non-Muslims to opt-out of Sharia law and choose to have their estates distributed according to their own religious or cultural traditions.
- It is important for non-Muslim expats to understand the local laws and regulations in order to make an informed decision about their estate planning.
Conclusion: Inheritance and estate planning under Islamic law are based on religious principles and values that have been developed over centuries. The principles of fixed shares, the priority of heirs, and the prohibition on disinheritance provide a framework for ensuring that the estate is distributed fairly and in accordance with Islamic values. Expats living in Islamic law countries should be aware of the local laws and customs, and consult with a local lawyer or religious scholar to ensure that their estate plan is in compliance with Islamic law.
Why Expats Abroad Should Consider Moving Cash and Investment Assets to a Neutral Jurisdiction
Introduction: Expats living abroad face unique financial challenges, including the risk of capital controls and restrictions on the movement of assets in certain countries. To mitigate these risks, many expats choose to move their cash and investment assets to a neutral jurisdiction that is more favorable and provides greater discretion over where assets are placed. In this blog post, we will discuss the reasons why expats should consider moving their cash and investment assets to a neutral jurisdiction.
I. The Risks of Capital Controls and Restrictions on Asset Movement a. Emerging Markets and Political Instability
- Many emerging market countries are vulnerable to political instability and economic uncertainty, which can lead to capital controls and restrictions on the movement of assets.
- Expats living and working in these countries are particularly vulnerable to these risks, as their assets may be subject to seizure or frozen in the event of political or economic instability.
b. Death in Country and Probate and Estate Planning Issues
- The risk of death in a foreign country is also a concern for expats, as different countries have different probate and estate planning laws that can make it difficult for heirs to access assets.
- In some countries, assets may be frozen or tied up in probate proceedings for years, making it difficult for heirs to access their inheritance.
II. The Advantages of Moving Assets to a Neutral Jurisdiction a. Greater Discretion and Control Over Asset Placement
- By moving their assets to a neutral jurisdiction, expats can have greater discretion and control over where their assets are placed.
- Neutral jurisdictions typically have more favorable tax laws and investment regulations, which can help expats protect and grow their wealth.
b. Protection Against Political and Economic Risks
- Moving assets to a neutral jurisdiction can also provide protection against political and economic risks in the expat’s country of residence.
- In the event of political or economic instability, assets held in a neutral jurisdiction are less likely to be subject to seizure or frozen.
III. Examples of Neutral Jurisdictions for Expats
a. Isle of Man
- The Isle of Man is a self-governing British Crown dependency that offers a range of offshore banking and investment services. The jurisdiction is known for its favourable tax laws and strong regulatory environment.
b. Jersey
- Jersey is a British Crown dependency located off the coast of Normandy, France. The jurisdiction is known for its strong financial services industry and favourable tax laws. Jersey is a well-regulated jurisdiction and offers a range of banking and investment services to expats.
c. Luxembourg
- Luxembourg is a popular destination for expats looking to move their assets to a neutral jurisdiction.
- The country has a stable political and economic environment, as well as favorable tax laws and investment regulations.
d. Guernsey
- Guernsey is also a British Crown dependency located off the coast of Normandy, France. Like Jersey, Guernsey is known for its strong financial services industry and favourable tax laws. The jurisdiction is well-regulated and offers a range of banking and investment services to expats.
Conclusion: Expats living abroad face unique financial challenges, including the risk of capital controls and restrictions on the movement of assets in certain countries. Moving cash and investment assets to a neutral jurisdiction can help mitigate these risks and provide greater discretion and control over asset placement.
Expats should consider moving their assets to a neutral jurisdiction to protect and grow their wealth, as well as to ensure that their heirs have access to their inheritance in the event of death in a foreign country.