Answered by Sidi Faraz A. Khan
Question: My parents are considering establishing a family trust for their assets. I’ve been told that if one disposes of their assets to a family trust then there is no need for a will. Is this correct? Do the benefactors of the trust need to be the rightful inheritors? Also, what permission (if any) is required by each person that would inherit from my parents to agree to the establishment the trust?
Answer: Assalamu alaikum wa rahmatullah,
I pray this finds you in the best of health and faith.
A family trust is basically a legal document that allows for the management of a person’s assets, including after death. It is generally set up for asset protection or to minimize estate taxes.
If a Muslim establishes a family trust, he or she would have to create the trust in such a way that it conforms exactly to Shari’a inheritance law. This is very important because if one has a family trust as well as an Islamic will, the trust would supersede the will.
The benefactors of the trust do need to be the rightful inheritors. As long as each rightful inheritor receives his or her appropriate share, their permission is not necessary to establish the family trust. It is, nevertheless, advisable to have all rightful inheritors informed of such a decision, as well as to seek their approval. Estate division is a very sensitive issue, and it entails rights granted to family members by Allah Most High Himself.
Our Beloved Messenger [peace and blessings be upon him] said, “Give the inheritance shares [as delineated in the Qur’an] to those who are entitled to receive them.” [Bukhari]
One should seek help from a qualified Islamic scholar for details on Shari’a inheritance law, as well as from an appropriate lawyer to find out how to create the family trust in accordance with Shari’a law.
And Allah alone gives success.
Faraz A. Khan
Checked & Approved by Faraz Rabbani