 Bismillahirrahmanirrahim, wa ala Rasoolillah, wa ala alayhi wa sahbihi ajma'in It's very nice to be back here at MCC. Alhamdulillah I've been here a couple of times and it's always nice to come back and talk about a very important topic one that impacts all of us and One that is generally not talked about very much If you think about this, if you think about our existence It's very interesting Allah SWT mentions that there was a time when we were not in Existence at least in this form this body and There was no mention like the most Wealthy powerful successful person in the world There was a time when nobody even knew that such a person would exist Allah SWT mentions That you know, we think a lot highly of ourself But there was a time when you were nothing and there was no mention of you and there was no mention of You know, you're you're coming in your future or anything. You were completely in as you know in a non-existent State at least in the physical sense and then we live this life and All of us know that at one point we're all gonna die That there's nobody who is audacious enough although there's all kinds of movements today to try to you know extend life and increase youth and You know live forever Everybody knows that all of these things are not gonna work And that at one day we're all gonna die But the difference between the first state and the third state so there's the first state before we exist and then this Existence of ours and then after we die is that after we die our we have the ability to be remembered like you have a chance in this world to Be remembered to do something such that people remember you and Allah that I mentioned this when I could do what I thought of them that they're They're they're I thought they're the legacy that they leave behind and So this is something really amazing that if we think about it We have a chance in this world to do things and Allah will write those things and also The legacy that we leave behind and so that's a little bit of what we're gonna talk about today is how do we plan? for when we are not here in such a way that we Leave a legacy and that we fulfill our religious obligations and that we take care of those that are That we are responsible for all of those things together But since I've done this presentation a couple times or at least discussed this topic a few times here I wanted to first ask you what are Some of the topics you want to hear about tonight so that we can Address them inshallah during this presentation So basically why'd you come here? So feel free and I don't know if there's any way I know there's people that are watching online and You'll share the chat. So you you for those that are online if you want to write into the chat And say basically what do you want to hear about today? Yes Okay, I can repeat the questions Yeah Okay, very good. So there was a there's a question about essentially what happens if you don't create a plan and How complicated? Does that what kind of sort of complicated mess or what happens if you don't create a plan? How difficult is it for the people that you leave behind? Yes? Yes Okay Okay, so practical questions like how much does this cost? How long does it take? You know, I understand we need to do it But how do we go about actually achieving that goal understood like practical? Yes. What else? Okay, the questions. What is the difference between a will and a trust? Okay, so all of these are relatively practical, which is good. Yes Okay, so you the question was how is this plan that you create executed such that It's sort of self-executing in the sense that this is something you do when you're alive But it only goes into effect when you're not around and how do we make sure that that whole thing works? Okay, good. So that's another sort of practical execution question. Let me ask on this side anything else Sure. Okay. Very good. So Property taxes This plan that we create how does it impact taxes or maybe framed differently How can we try to lower our taxes or at least ensure that they don't go up? In this in this planning stage. Yes, anything else? Yes Okay Okay, very good. Okay, so two things there about basically wealth inside of a marriage We're gonna talk about this in essence Who owns what? How do we divide that up what happens if one spouse passes how what is the inter-relationship between the way assets are titled and Beneficiary designations and account and joint titling and property ownership with Islamic inheritance that's one very important a discussion and then also the question about converts and Where do they leave their money and essentially what? Options as a person have if they don't have Muslim Heirs who would otherwise inherit from their mandatory Residuary estate, right, okay good any a cup maybe one or two more Yes Yes, yes, okay Okay, good. So another sort of like just sticking with the theme of practical execution of documents Once you do create this thing, how do you update it? I mean life happens There could be you know marriage divorce birth death change in financial situation change in assets number of things can happen and Naturally will happen over the course of someone's life So how do you update this thing? Very good any last things you want me to cover I think we're gonna run out of time Very good So we're gonna try to do that and I will also mention Two things one sort of first by way of disclaimer I'm an attorney And so whenever you deal with an attorney You know, there's Some fine print Which is basically that what we're gonna talk about is gonna be general General advice. We're gonna talk about High-level concepts. We're gonna talk about Islamic inheritance. We're gonna talk about Conventional estate planning and we're gonna talk about how we bridge those two things together But this is not legal advice for your specific situation. So if you have Specific questions or you want to execute a plan you have to You know engage an attorney either we can help you or somebody else can assist, right? But this is just general advice that we're giving so that way we don't That way you don't sue me. Oh Just so we get that out of the way the second thing is that this conversation is actually part one of the weekend discussion on the topic of Inheritance and estate planning tomorrow at three o'clock Insha'Allah Abdullah and I will be having a conversation with Sheikh Hamza Yusuf at Zaitouna College on This topic of Islamic inheritance law in the United States So that should really be inshallah a fascinating conversation that I'm very excited about and we're gonna talk They are about a lot of the which is very interesting to me that nobody seemed to be interested in any of these topics But the theory we're gonna talk a lot about the why and the how Of Islamic inheritance law tomorrow with Sheikh Hamza So so so I'm gonna potentially skip over a number of those points today So that you can get them tomorrow from him In that conversation and that's a conversation you can sign up for You can talk to me or Abdullah or brother Munir if you're not on their list you can join that Yeah, yeah, I think that's how we're gonna split it a little bit We're gonna talk a little bit of theory because we have to lay the precursor does that go off it But but we are gonna talk tomorrow a lot of theory tomorrow in that session does that go ahead and that's gonna be on zoom So you can register for it and you can get that link and you can You can watch it at three o'clock live tomorrow, inshallah all right, so so We're gonna talk about what is Islamic inheritance law and Essentially what happens when someone passes away and then what discretion do you have in What you leave behind like how much are you allowed to do what you want with and how much is Predetermined by Allah Subhanallah and the portion that's predetermined Where does it go and to whom and what are the rules around that and then we're gonna move to the practice side Which just seems to be the the heavy interest From our audience today, which is we need to understand a little bit about The rules that govern where we live so we have to understand California rules about probate about Intestacy about property law about asset ownership and about community property So obviously you're not gonna become an expert in the few minutes that we're gonna have this conversation But at least you can get an understanding of all of these various pieces that are involved when you think about this Then we'll talk about what are the tools right people mentioned wills and trusts We'll talk about them This are the conventional tools that people use to achieve their estate planning goals Right are these the right tools for Muslims if they are how do we adjust them? You know, what do we do to make them Islamic? You know, we'll talk about that And then basically we're trying to navigate two different legal systems concurrently Like we have Islamic law and we have you know, California law and we have Federal tax law and we have property tax. We've got all these different things We're trying to merge together and come up with a solution for So hopefully by the end you'll appreciate a little bit of the complex complexity that's involved And then we'll have time for questions and answers if your questions have not been addressed but Try to save them for the end just so that we can keep the flow that said if there's something on a particular slide that you Want to like have some clarity about just raise your hand and feel free to ask but just specific to that slide inshallah, so So and then we're gonna have magrim in the middle So I'm gonna try to get more of the theory Completed before magrim and then we'll do maybe the practice after magrim. So what are we talking about when we are covering inheritance law Basically what happens to your stuff after you die? Okay, that's like the gist of it to kind of really simplify it, you know There's terminology in every field and that terminology is often one that we might not be familiar with Both in Arabic as well as in English, okay, so Even in English when you use terms like your estate Right, like that's not a term that we use in our normal Conversation like my estate is comprised of this and I like people just say I have this I have that you know this So just simplify it like what happens to your stuff After you pass away Okay, now what is your stuff? What is your stuff comprised of? Tell me house What else bank accounts what else cars Jewelry Stalks, what else? antiques Personal property right stuff in your house. What else? Yeah, yeah, but we're not gonna divvy that up, right? So so we're gonna Okay, so good so your stuff Includes Anything that can be distributed upon your death that you have some ownership of Okay, that you have ownership of That is something that will have to be distributed Whether it's a lot or whether it's a little now. I'm sorry Pension right 401k right for a lot of people their biggest asset is actually their retirement accounts That's actually the biggest asset for a lot of people right maybe their house Especially in California, right and then their retirement accounts, right and how do we handle those retirement accounts? So So anything that you have a lot of people think this Exercise of a state planning is something that only very rich people should do There's this sort of misconception in society at large But even within the Muslim community, right like I Don't have a lot so therefore I don't need to do much and what we'll see is that no, that's not the case Me maqal lamin who ok after right that there's there's gonna be inheritance It might be of a lot. It might be of a little but whatever you have it's got to be distributed Okay, so these are just some kind of points here That we all acknowledge that we're gonna die that we have something we have some assets and We can't take them with us and Somebody else is gonna get them. So once we understand that then it allows us to prepare and think about this subject of inheritance law Now if you think about the There we go a little slow if you think about the goals and Wisdoms of Islamic inheritance law like why do we need to do this? Why first and foremost? Because Allah subhanahu wa ta'ala Instructed us to do so. This is really really important. It's amazing when we think of religion Normally, we think of like maqrib, you know, Salah reading Quran Zakat, right? We think of the ritual worship as the parameters of what Allah subhanahu wa ta'ala has legislated for us and yet the most Explicit injunction in the Quran is inheritance law This is incredible Right and Allah subhanahu wa ta'ala himself lays out these rules again We're gonna talk more in detail tomorrow, but I just want to impress this point, which is Allah subhanahu wa ta'ala in very Elaborate with a very elaborate scheme in Sultan Nisa ayahs number 11 and 12 Lays out the who gets what and he says that you seek That Allah is giving you a wasiyah about your children and he says wasiyat amin Allah Well, I'll leave when Haleem, right and he says in Allah. I can I leave and Hakeema So Allah's mother then he says these are the limits of Allah to do the law So why do we do this? Why do why are we here first and foremost because Allah has instructed us to and so we want to? We want to follow Allah's commandment and he actually says in this aya That whoever follows this aya comes right after the ayaats of inheritance Whoever follows Allah's rules is promised Jannah and whoever Transgresses upon the limits of Allah is promised hell fire for eternity may Allah's mother save us So this is actually a very very important injunction Now in addition There's other things here Which are kind of tertiary About justice for our heirs we believe Allah says in Allah can Ali man Hakeema Allah's most knowledgeable most wise He's set up this scheme and Allah subhanata Allah if we follow it This is this distribution pattern will be just okay and if you were up to us We might do things that are unfair and you know if you look at modern society people leave their wealth and all kinds of crazy Ways some people leave all of their wealth to one child and and completely disinherit another one because that one You know didn't come visit them for their birthday or something right this happens, right? another sometimes people cut out all their kids altogether and they leave their wealth to a Charity because they think that the charity is more deserving than their kids or maybe their kids have enough or whatever In some cases people leave everything to their pets um Would they do because The pets are the most loyal To the people when they get home every day like who jumps on top of them who's the most excited to see them It's not their kids. It's their it's their dog Right, so they set up a trust and they spend all this money and they're leaving everything to their kids We laugh, but it's real right and so this These rules are from Allah subhanata Allah maintaining family bonds. I mean Has anyone in the audience? Heard of or dealt with a dispute of a family member in relation to inheritance Anybody had like a family fight that they've seen before about inheritance No Yeah, I mean almost everybody has a story of someone dying and then this really Harmonious family that seemed to be totally intact Particularly on the second parent's death just completely falls apart right because of inheritance disputes And so these rules of Allah subhanata Allah lays out because they are going to impact everyone And then we have a massive opportunity as a as a community To build institutions through this exercise of estate planning Most wealth in America is transferred upon death So there's lifetime giving where people donate, but the large large gifts are done upon death And that's where endowments are built and institutions are established and oak off and you know kind of really where you can get Sustainability because you can leave these legacy gifts and the Sharia is going to allow us to do that to an extent and This knowledge is incredibly virtuous right this exercise that we're like doing here of learning about Islamic inheritance rules It's practical, but it's also tremendously rewarding and the Prophet sallallahu alaihi wa sallam says Learn inheritance rules and teach it to others Feina who nusf al-ailm and it's half of all knowledge. He says half of all knowledge. I mean that's amazing and He also said it will be the first thing that will be lifted from my ummah meaning You're not going to hear much about it Right like it's not going to be the topic of your standard Juma khutba It's not going to be the topic of your usual You know Halaqa True or not It's like have you heard khutba's and discussions and Halaqa's on this topic or Right most of you have been going as much as for your whole life Right how many times have you heard this topic discussed almost never it's amazing again This is the prophecy of the Prophet sallallahu alaihi wa sallam. We'll talk more about this tomorrow So I'm going to skip over that now Defining your estate so defining your estate so we're moving now from the from the background to the to the What are we covering so we said defining your estate is whatever you own Whatever your stuff is that's going to be the topic of our discussion is when we think about estate planning That's what we're planning now There's a really interesting a There's a really interesting basis for this notion of estate planning in the Quran itself which is in surat al-kaaf Where you know which we read on Fridays, so hopefully you read it today The Prophet sallallahu alaihi wa sallam he says about surat al-kaaf just on the side right that this whoever reads it It's noor it's light For that person for the week like it's your light for the week and Whoever reads and memorizes the first ten ayats another narration the last ten ayat its protection from the Jal So in surat al-kaaf there are a number of stories one of those stories is the story of Musa and al-khidr one of the lessons in the story of Musa and al-khidr is that they were traveling and they came across a wall and They were in a they went to a town and they asked the people for some food And the people rejected they were stingy about a new day for him a Fawajad a feeha jidar and you read a young couple of a comma So then they found this wall and al-khidr rebuilt the wall the wall was falling down and al-khidr rebuilt the wall So you guys know this story so musa alaihi salam Says like you know you can charge them right like you did some work for them here Should maybe we should get paid for it right and then that's the end of their journey And then al-khidr explains later that Why did he do that? Anybody know there was a treasure for orphans Right, what kind of a who can do that? There were women jidar of a kind of the gullamani yeti mani film a deity what kind of a who can do that? What kind of a boo homa saliha? So there was the father. What did he do? What did he do? He buried his wealth Okay, he buried his wealth. He must have realized what? He's gonna die and so his Act of estate planning to protect his wealth for his children especially from these greedy people was that he buried it and The Quran describes him as a righteous person and then Allah swt took care of those kids sent musa and al-khidr and Rebuilt the wall and then hopefully when they got older than they're able to you know procure their wealth So this idea of protecting your wealth So that the next generation can receive it and benefit from it not just the next generation But your dependence and your family this is really what we're thinking about when we are engaged in In estate planning so now What happens when a person passes away? Like what is the order of distributions when a person passes away? Let's say if I were to pass how what are the what's the first thing that's supposed to happen? Loans have to be paid. What happens even before that? What like naturally? What's first? Burial right the very first thing is you got to have money to get buried now. I have to allow our communities are generous and Typically this happens like either the family will pay Or the you know the the muslim community will pick it up But it is the responsibility of the person right and so part of planning is Ensuring that you maybe have set aside money to make sure that those burial and funeral expenses can be covered How much does it cost to die in pleasant in? 7500 so it's like double Phoenix So I'm visiting from Phoenix But that makes sense right it costs like double to live here and double to die here so so That's not an insignificant amount of money right it's not an insignificant amount of money for some people They would want to make sure that that money is allocated such that they don't become a burden on their remaining family members So you don't have to they don't have to cover those costs or the muslim community doesn't have to cover those costs So part of this proactive planning is first to make sure that these funeral and burial costs are covered Right, so that's what comes out first from the estate of the of the person What's second? What's next? debts Okay, so Money you owe Okay, actually money that people owe you as part of your estate if we go backwards, right? So, you know if Abdullah owes me ten thousand dollars. That's part of my estate That's part of the money that's supposed to come in but if I owe Abdullah ten thousand dollars That debt has to be paid before any of my wealth is given to other people Okay, and this is really important because we live in a society where people are really drowning in debt Okay, so like There's every level of debt that you can imagine right there's credit cards. There's consumer debt There's student loans. There's car mortgages the car payments. There's a home mortgage there There's you know There's so many different kinds of debts and then there's personal loans that people might borrow from other people, right? So we have to really think about how do we ensure that our debts are repaid? This again requires some level of planning because We're all gonna die. We just don't know when right? So if someone's like, well, you know, I'll get around to it one day In shalom we get around to it, but perhaps if we don't have a plan that would be very problematic So we don't want to be and his and and the Prophet's also would actually Not pray Janaza over someone who had debts outstanding in one narration that even the Shahid The martyr who gave up their life. I Mean is the highest pinnacle of sacrifice That person's sins are all forgiven except what? Debt that they owe that's not a sin, but their debts are not forgiven, right? So you're allowed to have a debt We're not talking about permissible impermissible about none of that stuff We're just simply talking about money that you owe people money. That's owed needs to be cleared, right? So so that's the second thing Now there's basically two classes of debts. There's debts that you owe to people Those have to be cleared and then there's So let's stop here cuz they said Salah is right after So we'll pick up with the topic of debt and then we'll move to the practical Considerations right after Salah Okay, there were a couple more I'm just gonna mention them that people asked me a mohrib so that if I forget you can remind me They were about having assets overseas, how do we account for things that are you know when we say our stuff is Our estate is our stuff And the study cat like what about all the things that a person may have outside of the United States? And also, how do we account and what type of planning is required for children with special needs? So we'll talk about that as well inshallah So We said that We established that this science of Islamic inheritance law is one that is relevant to all of us that will impact every single one of us in Multiple ways either as an heir of somebody else's estate or as the decedent who will leave their own estate And we talked about why we then need to learn it. What are the objectives of the science? What are the virtues associated with it? And then we moved to a discussion of Islamic inheritance law as From Allah subhanahu wa ta'ala himself and then we started to move towards the practical still within Islamic inheritance laws framework, so we haven't come to The integration piece yet about California and living here as Muslims in America We're still on a little bit of theory with respect to Islamic inheritance law So we said the first thing that happens after a person dies according to Islamic inheritance law And also according to state law. This is actually matching Under state law as well is that the first thing you have to cover and the first cost that comes out of an estate Our funeral and burial expenses the second our debts and we talked about debts that a person owes and We briefly right before Salat and muqtib mentioned that there also is a category of debts known as debts Huku Allah or debts to Allah Now what is that referring to? What do you think that's referring to right so basically religious obligations that you had in your lifetime that you May not have fulfilled Okay, this is a category of debt For example the most common example is What? The maybe even more common than that Hajj right so Hajj is an example Where it became obligatory upon you because you have the financial means you're planning to go But you died before you were able to go right so that was a debt then that you owed to Allah, right? and so I think specifically about Hajj that Realizes in every month have allows for the payment on hajj. Do you know I? Believe in Hajj and the other the other religious obligations about Salat and such there's some discussion between the madhhab But basically if you have missed religious obligations you can Pay the the the dew or you can stipulate in your estate plan that I missed This is a cut or I've you know been accumulating this the cut that I'm supposed to pay and I haven't paid it yet or Whether it's fast or Salat according to some of the madhhab and Hajj You can basically stipulate those things those things will come out of your wasiah share Okay, so I'm defining these as shares. What is the wasiah share? The wasiah share is basically the one-third that is discretionary up to one-third of your wealth after you pay the funeral and burial costs After you pay off any debts of now. Let's say we started off with a hundred dollars We had five dollars of funeral and burial costs We have five dollars of debt that I had to pay now. I'm left with how many Fridays want to make sure we're still still here. We've got 90 left. I'm allowed how many as a discretionary bequest And this will see a share Yeah Confident yes, okay, so I have a discretionary portion I'm allowed to utilize to give to anybody who's not going to inherit in the Residuary share in the farah. Okay, so basically whoever's not going to inherit from category number four I can use in category number three that could mean What type of examples? What are some examples? What would you use this will see a share for? Sadaqa right you can use it for Sadaqa Jaria right the famous hadith We're all familiar with that after a person dies in Qatar Amaloo right that person's deeds are finished except for three things and among them are Sadaqa Jaria right now especially for high net worth individuals Okay, because we'll come to the hadith We'll come to the hadith But basically if you have a lot of money and your family is going to be okay And they're going to have enough then you'll be more inclined and you're more encouraged to give from this discretionary portion If you have young dependence, it doesn't make a lot of sense to give your money to charity when you have You know a three-year-old and a four-year-old and they have to live their life Right, so this is something that perhaps changes over the course of one's life But I think it's incredibly powerful. I think this is an opportunity for Muslims in America Especially those who have adult children who's Who are financially stable and independent themselves to utilize their share to build endowments and the reason that the Giving from the Waseeah and this bequest is more powerful than lifetime giving Is what I'm curious if anyone can get why do you think it's easier to do this? There's a couple reasons. There's like a lot psychological reason. There's a practical reason. What do you think? Yeah, it's harder to part with your money when you're alive, right? So frankly if you give in your life, it's more it's it's probably more rewarding because you're actually You know distancing yourself from the money and that's hard, but there's another reason which is that? Upon your death you have access to give more Namely your retirement accounts Okay, so you can't today if you wanted to give all of your retirement accounts to the message, right? There's not an easy tax-efficient way to do this Okay, but upon death you can So it opens up for a lot of people a larger pool of assets potentially illiquid assets Maybe the home they're living in maybe their 401k or the retirement accounts or so on and so forth So on death your estate might actually be larger than what you have access to on a day-by-day basis Okay, so this is a powerful Opportunity and then what's left? Whatever's left after all of these things which is going to be Whatever it is is going to go to predetermined heirs that the Quran by and by and large most of the rules come directly from the Quran itself This is what makes this field pretty interesting is that there's not as many differences across Madahib Because the rules are so unambiguous in the Quran itself. There are just differences, but they're not so significant So talking about the Messiah, this is the famous hadith of Sa'ad bin Abi Waqas in which he Tells the asks the Prophet sallallahu alaihi wa sallam that I have Money now. This is the second example of estate planning. We gave one before which was what? No, the example of estate planning in the Quran we said Where that righteous man in sort of calf planned for his children. He was planning as a state here again Sa'ad bin Abi Waqas Is coming to the Prophet sallallahu alaihi wa sallam and what is he doing? He's planning he thinks he's about to die or he's sort of nearing death and he says to the Prophet sallallahu alaihi wa sallam Can I give two-thirds of my wealth to charity the Prophet sallallahu alaihi wa sallam says no, you can't He says can I give half? He says no, you can't and then he says how about a third and he says a third What's the do to kathir? Okay, and even a third is a lot Okay, and hadith continues that it's better for you to leave your dependence To leave your your children and your dependence not reliant on others Okay So if your children are young and such and dependent upon you it's better for you to leave your wealth to them But again if the circumstance is such that a person is high net worth They're gonna be subject to a state taxes anyways or their family is you know well off Or they don't have Islamic heirs then definitely this is gonna be a really good opportunity to use And this is a nice The nuance of the sharia here that you do have some portion which is discretionary But most of it is going to be non discretionary per the rules of Allah Subhanahu wa ta'ala also this allows you to give to more distant relatives So you know oftentimes when the wealth was being distributed there are perhaps like cousins and Especially where the families were living a lot closer, and there's all more distant relatives This is an opportunity to potentially give to relatives beyond the immediate sort of nuclear family that usually inherits as well Now with respect to What's left most of it comes from aya number 11 and 12 of so is Anissa Okay, so I'm gonna just derive a few quick principles From the verses in which Allah subhanahu wa ta'ala mentions you'll see come Allah who fee all adikum Did that carry myth lo have the own thing the very first principle is that is what It's number one on the screen Right, it's a two-to-one ratio of male to female. Okay like for similarly situated Uh Levels so basically when we're talking about children Okay, it's Two-to-one boy to girl. That's the very first principle mentioned in the aya Allah is giving you a we'll see you with respect to your children, and then he says that can it be so hell on saying, okay This is this will be one of our conversation points for tomorrow because this is a question that a lot of people ask Is this rule still applicable today? Yes, right. This is the Quran. This is unambiguous Quran, right? And so a lot of people Have questions about this verse and the application of this verse, right? What's important is to understand that these rules I'm just gonna give one point here these rules apply to what you Leave behind on death so if someone Loves their daughter and wants to make sure that their daughter has enough What's a simple example of something they can do for their daughter? Hey, but they can give whatever they want in their lifetime, right? They can do whatever they want in their lifetime. This rule applies upon death. Okay, that it's two to one upon death And if you are interested more in this discussion than inshallah tomorrow, we will dive deeper into this discussion Thank you If you only have one daughter, what does she get? I'm sorry if you have two daughters Two daughters, no sons. They get two or more daughters. No sons. They get two-thirds of the entirety If you have one daughter she and no sons. She's gonna get half, okay now Then we move to the parents For those that like haven't studied this verse I remember like really appreciated it. This is so amazing like the Quran with such precision with fractions and in fact Algebra was Invented in part to solve Islamic inheritance problems Like this is amazing like our tradition is so rich Right that these rules that we find in the Quran that you know our scholars and mathematicians and scientists They utilize them to benefit humanity So now we go to parents Basically, if you have Parents who are living They are most of the time going to get what? One-sixth, okay, so if your parents are alive most of the time they're going to get One-sixth. This is very different from state law Like in America if you die and you have a wife or you have a husband or you have children. What do your parents get? Any state No, let's assume you don't have any plan Huh, do your parents get anything? Yes. No There's no idea like this I this idea of like you have this indebtedness to your parents and that you have an ethic to Take care of them and all of that like that doesn't exist in this society Right the intestacy rules the default state laws are Intended to match what people would want like in other words the the law is created by whom by people the legislators who are Sort of creating a default system that they assume. This is what most people would want What would most people want most of it to go to my spouse or then to my children, right? Like nowhere in there is this conception that you have an ethic and a duty to continue to take care of your parents after death So this is like very different However, there are situations in which if you don't have children or there are no siblings The mother's share increases she gets a third if there are no children, but you have Siblings meaning two or more than the mother's share is going to drop back down to a Sixth, okay. This happens after me body was he had to use he be ha Odein After the was he a and after the debts after the debts and the was he have been paid then we go into this Distribution and then a lot of others is about you come up now Don't I don't know that your parents and your children you don't know who would have more benefit Like you don't know if it were up to you you might think well Maybe I should give more to my parents because I owe them everything or maybe you could make an argument that my kids are young I should give more to them. They have the rest of their life in front of them You can make all kinds of different arguments people can argue anything, right? Are there any lawyers here? Yeah, there's a couple. I shall know not raising their hands, but right so these guys can make arguments about anything, right and Allah is saying that Fariha, but I mean Allah in the law kind of Aleem and Hakima These are rules that Allah said the most knowledgeable the most wise has sent forth and their mandatory, right? In other words submit to them like this is a test a lot of people are like I You know That's good theory, but my situation is kind of different. You know my family's Special right? No, this is Allah saying that these rules apply to everyone Now when it comes to spouses spouses also have a share Well, I come with her as well as your wife. He'll let me come with no one else. I'm coming with no one else Well, I'll come with a robber. I'm not talking in body. What's it? You seen a BHA or Dean? by the way, if anyone really wants to test the the Accuracy or the the ability of a hafiz you ask them to recite these eyes This is like the hafiz test right to be able to recite these eyes because they're tricky, right? It's all fractions. So The if a married woman passes away without children What is the husband get and if she has children he receives Fala kumrubu'u min ma'atarakat right a quarter What does she get what is the widow get? Wala hunna rubu'u min ma'atarakatum illam ya kullakum walad fa'in kana lakum waladun Fala hunna thumnum min ma'atarakatum If you pass away and you are survived by your wife, what does the wife get? I mean the answers are on the screen, right a quarter or an Eighth so what are you noticing in the two scenarios? Right the husband actually gets double the share in this case of what the wife would get Respectively from each other's estates We're gonna talk all about the who owns what and how it what is all of that but still in the realm of Islamic inheritance rules if Aisha dies with You know a hundred dollars. This is how her estate would be distributed and if Ahmad dies This would be how his estate would be distributed Meen ba'adi wa siyyat in Tulsuna Bihar Odain again after The debts and the wa siyyah have been paid All right, and then we have the situation of the kalala Who's that? Who's that? Who's a kalala? This person doesn't have doesn't have kids and Ascendants and descendants there's different definitions of who the kalala is right and there's two verses about kalala Let's skip over it inshallah in the interest of time most people that are gonna engage in this planning are gonna either have kids or are going to have parents or such So so we're gonna skip over it, but we can come back to it at the end if we need to What's interesting about? What's interesting about Islamic inheritance law is that? inheritance law is basically looking backwards after death and estate planning is looking Prospectively so when what we're engaging in is we're trying to plan To make sure that these rules are applied after we die right so so far. We've been talking about Ahmed died What do we do with his wealth first? We figure out what he owned then we figure out who were the people that he left behind and then we figure out How do we split it up? Right? That's what we've been doing so far now. We're gonna move to okay. Ahmed is still alive So now we want to try to plan to make sure that Ahmed stuff gets distributed the right way while he's still living Okay, this whole question of execution and such Yes Yeah, that's correct. Yeah That's correct. Yeah, what he a boy who you could leave one of them as soon as right? So this this notion of two to one doesn't always apply. There are situations in which the Female gets more than the male double the male there are situations in which they inherit equally and there are situations in which I'm sorry There are situations which the male gets double of the female there are situations in which it's equal and there are Situations with the female actually gets more than the male. The father becomes Aslaba, right? So he's gonna get residuary He's gonna get what's left so it's gonna depend upon who else is in the equation Very good, so so it wouldn't be five six that would be left over but there would be two-thirds potentially each Let's assume that let's assume there's two parents, right? They're gonna get one six each So what happens to the rest right the rest is a category known as? Aslaba Usually which are gonna be residuary heirs So we're gonna apply all these Quranic fractions and then we're gonna come up to a total that total may or may not be one Right, it might be more than one in which we would reduce them But more likely than not it's gonna be less than one. There's gonna be some leftover Okay, and so there's gonna be a left over which is then going to go to those residuary heirs Let's take some examples. I think this will help Okay, so we've got Hamza Hamza dies he's survived by we dad and may moon and Suleiman and Dua Okay, so he's got a wife Who is we dad? He's got a mother Who is may moon and then he's got a son Suleiman and he's got a daughter Dua Okay, all right, so What does we dad get six eighth what one eighth the wife gets one eighth because Cuz kids right he has kids she gets an eighth, okay May moon ah is Mom the parentheses is supposed to give you the relationship Okay So may moon that gets what? One-sixth right remember the parents get one six. Okay, what do you have a healy-coly-wahid and who must do this? Suleiman and Dua So we've got a son and a daughter now. What happens? Was this one of the scenarios that we covered in the ayah? Did that carry me to have the one thing okay? So basically they become a suba they take the residuary at a two-to-one ratio So we give the one eighth we give the one-sixth of the what's left We're going to give two-to-one boy to girl Okay, I see some like I haven't done math in a long time looks Okay, so This is just a refresher. Okay. Now Hamza dies again and this time He's got his His wife we dad. He's got his father Faris and He's got Suleiman Dania and so what happened is He's got he's got an extra daughter and then this time. It's his father and not his mother Okay, so who gets what in this scenario? What is the wife get does her share change? She still gets the same share. Okay, and The father One six the same as the mom right same share as the mom would have gotten and if the mom is there She's also going to get one-sixth. They're both going to get one-sixth if they're alive now in this case We have two daughters in a sign So who gets what how many shares do you make at that point? Four shares you're going to make four shares. You're going to give one fourth Two each of the daughters and you're going to give two shares to the son of the what's left again I mean Vadi will see it to you see be how they after the funeral burial cost the debts And we'll see ya are given of the what's left. We're going to pay those first shares Chronic shares and then of the what's left from there. We're going to do two to one boy to girl all right, so Hamza we dad died this time. Okay, so So this time the woman the wife died and she survived by her husband and Her father and her mother So who is she not have? He doesn't have children Okay, so what's missing from this equation? What do you need to answer this question? You need some knowledge of Whether she has siblings or not. It's very good, right? So you need to have the full picture Okay, so let's assume Let's assume that this is the full picture Okay, this is the full picture. There's nobody else involved. This is all she's got She's got a husband no children. What does the husband get? Okay What does the husband get okay, how many yeah, how many fractions are there in the Quran? This is a trivia How many fractions are there in the Quran? No, that's too many I'm just actual fractions How many is it six, huh? Eight I Forgot you can double check for me. Okay We have one half. We have one third. We have one fourth. We have one sixth and we have one eighth and Two thirds and two thirds. Yes. Okay. All right, so So in this case the husband gets a quarter. What is the father and mother get and Okay, I'm gonna cancel this example Okay, because this example actually gives you This example is intended to show you that there is some Nuance to the rules. This is actually an advanced example. Okay. Yes Length of life of the person More than the gender in in some cases perhaps So so the second generation that's they of parents that they are not expected to live long Gets always less than the husband and much less than the children So this is I think because we are always seen as you know, we We We do with the generation with the genders You know bias to gender but in many cases the woman if it's a daughter, for example receives more than the father With the husband, okay, so so you mentioned we're gonna skip this point Yeah, I think one good point you're making here is that there's a lot of discussion about gender Basically the the rights are Based upon proximity of Relationship that's actually how the the shares are allocated. It's based on blood first and foremost, right? This is very much Blood relationships the only non blood relation that inherits is what? spouse right and we're basically looking at proximity and going more distant when it comes to inheritance rules, okay? Table that third example. That's a level 2 example. Okay, so that's that's for For after you've studied enough so we can go into that example, but the first two are straightforward enough, okay? so Can we close that door? So now let's move from theory And and do understand that I wanted to go through those rules because I wanted to give you an appreciation for How rich the tradition is and also because it's so virtuous to learn Islamic inheritance rules The prophet says may you did he learn you fuck the orphan Dean if Allah intends good for a person He gives him a deep understanding of the religion So we want to like try and always be students, you know If you haven't learned the new subject, this is an opportunity to learn a new subject and really Dive a little deeper now. We're gonna transition to we live in America and You live in California I'm an attorney In a state planning attorney that's licensed both in California and Arizona. So basically my job is to create plans for clients that sort of Try to achieve these goals right now try to an integrate Islamic inheritance into the plan So what does that mean in order to do that? You've got to know a few things First thing you've got to know is who owns what? When is this relevant? Remember we said that the state is defined by your stuff Okay, so is it an easy question to define what is yours? When is it complicated? When is joint right? So if you're married and you've got two names on an account Does it mean it's 5050 Not necessary, but that's what it says Right, so what happens is when people come and start these engagements with me Oftentimes, they're like well, I've got this asset with my son I just added that name on like you know for good I thought it was a good idea and this one I added my daughter because I thought maybe that was a good idea and This is jointly titled but this one, you know My husband was traveling so I signed it myself and this one the husband says my wife wasn't there So I signed that one myself and this one is joint and it's all kinds of different this one this one We didn't really do it intentionally and we've got all kinds of different assets with different titles now the title is going to be super important when analyzing and The reality might be something different the intention might be something different and we've got to reconcile those two things together Okay, again, this isn't going to give you the solutions to everything. It's just gonna it's gonna bring to your awareness that we have to first define what is ours and Unilaterally inside of a marriage you can't do that So if you're married and You came to me and said I would like to create my estate plan and 100% of the stuff that we own is actually mine Right, even though it's got her name on it or even though it's got his name on it It's actually mine. So go ahead and make it follow Sharia Because it's mine. I earned it. You know, I just added his name or her name for whatever. Can you do that? Not here Right, so so you've got to be on the same page if you're married a you could do this if you did it before you got married how Pre-nup right so this is a little bit to a question that was asked earlier as well How do we manage marital finances right? We can do a prenup to establish what's his what's hers From the get-go and we can operate under a very clear um Regime now most people don't do that, but that's actually a good practice It's a sound practice, and I think it does eliminate a lot of ambiguity But we have to understand secondly. What's community property? I? Think that's number three on the bullet designation, but I mean that's a good question. It's it's a little bit of a digression, but it's related so I'll answer it Is it Islamic? All right, so So I think Islam encourages the writing of contracts Okay, this much we can establish from the Quran itself The Quran itself encourages the writing of contracts. We have a proof for that Allah says yeah He will leave in a minute that the day unto me day need a jilim with someone fuck to go when you're writing a debt contract And when you engage in it when you're borrowing money write it down and have two witnesses Okay, the Quran says to have witnesses and have a written contract. Why because people fight about money right, and so we want to eliminate that and a marital contract doesn't require a Written contract. I certainly doesn't require a prenup, right? But a prenup is a contract in which you can clarify How you are going to organize your finances inside of that marriage? It can include things like the mahar right what the mahar is and what's oh, so it has Islamic dimensions to it it will clarify the what's his and what's hers and It can clarify What happens in the event of divorce? Okay, and what happens in the event of death those are things that can go into a prenup. I do think it's a good idea Okay, I think it will very much clarify ownership of assets and Allah forbid if there is a problem in that marriage it will mitigate so much of the dispute and cost of battle that is so common In any divorce like everybody goes into into a marriage happy, right? But if there is a problem usually it's not a happy ending, right? It's usually acrimonious right to some level and so you can avoid much of that by having Defined everything Objectively when everyone was happy. Okay, so it's it's it's definitely something good to do Is it Islamic? It's a contract that you are, you know Entering into and so you can make sure that it is Islamic like you can put Islamic terms into it to I don't Just mean like put this man at the top. I mean I Just mean that the contract itself will be within the framework of Sharia Like you are defining your legal obligations inside of the marriage and you are determining what's going to happen in the event of the marriage failing So I think that's something that more people should do now Related to that What's community property? What's community property? Who knows what community property is? None of you Live in California What's community property? Yes, yes Yeah, basically Whatever wealth is acquired inside of the marriage is considered community Except for a few exceptions namely what you receive as a gift or what you receive as inheritance Or what you came into the marriage with Okay, so you get married you got ten dollars Okay That ten dollars is yours at separate property But if that ten turns into twenty or let's just forget about the what it turns into now You have a job and you made ten dollars and you deposited that ten dollars into a separate Bank account only in your name. So Ahmed works and Sara is at home not working Ahmed earns ten dollars and he puts that ten dollars in Ahmed's bank account Who owns what? It's community property, but it's an Ahmed's bank account Does it matter? not for the purposes of of Distributing the community property meaning in the case of death or divorce right the spouse has a claim on half of that wealth Okay, now this is an important point related to prenups and Related to Islamic inheritance and related to the rights of women in Islam in Islam Let's invert the example. I just gave and say I shall works Did we use Aisha was just the same example was the girl Aisha a minute ago. It was Sara. Okay. All right So I see who's listening so Sara works Okay, and Ahmed stays at home Ahmed is playing video games all day Sara is a physician and she's making like three hundred thousand dollars Ahmed is chilling at home playing video games Sara earns three hundred K under Islamic law Who owns what under Islamic law Sara owns what? $300,000 okay What does Ahmed have under Islamic law? The video games right he's got the video games. Okay. Now. Let's apply California community property law Progressive California, okay, let's apply California property law to this example He owns the video game, but what else does he own? $150,000 okay, so now when we're applying this is really important to understand like it's under Islamic law She's got 100% under is and he's got zero, but under California rules. It's 50 50. Okay, so Would it have been good for Sada to do a prenup Absolutely, right it would have made a lot of sense right For her to do the prenup now what are Sada's options at this point if she wants to get Wants the assets to be hers She can do a post-nup. She can do a property agreement, but he's got to agree Which is like he's playing video games not gonna agree. He's chilling. Okay, so So That's why the prenup is so valuable because you've said it in advance and you get to Define it now if you haven't defined it you both have to agree and you can memorialize that agreement in the form of a post-nup Or a transmutation or a property agreement, but again both spouses must agree. Okay Now you also have to understand what the titling of the assets is so for example you have a home and you have it as joint tenants with the right of Survivorship community property right of survivorship you make this nice Islamic will you go to a lawyer or you use one of these Islamic, you know websites to make a will and It's got you know I'll have a stamp on it and says this minute at the top. What's gonna happen on the death of the first spouse What's gonna happen? Okay, one person said probate one person said 50% The entire house goes to the survivor. Okay, your will did what? What did it accomplish? Nothing, okay, I understand this point your will did nothing. Okay, your spouse got a hundred percent With or without your will no probate, which is good. So we don't end up in probate Which is the court system so so we don't end up in the court system But we also don't end up with the will actually doing anything Okay, so we end up with the spouse having a hundred percent Some people say that's not a bad result my spouse nice person, right? They obviously they'll take care of it Shala, that's fine, right, but there's a possibility that the spouse doesn't Fulfill the obligation. There's a possibility. What are the number of possibilities? The spouse might be grieving might never get around to it despite spouse might get remarried, right? If that spouse gets remarried then potentially the new spouse might get added to the title and we end up in this chain of title where the house ends up going to Second spouses children third-party just not where it's supposed to go, right completely. These aren't super far-fetched examples, right? so so so Just understand that The titling is super super critical when you engage in a state planning, you know, so many people are like Can I just do a down can't the must you just have a Download template that I can just print out and I can do it like why are we making this so complicated because it's complicated, right? You have to take into account all these various considerations if you want to do this correctly, right? The boilerplate stuff might work for very simple cases, right? A person's not married. They don't have a lot of assets, right? Fine, maybe it works Okay, but if you the more you have the more kind of it is important to look at this holistically and get expert advice Now let's assume You don't have it also beneficiary designations What is the beneficiary designation? That's what controls more than a will and even more than any trust or anything if you don't update your beneficiary designations That's the person who's going to get the assets Okay, so if you've got your you know one child or you've got your ex-wife on the beneficiary and you never updated it That's a big problem, right? Your estate plan doesn't work unless your beneficiaries are titled correctly So 401ks, especially retirement accounts even financial other accounts brokerage accounts a lot of them now have Options to name beneficiaries transfer on death pay-on-death. There's different terms for these things Very critical that we designate them correctly In the absence of a plan the default state rules would apply Okay, so now let's assume someone dies. They don't have a will. They don't have a joint property They don't have any beneficiary designations. What's going to happen to that property? Probate and state decides so the state's not going to do something different every time It's got a bunch of rules and those rules would apply are those rules based on Sharia Obviously not right. Also, that's when probate kicks in What's probate anyone dealt with it? Yeah, anybody dealt with it. Nobody's dealt with it. Well, that's good Because it's a inefficient Process anybody dealt with like California bureaucracy government systems and stuff like can you imagine this probate court system is very antiquated system? And it's expensive and lawyers actually in California are allowed to charge percentages of the estate Okay, so they can just charge a percentage fee So your estate even if it's not super complicated Can be sort of eaten up pretty quickly in legal fees And court fees and time and all of this right some people describe it as a lawsuit against yourself okay, so Most people that go to an estate planning attorney like my clients that are not Muslim just basically 100% of my clients Want to avoid probate? Everybody wants to avoid probate whether you're Muslim or not Muslim but if you're Muslim there's like a An additional reason like why in the world do you want to have this like Judge have anything to do with your estate or this probate referee or whatever like we don't want other people involved in our stuff Especially people who don't know anything about us or that don't know anything about our faith or whatever now The beauty of living here is that the state allows you to do whatever you want if you take the proactive steps to do it These are default rules These rules will apply if you don't proactively make a legally binding plan You have to meet certain requirements. You have to do the work You have to get the witness, you know You have to meet all the requirements if you do then you can basically Bypass the system and you can do whatever you want again if you're married you both have to agree You can only do perhaps your portion of the estate otherwise now You also have to consider taxes Okay, there's different taxes. There's taxes you pay in life. I mean there's income taxes There's taxes when you sell an asset those are called capital gains taxes There are property taxes anybody heard of prop 19 You guys following the rule change a few years ago Those of you that have houses in the Bay Area That you bought a long time ago Okay, those houses have a low property tax basis, okay, and if One of the things that most people want to avoid is having a reassessment To fair market value. So like you take an example of somebody who bought a house In the Bay Area, let's say 30 40 years ago for like $200,000 and now it's $2 million, right? Their property tax basis is extremely low and their neighbor might be paying a lot more So what does the government want? It wants to reassess it wants to get that higher property tax You want to try to lock in as you know that low property tax basis So this planning also now is complicated by the fact that there was a new law a couple years ago That made this planning a lot harder where the state is trying to reassess the property taxes on death With a few exceptions and so you want to consider those exceptions if you have appreciated property and for someone who is high net worth There is estate taxes as well estate taxes is a 40% tax on death But only for high net worth individuals Who are above the exemption amount and the exemption amount is very high? Currently it's about 13 million dollars. So assets that are above that are taxed at 40% is a massive tax So it doesn't impact most people, but it does impact people And so if that impacts you then certainly you would want to think about it And that is a moving target depending upon which party is in charge It'll either go up or down the the exemption amount, right? So so that's something to always sort of keep in mind All right, so what are so any questions on this slide because this is a really important slide These are the things we have to think about again We're not giving you the solutions to your specifics things I just want you to know the frame of like what you have to consider when you're doing this planning Okay. Yes Yeah, so I'll repeat the questions. It's okay. So the question is I'm gonna frame your question slightly differently to make them more generally applicable Can we do planning that? Avoids reassessment essentially right that's that's the question and the answer is in certain cases Yes, right in certain cases there's gonna be scenarios where you cannot right because that's how the law is designed It's not intended to just go forever but there are plenty of planning opportunities where in which prop 19 is a very very important consideration and a well-drafted estate plan can Can account for that and it should account for that I think So These are Documents that I think everyone should have Okay, so when we think about an estate plan these are documents that I think everybody should have a Will everyone's familiar with Now the will does a couple things if you have minor children That's where you name guardians A love forbid if something were to happen to mom and dad The last thing in the world that anybody would want for their children is to end up in the foster care system Right, that's not that grant us all off you and protect us That's super important. You've got to designate a guardian if you do nothing else I mean like we're talking about wealth and inheritance and all of that But this is just like just basics if somebody has children that are minors You've got to at least make sure that the guardianship piece is taken care of The will as we said might not solve your inheritance problems because if you've got joint assets And you've got beneficiaries and all that stuff It's largely gonna go to the survivor or whoever's named there But at least it will do the guardianship and it might solve some people's inheritance issues as well, especially if you're not married and you don't And you don't have already beneficiaries on there power of attorney and health care directives are Important in the event of incapacity most people don't die suddenly so this whole time. We've been talking about post-death But especially with advanced medicine people tend to live longer and they tend to also have a period of incapacity Like most people don't die suddenly so planning for that is important and planning to avoid disputes among family members over health care decisions is also really important and Taking into consideration. Are there any physicians here? Was oh, this is like a different audience. I used to everybody's in tech here so The normal like much of the group audiences like you know full of doctors so Everybody's probably seen some family member or Distant, you know friend or whatever where there's this end-of-life discussion and what should we do? Do we pull the plug who's in charge who's making the decision like all that kind of stuff? We would try to do in advance to try to Mitigate disputes and use that time for Dora and such instead of disputes and then a trust Okay, the trust is generally going to be a better solution for a state planning So this was a question that was asked I think maybe three or four questions at the beginning were about trusts and I think that trusts are a much better solution for Really anyone in California because probate is very expensive Who has any sort of savings but for Muslims in particular? Because you want to avoid the probate system and you can determine who owns what like in this inside of that trust So let's talk about trusts What is this trust does anybody have a trust? Good, some people have trusts. Okay, like it's not just something for super rich people Like that's what it used to be maybe or it's considered or that's what you know comes to mind that you know This is something for the ultra high net worth. Now notice. What is my title revocable living trusts? So there's all kinds of different trusts. There are revocable trusts and there are Irrevocable trusts. Okay, we're gonna talk about revocable trust first That's basically the family trust and what it is is a bucket that you create and you put your assets inside okay, it's like an invisible wrapper and And The benefit is you put your stuff inside you consolidate ownership of your assets and you can also name that trust as the beneficiary Remember we talked a lot about beneficiaries. So if you want to designate all the Sharia distributions and such you can do so Inside of that trust and you can have your assets point to that trust such that the trust will be the beneficiary upon death Okay inside of the trust you can define So what happens you can avoid probate the trust itself never dies Okay, so why do we go to probate because the owner of the asset is dead? Okay, Ahmed had a house. I want to buy Ahmed's house. What do we do? We have a contract We have an exchange of money. We sign documents. Ahmed's not alive. I want to buy his house That's where the probate court will come in right and in theory it's protecting against fraud It's doing all of these jobs, but really it's just a super inefficient process So the trust will not die that the house was in the trust now Ahmed died But what happened? He had named backup trustees in advance. He already had a list when I die It's gonna be Sarah if Sarah's not there. It's gonna be hot it if hot it's not there It's gonna be Aisha whatever right. He's got this list of people either It's his children or his parents or his friends or whatever okay, and then we can distribute things Islamically It's gonna say upon my death. I want to do a B and C okay now It's also like sort of built in to account for change circumstances We can say we don't know who's gonna die. We don't know what the order of deaths is gonna be So we can build all of that into the trust The other thing is if you have like property in three states You'd have to do a probate in every state so you can just multiply the Probate costs because you've got these properties and so you've got to now have ancillary probates in various jurisdictions But if you have a trust that trust can own property in various states, okay, so there's like another advantage. I mean There's different roles in the trust. There's what's known as a trustee Which is the person who manages the trust and then there are beneficiaries Which are the people who are gonna receive the distributions so the Islamic heirs are the beneficiaries The trustees are gonna be the people who are gonna manage it the managers and you make a list Right, so you can name some people name their children some people name friends some people name parents Some people name professional advisors or trust companies whose job is just to administer trusts, right? So depending upon the situation the complexity all these different considerations whether you have relatives, you know Some people might not have anyone that they can name, right? I don't advise like naming like People that without asking you some people come in they're like name They name the imam as the trustee like poor guy It's like it's a burden like to place on someone especially if you don't discuss it with them, right? So you definitely want to have discussions. These are really important discussions to have this point is super super important If you are married and you want to have a trust do you set up one trust or do you set up two? Trust is that a joint trust inside of that trust who owns what? That's the first thing we do Like when we have this when we have an engagement is who owns what tell me what? The ownership assets what what do you think as husband and wife, right? And does your wife think what you think and does your husband think what you think, right? We've got to be on the same page if you're married, right? Very very critical. Yes Good the question was can the trustee and the beneficiary be the same person they could right? So so oftentimes that is the case like it might be one of your children or so You have to trust that person you really got to trust the trustee because remember there's potentially no oversight Right, so they're legally bound there might be a conflict of interest there or it might make a lot of sense Maybe it's efficient Maybe the most logical person is one of your children or maybe it's a two of the three of the children whatever so So yes, there's no rule prohibiting it and oftentimes that is the case But sometimes it's not and so every situation is really dependent upon who Who's there and who who you trust to carry out your wishes? Can you have more than one trustee the beauty of this trust is very flexible instrument? You can have one trustee you can have two you can have ten obviously the more you have the less likely anything is to get done and the more likely people are to fight but That's checks and balances, right? So you You have some some balance and again, this is I think why a lot of like This type of thing. I don't think lends itself to sort of self-help Right a lot of people are like I'm a smart person I will figure this out and I really don't think that's the case here when it comes to this level of like planning for Simple stuff absolutely right, but the more that is involved the more that you know it makes sense to discuss Questions other questions about I think there were a lot of questions about the trust So maybe I'll answer a few and you can ask more as well. So Once you set this trust up first off generally, what is the ballpark of fees to set up a trust? Right, that's the maybe question number one. It's like buying a car All right, you can get like a wild range of fees. You can buy like a Tesla or you could buy like, you know An old Corolla, right? So there's gonna be you know different levels and sophistication and assets and whatnot But usually like for a family trust It's gonna be somewhere in the range of three to five thousand dollars that gives you a ballpark You might find some that are less if you're a high net worth you might find some that are gonna be a lot more But that gives you some range of what you would expect for like a you know a Well like a good practitioner who knows what they're doing some like I said You might find some that are less and you might find some that are more But that gives you a range maybe twenty five hundred to five thousand something like that now You might say what are the sort of ongoing costs associated with set up you setting up a trust? Okay, well number one It doesn't get registered with any state. It doesn't actually get filed So it's like this entity that's created but it doesn't get filed with the state while you're alive And well so usually there should be no Ongoing costs like annual maintenance type costs some attorneys charge, you know sort of like maintenance fee and they say you We charge annually and that includes like one update or one meeting or whatever some people do that But it's not a requirement What we usually do is we say that you know Think about this as a three to five year plan If you were to pass in the three to five years who are the people? What are the steps? Like does this make sense right? We're not thinking 25 years down the road necessarily but in the next three to five years Does this make sense and then we come back every three to five years and we update it but there may be life events that necessitate a update and Generally those would be hourly type of updates To to make the updates in some cases They might be very significant updates and it might be a redo of the trust Also, if you have a trust for example that somebody else created that was not Based on Sharia principles a lot of people might have done trusts just to avoid probate and to kind of make sure that some of the Goals are achieved if not all of them and you want to sort of add a halal stamp to it That might require redoing it that might require making updates to it It might be an amendment. It just depends on sort of what's involved with that trust and then As the trustee you can still buy sell add subtract like in other words You can sell your house and buy another house you can do different things You just have to do so in the capacity as a trustee. Okay, so it seems like a foreign thing like it's difficult But it's really not that difficult. Those of you that have a trust. Is it really hard to manage? Is it super hard to have a trust? It's really not that hard. Okay, so once you set it up Then you get used to it and you just try to make sure that your trust is The owner or the beneficiary on all of your assets so that everything is wrapped inside of that trust Good. So one question is about tax. Yes Yeah, so again At least the way that we do it every asset has to be disclosed And identified and again, that's otherwise, you know you can go through this elaborate plan and Then you die and your trustee doesn't have a clue what you have Like where does that person start like we've had situations where people have died and the family just doesn't know what they had and It's like a Expedition to try to figure out what accounts they had and what you know firms and brokerage account Not everything is on the tax return. And so It's hard. There's a lot of accounts. It will not show up anywhere If you're not getting dividends and whatever so point is if you try to make it easy, right? So you want to have a list and maybe you update it once a year once every few years or whatever at least if you're 90% correct the the trustee will know what you have and so we make sure that we have all the assets with respect to taxes We said at the outset like a well structured trust is intended to try to avoid taxes We're trying to contemplate different taxes property taxes the state taxes, you know capital gains step up the basis all these different Considerations, but no generally when you're setting up a revocable trust You don't need like to have your CPA approve a Revocable trust because it's tax neutral on creation. It's not a taxable event But we like to work collaboratively with CPAs like if you've got someone to make sure that you know advisers other advisers are involved in the plan But certainly if you're setting up an irrevocable trust Which would be a trust more so for tax planning or for asset protection then it's it's it's gonna be more likely that a CPA Wealth manager perhaps whatever different advisers are involved in that end up team planning Yes Yes, absolutely. The question was once Yeah, once you set up a trust do you need to change the title and so One portion is we've got to have a list of assets, but that list by itself is not gonna be good enough, right? You've actually got to change the title Okay, and so every asset is different for property. That's a deed, right for bank accounts That might be retitling for you know brokerage accounts that might be retitling for some accounts It might be a beneficiary. So you got to go asset by asset and then you've got to make sure that that process is called funding Which is making sure that your trust is Is actually holds assets So so it's an important process on the back and move what time is actually 930 I see okay, so So that's something that's very important oftentimes people will create these trusts But they won't transfer their assets into the trust and then you have an unfunded trust You might end up in probate Which is again beat defeats Both it's a combination right some things you have to do by yourself for example all of the financial accounts like no law firms Gonna be able to you know Contact chase for you and change your account or anything like that stuff you have to do by yourself So there's usually some homework associated with setting it up, but think about it if you don't do it That would be stuff that people after you would have to do anyways Right like the family would still have to go through this complicated exercise of changing accounts and doing all these things and whatnot And so you're basically doing their work for them in advance, right? So there's definitely some time investment along with the money investment on the front end But the objective is that it's much more efficient on the back end So that investment of both time I always talk clients. It's it's not just money. It's also time, right? Maybe you have a half day worth of Account changes and phone calls and this and that it's a lot easier now Then it was in the past we had to send things in the mail and do all these things a lot of this stuff can be done online But nonetheless, there is definitely some work involved with funding your trust okay, so Irrevocable like I said are more advanced So those are trusts that are done for tax planning like advanced tax planning especially estate taxes which would be For high-net-worth individuals who are above that 13 million dollar exemption limit or who foresee themselves being above the 13 million dollar exemption limit And that limit is actually subject to drop in 2026 to 6 million. So it's actually The current law under the current law January 1 2026 it would cut to 6 million So who knows if that'll be the case, but that would then the estate tax would impact far more people, right? at a 40% rate above the the clip so So then it this planning would be much more significant Again, they might raise it. They might lower it who knows But it's something to be aware of that the exemption right now is 13 million coupled at 12.92 or whatever the exact number is And it goes up for inflation every year, but then it's supposed to get cut significantly in half at the end of 2025 Okay, so So just to go back to this question like this this Concept of estate planning we said is to preemptively plan Whereas in the beginning we talked about retroactively looking at our assets and distributing them So our goal is to fulfill religious obligations now Most people's goal is also to protect their spouse Right like especially if one spouse is not working right making sure that we're not You know creating a situation where that spouse is left like with very little Or an inability to you know, have a maintain their standard of life and such and so that's another consideration that comes in Almost everyone of course with children wants to make sure their children are taken care of Ensuring some level of family harmony Everybody thinks that But not really everybody thinks that their kids will not fight a lot of my clients think their kids will fight And they want to plan but other people think their kids will not fight Well, I know, you know, may Allah protect our families But we want to make sure that we maintain family harmony and not create a situation where there's conflict and one of the best ways to do this is to Create a plan and tell everybody this is what's gonna happen. And this is what's gonna, you know, we We have like this weird Sort of belief in a lot of cultures Muslim cultures that like if we talk about death, we're gonna die Right. And so like families sometimes just never talk about death even though it's so prevalent in our tradition. I Mean the sheikh recited in Maghrib That like this want of more has deluded you That's what I'm a cover like we're always thinking about more in this and that in different capacities And then the IS is until you visit the graves Like that's the one the reality hits either like actual visit like whenever you just go to the graveyard You have this realization or upon your death and it's mentioned as Maqabir like because it's not a permanent abode. It's just a place that you're gonna be for a short while so That's important. We want to minimize taxes and fees This is also interesting prevent squandering of wealth. So We don't want to As a corollary to take in care of our children. We don't want to give them so much that they like Become they just lose their work ethic and they're just spoiled like, you know This notion of trust fund children everyone generally thinks that's a bad idea, right and the Quran talks about this Well, I took the super high I'm while I come The Quran talks about this right that don't give the Sufa ha your wealth like don't give foolish airs your wealth and It's amazing. The Quran says web tell you yet. I'm a test in orphan What does that mean? Anyone know? What is the test? What do you do? This is like so profound give them a little bit of wealth and see what they do with it It's financial management You teach them before you give them a whole bunch of money. You see what they do with that money What tell you yet? I'm a fan. I thought I'd have a little nikaah. Then what feina anastom in them rush done Fadfa we day him and while I'm Once you find that they've reached this age of rushed Now they have this financial acuity. They know what to do with money. Then you give them their wealth Okay, now. What is that age? What does that look like? What are the parameters? Coming to the question of a special needs child, right? So so maybe there would be a situation where somebody might never reach rushed in which case You would have a trustee manage their money for them, right? So this is really important if especially in the case of special needs there's a lot of government benefits that are available in the case of a special needs child and Sometimes if you give them wealth as an inheritance it would disqualify them From receiving those benefits Right because some of those tests are means based at least once they reach the age of 18 And so again this planning also has to be considered at that point Why state plans are important All right Picking up inshallah for a few minutes before Asia Abdullah that it was not Was not emergency and I just goes to show you that We really don't know When Anything could happen and so therefore we should be prepared at any moment You taking off, okay So the last few points I just wanted to cover again this this If you are trying to create a plan You can reach out and we can do that separately, but with respect to general questions There were two or three things I wanted to cover one was Planning for illiquid assets is something that we should really consider especially partnership assets if someone has a business Whether it's a family business Or it's a business between partners. That's when Contracts and written contracts are super important Quran says About So contracts inherently partnerships are situations where people often are Unjust to one another and the Quran says except for Few who are righteous and do good deeds So if anybody has a partnership or such and that's something that you would definitely want to have a plan for succession Or if you have this family business, you also want to have a plan for succession So a trust really helps in that regard and also maybe more comprehensive business succession plan There was a question about converts in particular What it happens if a person doesn't have Islamic heirs, so remember we said that inheritance law deals with the Decedent and their the decedent being the person who dies and their wealth or their assets or their stuff and the people That are left behind now those people the mandatory heirs From the water from the the farah in category They have some conditions that are required in order for them to Rather they are some disqualifiers of inheritance, I should say so we talked about these relationships There are basically two ways in our present time Which in which somebody could be disqualified from being an heir the first is if they are not Muslim Okay, so the shares for the mom and the children and the wife and the husband and parents and so on and so forth From the mandatory shares Required that they are Muslim and if they're not Muslim they can do not inherit from this share now What does that give you the opportunity to do? To utilize which share That will see it at one-third share So if somebody has non-muslim relatives that they would like to gift and support they can but through that will see a share and also I wish all that never happens, but also if somebody kills you they don't inherit from you either So the second category would be the killer is also eliminated from inheritance There's actually consistent with state law. You can't kill someone for an inheritance So that is present in Islamic inheritance law as well now, but if somebody has no heirs No Islamic heirs, so they have no Muslim relatives whatsoever Basically, there's a long list of people you keep going further and further remote, right from the Quranic heirs to the Aslaba and then eventually in according to Hanif is at least of the with Alham and then to the Muslim Treasury The base of mal right and we don't have that so then it would go to basically charities that would substitute in And some scholars allow in that scenario Basically if you have no heirs and there is no Muslim Treasury then you can basically do whatever because you don't have You're not violating anybody's rights Islamic inheritance is based on rights And so if nobody's entitled to inherit then you basically have discretion with your estate if for somebody who doesn't have any Muslim heirs But this is something to run by with a scholar to make sure that your unique situation is accounted for Now if someone is well off there was a question about well, you know What if this person doesn't need anything because I'm making heritage is not based on need it's an entitlement Okay, if that person doesn't want it, they're free to disclaim it. Okay, but it's a it's a it is a God-given right Right, you didn't do anything to deserve it But Allah gives these rights and so if a person says I don't want it I don't need it and I'm gonna donate it to charity so that my You know parents gets so the reward for it or I want to help my less fortunate sibling Who is in more financial need or some other more distant relatives or whatever all of that is free to happen after death? anybody can you know give away their shares and do whatever they want with them, but That's got to be voluntary and you can't do it for them So you can't look at your children and be like well, you know my son. He's good my daughter She is more in need so I'm gonna cut my son out and I'm gonna give everything to my daughter Even if your intention is good your attention is like oh, I want to help her but you need to help her in your lifetime and You need to not Change the rules upon death Okay Anything else? We're about to break for Salah. Yes Yeah, yeah, absolutely. So so so a good estate plan will account for contingencies, right? We never know who's gonna die when and so we basically would say in this scenario a there is this but in scenario B There's a different result And that's that that would be something that would be accounted for in a good plan. Yes Most of the examples are like one spouse dies and then the next spouse dies But you know may law protect us if something were to happen concurrently the result would be very different And that possibility has to be accounted for when drafting a plan. All right, so I think We'll stop here for Salah inshallah and if you have more specific questions You can feel free to reach out inshallah if you would like to set up your plan or you would like to update your existing plan to make a Sharia compliant Insha'Allah feel free to reach out. I am based in Arizona not in California However, I am licensed in California and nowadays we can do everything remotely as you all are accustomed to doing So it's not really a big problem, and inshallah we'd be happy to assist My last product that I accept from you all for this gathering and overlook and forgive my shortcomings SubhanakAllah