MUSLIMS BUSINESS OWNER’S PERSPECTIVE TOWARDS

ISLAMIC ESTATE PLANNING

Group members:

No Name Student ID
1. Saiyidah Syafiqah binti Mohd Shadon 1170204
2. Nur Aliah Rahwanie Binti Mohd Mahathir 1170206
3. Nur Athirah Lyana Binti Mohd Razali 1170203
4. Norzainah binti Ahmad Kamal Ariffin 1171408
5. Rufaidah al-Syamiyyah Binti Ismail 1171406

Group: KMC 2
Lecturer’s Name: Dr. Nur Shuhada Kamarudin

Submitted in Partial Fulfilment of the Requirement of the Personal Financial Planning

course (MFB 4033)

12 DECEMBER 2019
CONTENT

No Title Page Number

1. Acknowledgement
2. Abstract
3. Introduction
4. Research problem
5. Literature Review
6. Methodology
7. Result & Analysis
8. Conclusion
9. References
10. Attachments

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ACKNOWLEDGEMENT

It is always a pleasure to remind the fine people that help us to finish our assignment
regarding business owner’s perspective towards Islamic estate planning.

First of all, thanks to our parents for giving us encouragement, enthusiasm and invaluable
assistance for us. Without them, we might not be able to complete this subject properly.

Second, we would like to thanks to Dr.Shuhada for give us the opportunity for us to learn
more about Financial Planning. She had supported to us by showing us guidance and
support.

Thirdly, we also want to thanks to Kasih Ibu Laundry‘s owner, Encik Syed Amir Syed
Omar, and owner of Tadika Hadanah, Puan Zubaedah, for their cooperation to let us
interview them regarding our survey.

Besides, we would like to thanks to our group member that give the best to complete this
assignment. Not forget to our classmate that helps us to understand more about this
assignment.

Finally, we apologize all other unnamed who helped us in various ways for us to have a
good quality of knowledge.

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ABSTRACT
Estate planning involves making plans for the transfer of estate after death. Estate includes
cash, clothes, jewellery, cars, houses, land, retirement, investment and saving accounts. In
Malaysia, around 90 percent of Malaysian has not made a will for their estate property
because of the lack of urgency. They believe that only wealthy people that must make a will
and they have to build wealth before writing a will.

In Malaysia, there has been an increasing in the number of unclaimed inheritance properties
over the year. It is necessary to identify the causes of delayed distribution of inheritance
property left by a deceased.

Therefore, the objectives of this study are to investigate the determinants that contribute to
attitude towards estate planning. Questionnaires were distributing to the Muslims business’
owner. The data obtained were analyzed and the result indicates that knowledge about
estate planning, media awareness, perception towards estate planning, family influence and
religious or ethic belief becomes the important determinants that influence attitude towards
estate planning. This study advances current knowledge by adding alternative insights to
determinants of attitude towards estate planning.

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INTRODUCTION

Estate planning is the final part of financial planning. Estate planning is the writing of wills
and nominations as means of wealth distribution after one’s passing on. The principles
guiding Islamic Estate planning helps to ensure that the wealth or estate transferred is in
accordance with the giver or deceased’s wishes and, more importantly, in accordance with
the shariah yet complying with Malaysia’s legal system. In the absence of wills or
nominations, situations arise where the estate of the deceased is not inherited by the rightful
heirs or being fought over by surviving family members. Thus, to avoid such unhappy
disputes and family woes, it is vital to understand some of the important terms in estate
planning for Muslims. Some of the means of wealth and estate transfer as mentioned in
Quran and Hadith are Wasiyyah (Will), Waqaf (Endowment), Hibah (Gift) and Faraid (Muslim
inheritance law).

Wasiyyah can be defined as the gift from a person to another, for example like material
wealth, property or benefit to be owned after the death of the giver. Literally, wasiyyah also
can be defined as a declaration of a person made during his life time with respect to his
property or benefit thereof to be carried out for the purpose of charity or for any other
purposes permissible by Islamic law after his death. Wasiyyah in Islam is not only seen as a
part of Ibadah, but it also been considered as a part of social responsibility because
indirectly it contributes to socio-economic through sadaqah jariyyah.

Waqaf means detention of a property so that its produce or income may always be
available for religious or charitable purposes. When waqaf is created, the property is
detained or is ‘tied up’ forever and thereafter becomes non-transferable. There are two forms
of waqaf which is economic assets and social assets. Economic asset are generally fixed
assets, income producing, include rentable shops, houses, farms, shares in companies or
businesses. Social assets also generally fixed or capital assets and include schools, masjid,
madrasah, hospitals, water, library and others.

Hibah is a transfer of legal and beneficial ownership of the assets from the donor to the
beneficiary on volunteer without valuable consideration and compensation. Further, the
proportion of distribution to heirs and non-heirs can be determined by the donor.

Faraid is the distribution of the estate of a deceased Muslim whether the deceased left a
will or otherwise before he died. The estate will be distributed to the deceased heirs such as
children, wife, husband and others according to Islamic law. The assets to be distributed to
the heirs are the remainder after deducting the funeral expenses, the heir’s debts and wills
that is allowed by the Islamic law or syarak and usually not more than 1/3 of the total assets.

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RESEARCH PROBLEM

The purpose of this survey to investigate Muslim business owner’s perspective towards
Islamic estate planning especially when they were alive. Our research environment is a
working population area. Most of them have their own job and additional jobs to get side
income. Therefore, this survey can gain information on their knowledge in planning their
future estate.

Planning for distribution of property during life should be practiced more widely. Through
Islamic estate planning it is able to protect the owners and potential beneficiaries during life
or death. Understanding based on Quranic and Hadith, can guide Muslims in understanding
the necessities and importance of planning estate during their life. Nowadays, most people
do not care about property planning at an early age because they do not know how to do the
process.

After we do the interview for both of our clients, one of our clients explain his estate
planning by using own Faraid planning. For him, Faraid is the best solution in Islam to
distribution her estate property in a fair manner as provided in the guidelines. Whereas, one
of our customers did not choose Hibah, Wasiyyah, Faraid and Waqaf as a future plan as
they do not yet have assets to distribute to the heirs. however, he has placed his sons'
names as heirs in the EPF's savings in the event of his death.

From this survey, a few factors of estate planning behaviour influence a person’s plans
on their property. One of our clients mentioned family and religion as his reason to plan their
estate planning. Through his experience, the distribution of estate to individuals with the right
ways that can avoid in the future. From this survey, a few factors of estate planning
behaviour influence a person’s plans on their property. One of our clients mentioned family
and religion as his reason to plan their estate planning. Through his experience, the
distribution of estate to individuals with the right ways that can avoid in the future.

In short, through this interview, we and our clients are able to open our minds to plan our
finances more specifically to future. We also want to make sure that we have enough
planning and knowledge for our estate planning to be carried out in a Shariah-compliant
manner.

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LITERATURE REVIEW

In Islamic perspective, estate planning is closely interrelated to the economics and Muslim
community. It is because to avoid assets from continuously remain frozen. (Fazira Shafie,
2014) Had researched the values of unclaimed assets have increased from RM 40 billion in
2009 to RM 42 billion in 2011 and subsequently increased to RM 60 billion in 2013. These
valuable assets have been frozen and become counterproductive. Moreover, Islamic estate
planning is an important attempt in order to make sure Muslim society is well protected and
secured. Thus, in planning Muslims individual supposed to prepare the several guideline and
strategies for the future exploration on how they want to manage and distribute their assets
before and after the death. This is concern of in this research.

(Rudnadewi Abdul Rashid, 2013) who have explained about among the estate planning
forms of life are as gift inter vivos (hibah), bequest (wasiat), endowment, charity and vows.
Meanwhile, the management of property after owner’s death is subject to law of succession
(faraid). It is how the estate management planning in Islam are divided. In Islam, there is no
limitation on the transfers of wealth during the lifetime, but the disposal of estates upon the
death is strictly subject to law of succession (faraid) and bequest (wasiat) rules.

Other previous research by (Bouteraa', 2019), explained about the estate planning had a
few advantages whereby customers will be able to distribute their asset or property
beneficiaries quickly. Also, will minimize the expenses, less strain from the deceased’s
family, tax reduce and also provide the pledge to the hires after the death. (Suhaili, 2010)
have conducted on study on the main purpose of estate planning in Malaysia for Muslim is to
expedite estate claims by avoiding the frozen estate problem, protecting the estate from a
split into many portions which would then diminish its potential value, and protecting the
beneficiaries.

Besides that, according to her study, most Muslim in Malaysia do not view estate
planning seriously and who making wasiyyah is very low as well as some of them are
skeptical about making a wasiyyah, which is evidenced by having large number of Malaysian
Muslim not having wasiyyah. These studies also established that relationship between social
class into groups according to their employments has a significant impact on will ownership.
Thus, those in managerial and professional occupations are found to be more likely to have
a will than those in semi-skilled and unskilled jobs, or those who are unemployment (Suhaili,
2010).

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 Low level of awareness and knowledge are one of the contributing factors to why Islamic
estate planning is not widely implemented. It is because, according to (AB. AZIZ, et al.,
2014, p. PAPER 1144) Malaysian Muslims particularly Malay people do not really want to
write wasiyyah due to a few reasons. Firstly, it is because they are not knowledgeable about
wasiyyah and it’s significant. Normally, people in this group have misconception towards
wasiyyah in which they think only faraid instrument applies in the estate distribution and
hence they think either leaving wasiyyah or not will not have any impact since at the end of
the distribution process the estate will distribute according to faraid rules. It is same going
with our client that very focusing on faraid and did not know a lot of information about
wasiyyah. Second reason why estate planning is not widely practice due to their altitude that
is reluctant to write wasiyyah even though they are well informed about it. The last reason is
because they cannot afford to draw up a wasiyyah even though they well informed about it.
Generally, those who in third group, take that cost is the main consideration and this is
largerly contributed by their zero knowledge on the actual charge imposed by wasiyyah
writing provider.

Besides, another reason behind the poor practice of the Islamic estate planning due to lack
of awareness and knowledge. The Malaysian Muslim do not actually fully realize the
significances as well as methods of the Islamic estate planning and to the large extent they
are not aware to the significances of writing wasiyyah as the main tool in the Islamic estates
planning itself (Almu'amun, 2010). Hence, the poor level of awareness can be associated to
the lack of knowledge among Malaysian Muslim wheares this inadequate of information is
reflected by their misunderstanding towards the concepts of the Islamic estate planning,
faraid, wasiyyah, hibah and so on that related with estate planning.

This phenomenon of failed settlement of the estate planning due to the attitude of the
public that it is not always necessary to plan for the distribution of property as it can be
distributed according to the law of the deceased after death. This is evidence by a statement
from the Trust’s Chairman, Datuk Dusuki Ahmad, who asserted that the most Muslims think
that property management can settled by faraid law is one of main causes of delay in
inheritance distribution (SAMSUDIN, 2017). So, in this regard, awareness is an essential
element in the planning and formulation of the estate before the person were death due to
the heirs do not have any difficulty in managing the distribution of the estate. Thus,
everybody should make their own estate planning based on the Shariah principle in Islamic
perspective.

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METHODOLOGY

This survey adopts quantitative method to collect and analyse data by answer a few
questions during interview. This method can evaluate individual understanding about the
knowledge of planning real estate. An interview is a conversation for gathering information,
involves an interviewer, who coordinates the process of the conversation and asks few
questions. The interview method much easy to collect data by presentation of oral-verbal
and also can reply on terms of oral-verbal responses. Besides that, interviews can be
conducted face-to-face to get information with clearly.

This survey will be analysed to extract information regarding the concept and practice of
Islamic estate distribution by Muslim. This survey consisted of 25 multiple-choice questions
and four questions that the respondents had to answer. Respondents were given 10 minutes
to fill in the surveys. Furthermore, survey used to collect data from a small group on a board
range of topics. This method used structured and unstructured interview, which are the
clients only need to choose their answer and give their opinion during the interview.

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RESULT AND ANALYSIS

Respondent 1 Respondent 2

Gender Male Female

Living area Shah Alam Nilai

Age 57 34

Level of Education Degree Degree

Educational Background Architecture Dakwah and Islamic

Management
Previous University Universiti Sains Malaysia University Sains Islam Malaysia
(USM) (USIM)
Marital Status Married Married

Year involve in business More than 10 years 8 years

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Based on the interview and questions that had been asked to the respondents, the results
were presented through this survey and research.

Section 1 (Muslim Business Owner’s Perspective Towards Islamic Estate Planning)

Table 1: How could the respondents explain their estate planning (Respondent 1)

Estate Planning experience Yes No

1. Currently have register with Hibah product   

2. Currently have register with Wasiyyah product   

3. Currently already have register with Waqaf product 

4. Already have their own Faraid planning 

Based on the table 1 above, respondent 1 stated that he did not register with hibah
product and wasiyyah product but he registered with waqaf product such as his business
insurance. Then he also stated that he already had his own faraid planning since he had
been experienced with many situations involving faraid and because he also shared the
business with his only one daughter.

Table 2: How could the respondents explain their estate planning (Respondent 2)

Estate Planning experience Yes No

1. Currently have register with Hibah product   

2. Currently have register with Wasiyyah product   

3. Currently already have register with Waqaf product 

4. Already have their own Faraid planning 

Based on the table 2 above, respondents did not register with any product like hibah,
wasiyyah and waqaf. She stated that she did not register with hibah product because his
husband did not allow her to take the product since her husband is working at government
sector and he already have all of hibah product. Plus, she did not take wasiyyah product
because she never thinks to take the product since she still young and her children also still

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 young. In addition, she did not have her own faraid planning because she just starting her
business but she said that soon she will think about faraid planning.

Section 2

For this section, we used the rating 1 until 10 (strongly disagree to strongly agree) to see the
response from respondents. Only one respondent which is respondent 1 could answer this
section because the other one currently do not have any estate planning to answer these
question.

Q1) Table 3: Factor of Estate Planning Behavior

Statement Rate

For me, to develop specific Estate plan makes me happy

5

For me, to develop specific Estate plan is important

10

For me, it is important to choose related estate planning

product in preparing the estate planning plan
5

For me, preparing for estate planning contribute to less

financial stress to me
10

For me, carefully choosing estate planning instruments

purposely to develop estate planning would be beneficial
10

Based on table 3 above, he stated that he has to know about a product before he makes
a choice to choose in which estate planning product that he is preparing for estate planning
plan. Next, he also agreed 100% about he have to be careful before choosing a product so
that he will not make a wrong decision in developing estate planning plan that would be
beneficial for him.

Q2)
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 Table 4

Statement Rate

My family is the reason for me to plan for my estate 10

planning

My friends are the reason for me to plan for my estate 1

planning

My religious is the reason for me to plan for my estate 10

planning

My Culture is the reason for me to plan for my estate 1

planning

Based on table 4 above, he stated that only family and religious are the reason he plans
for his estate planning. His family were the reason because he only had three members in
his family, so they are the strong reason why he had to plan his estate planning. Next, since
he already learned that as a Muslim, he needed to plan this estate planning, so that is why
religious also a reason why he plans his estate planning.

Q3 Table 5 & 6: Factor that encourage to have a specific estate planning

Statement Rate

I believed, I have the ability to have a specific estate 10

planning

I believed, my current income enables me to have a 5

specific estate planning

I believed, current estate planning product in market

encourage me to have a specific estate planning 1

I believed, government encourage me to have a specific

estate planning 1

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 Based on table 5 above, he said that he has the ability to have a specific estate planning
because he already going through about 3 deaths of his family members that are related
with the estate planning. Besides, he actually did not believe that current estate planning
product in market will encourage him to have a specific estate planning because most of the
product in the market are commercialized product, he prefers faraid planning more than
estate planning.

Q4

Statement Rate

I believed, my knowledge on Faraid enables me to have a 10

specific estate planning

I believed, my knowledge on Wasiyyah enable me to 7

have a specific estate planning

I believed, my knowledge on Hibah enable me to have a

specific estate planning 7

I believed, my knowledge on Waqaf enable me to have a 7

specific estate planning

Based on table 6 above, he rates 7 on the second question which is his knowledge on
wasiyyah enable him to have a specific product. For him, he actually just knows little about
wasiyyah because if he wants to learn, there’s a lot that he had to learn. On the third
question he also rates 7 because he does not know too much about the Islamic terms. From
all of the questions above, he said that he sticks with the faraid planning because it is the
best facilities he ever has and he does not want to think so much about all of the terms.

Q5 Table 7: Intended to have a specific estate plan.

Statement Rate

I intend to have a specific estate planning 4

I intend to choose particular estate planning product for 10

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 my estate planning

I intend to plan for my estate planning

10
I intend to make sure I have enough plan for my estate
planning 7

So, from all of this question, it can be concluded that he actually more prefers faraid
planning instead of estate planning. Plus, he already has his own planning on his estate.
Lastly, he just makes a normal planning because he does not have so much estate.

Section 3: Open ended question (Estate Planning Behavior)

In this segment will includes four question have been created to get random
response and answer from our two interviewees. For the first question is the opinion on
Wassiyah, Faraid, Hibah and Waqaf. From the respondent 1 stated that all of these products
will encourage fair distribution of properties without raising any doubts. While respondent 2
stated that it is a must because if we have properties, we have to divide evenly before it is
too late. It is intended to avoid confusion with the properties’ heirs.

For second question, respondents 1 stated that he make estate planning because he
believe in faraid while respondents 2 stated that she not have planned for estate planning
because she do not have any property yet and for her business share, she actually sharing
with her husband which is she has 50% of the share and her husband has another 50% of
the shares.

Based on third question, it is the opinion from our respondents about when
individuals should start their estate planning. Respondent 1 considers that the individuals
need to make estate planning when the individuals already have their own property.
Respondent 2 which is younger than respondent 1 give an opinion that the individuals
should thinking about the plans started from now and if the individuals already have own
works or own salary, they should start thinking about the plans because they need to start
thinking since young.

The last question for this survey, which are comments from respondents about current
estate planning products or management in Malaysia perspective. Respondent 1 stated that
most of the estate planning products or management in Malaysia perspective are based on
commercial and business based because the percentage paid to property representatives
depend on the amount of the property available. More property we get, more percentage

16
that will be paid to the property representative. Respondent 2 stated that estate planning
product or management in Malaysia nowadays should give people more details on the
information. Plus, government should create more advertising about the estate planning
products. Lastly, government should make the estate planning products for all peoples not
only for rich peoples.

CONCLUSION

The purpose of this study is to investigate the issue with respect to the determinants of
the Muslims business owner’s perspective towards Islamic estate planning. Result of this
study shows that people are still not aware of the importance of estate planning. The
younger people believed that it was too early for them to write a will. Also, the respondents
view estate planning as a tool for the wealthy. They do not consider themselves rich, so they
do not need to undertake such planning and consider to focus more on saving money.

Therefore, Government should increase the knowledge about estate planning by

advertise the information on the internet and make a talk and campaign about the
importance of estate planning, particularly. The financial planner also has the important roles
to educate people about the estate planning. Estate planning is one of the areas that
financial planners need to look into, as such there is a need for them to advise their clients
on the importance of writing wills and storing them at the right place.

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Almu'amun, S. (2010). ISLAMIC ESTATE PLANNING: MALAYSIAN EXPERIENCE. Kyoto

Bulletin of Islamic Area Studies, 165-185.

Bouteraa', D. M. (2019). CONCEPTUAL STUDY: BARRIERS OF ISLAMIC ESTATE

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Fazira Shafie, W. Z.-E. (2014). ISLAMIC REAL ESTATE MANAGEMENT: REVIEW IN

ISSUEE AND CHALLENGING IN MANAGING INHERITANCE PROPERTY IN MALAYSIA.
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Samsudin, S. N. (2017). COMPARISON BETWEEN WILL AND GIFT AS AN ESTATE

PLANNING INSTRUMENTS IN ISLAM. AL-QANATIR: INTERNATIONAL Journal of Islamic
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Suhaili, A. (2010). ISLAMIC ESTATE PLANNING: ANALYSING THE MALAYSIAN

PERCEPTION ON WASIYYAH (WILL) AND BEQUEST PRACTICES. In S. Alma'amun,
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ATTACHMENTS

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