How I Use Faraid Calculator to Decide Who Gets My Money After I’m Gone

Do you know who gets your money after you’re gone? Have you used a faraid calculator and know for sure which of your family members are your faraid heirs, aka people who have claims to your assets after your death, according to Islamic inheritance laws?

No, push through the ‘this is uncomfortable to think about’ thoughts, this is important. As the popular Malay saying goes, mati itu pasti.

Here’s how to use faraid calculator so that you can know, then decide who gets your money after you’re gone. There’s literally only 5 (+1) steps:

• Step 0: Know how Islamic Inheritance Laws work – Deduct burial costs, debts and Harta Sepencarian first
• Step 1: Use faraid calculator – see who have claims to your money under Islamic inheritance laws
• Step 2: If you’re happy with your faraid heirs, set up Wasiat (Cost: RMxxx)
• Step 3: If you want to personalise your faraid heirs, set up Hibah (Amanah/Mutlak), Wasiat and/or Trust
• Step 4: (Optional but encouraged) If you want to give EXTRA money to your loved ones (faraid heirs or not), subscribe to Hibah Takaful
• Step 5: (Optional but encouraged) If you want to leave (some of) your wealth to charity for the pahala, set up Wakaf

Please note that the above is an oversimplification of what can be a complex estate-planning process. If you have multiple faraid and non-faraid heirs, multiple types of properties and assets, etc, please engage a professional rather than DIY-ing it.

Disclaimer: I have done my share of research on this topic. I have talked to Islamic estate planning professionals and financial planners. I’ve made sure the information is accurate to the best of my ability. However, my knowledge may be limited. I invite you to share what you know in the comments section.

Step 0: Know how Islamic Inheritance Laws work

Under Islamic inheritance laws, if there are no documents in place, the wealth of a Muslim who passed way must be used to pay off burial costs and debts first, BEFORE half of it is distributed to the surviving spouse as Harta Sepencarian, BEFORE distributed to faraid heirs.

Deduct burial costs, debt and Harta Sepencarian first

How it works is:

• Person A dies
• Pay burial cost
• Pay off debts, if any
• Spouse of A gets half of assets as Harta Sepencarian*
• The remaining of Person’s A’s assets is distributed according to faraid

*A lot of people don’t know/ forget about Harta Sepencarian, either intentionally or not. This is obviously unfair in situations where the widow is a homemaker taking care of children/the elderly.

A common question here is – what if Person A’s wealth is just enough to pay burial cost and debts? Will the spouse get Harta Sepencarian or their faraid heirs get their allocations?

The answer is no. If there is no more wealth to be distributed after paying burial cost and debts, then there is no Harta Sepencarian nor inheritance to faraid heirs. If this upsets you, see Step 4 for solution.

Types of assets to give your beneficieries

Here are some items that are classified as assets:

• Properties/Land
• Bank accounts
• Stocks and securities in Bursa Malaysia
• Vehicles
• Unit trust accounts
• KWSP/EPF
• Insurance policies
• Companies I own / have shares or equity in
• Safe deposit boxes
• Club memberships (that can be inherited)
• Jewellery

Note: I own cryptocurrencies. The best way to distribute this, according to my advisor, is to put the keys in a safe deposit box and leave the details in the legal documents.

Step 1: Use Faraid Calculator

First, you have to know who is your faraid heirs, as decided by Quran and Sunnah. The rules can be complex and depends on many factors, so the easiest way is to use a faraid calculator.

There are a few versions of faraid calculators out there, including USM’s Sistem Maklumat Faraid.

Personally, I like to use iFaraid Calculator app – you can find it in the App Store. All I have to do is input my family members, and it will show how much everyone will get.

Using myself as an example, I inputted the following family members in the Heirs List:

• Husband
• Mom
• Dad
• 2 Sisters
• 1 Brother
• No grandparents 🙁

If I click on the Family Tree tab in this faraid calculator, I can see (1) who are my faraid heirs, and (2) the allocation of my wealth that each of them are entitled to:

• Husband: 3/6
• Mom: 1/6
• Dad: 2/6
• Sisters & Brother: None

Now, my situation can be considered simple. It gets considerably more complex if I have children, grandfather, or if my father is no longer around. x out of 36 allocations (or more) is not uncommon.

I’ve tried a few faraid calculators and iFaraid Calculator app is the easiest one yet to understand, so I recommend you try it too 🙂

Step 2: If you’re happy with your faraid heirs, set up Wasiat

Now, if you’re happy with who your faraid heirs are, all is good. You can set up Wasiat document and just state you want your wealth to be distributed according to faraid.

Here, you might ask – but if faraid is implemented anyway, wouldn’t it be fine to skip the estate-planning paperwork?

Important: You should do Wasiat even if you want to follow faraid

It’s important to set up Wasiat even if you’re happy with who gets your money under Islamic inheritance laws. Without the documents, your heirs will be going through a long, complicated court process which may will take years*.

The image below is from Maybank Wasiat/Will-writing service page in Maybank2u. See, you can select ‘Entire Estate Distribution Following Faraid Allocation’ under Mode of Distribution – choose this if you want to follow faraid distribution exactly.

I’m serious – go ask Shariah lawyers. I was informed there is so much backlog, heirs may have to wait for a year or more just to get court hearing date. It takes much longer if your heirs are uncooperative/ busy/ no money to go through the process.

Personally, I’d love it if my partner and parents can get my money ASAP. They can do a lot of good with it, instead of waiting for the assets to be ‘unlocked’.

Where to do Wasiat in Malaysia

You can do Wasiat at a few places:

• Banks: some of them offer Wasiat services
• Estate planning companies: As-Salihin, Wasiyyah Shoppe, Amanahraya etc
• DIY services like Pewarisan (most affordable option)

Cost to do Wasiat: RMxxx

Step 3: If you want to personalise your faraid heirs, set up Hibah (Amanah/Mutlak), Wasiat and/or Trust

Now, let’s say I DO NOT want to leave my wealth behind to my faraid heirs, because they are abusive or financially irresponsible or whatever.

Or maybe I’m happy with my faraid heirs, but I ALSO want to give to someone else. Perhaps other family members, or even friends.

I should now look into:

1. Setting up Hibah documents
2. Editing my Wasiat
3. Consider setting up a Trust

If you’re at this step, more often than not, you’re doing Hibah AND Wasiat, not either or. Let’s go over each of them:

1) Setting up Hibah documents

Hibah is basically ‘gifting’ – the assets you give away will now no longer be included under assets that need to be distributed under faraid.

There are three types of Hibah:

• Hibah Amanah – give the asset after your death
• Hibah Mutlak – give the asset while you’re alive
• Hibah Takaful – kinda like life insurance, see Step 4

There are a few pros and cons to Hibah Amanah and Hibah Mutlak you need to be aware of:

Pros:

• You can give your assets to whoever you want. There are no limitations to religious background, family ties, etc
• You can Hibah Amanah your funds in ASNB for just RM180. More info in The Exact Steps to Do Hibah Amanah ASNB

Cons:

• Not everything can be hibah-ed out. For example, you can’t hibah EPF/KWSP money (this is why I contribute just enough to max out the tax relief, but not more, and happy to use EPF i-Lindung to get insurance)
• You can only hibah assets that are clear of debt. Therefore property, vehicle etc that are still under mortgage and hire-purchase loan cannot be hibah-ed. You’re probably paying takaful that will pay off this debt in the event of your death though
• Hibah Mutlak (transfer ownership while you’re still alive) is good but it does mean the property is no longer your property. With no/less assets, you’re reliant on family to take care of you, especially when you’re old/sick/vulnerable. (For this reason I much prefer Hibah Amanah)

Next is Wasiat.

2) Editing your Wasiat documents

Next, you may want to clarify in your Wasiat document that you’d like to allocate up to 1/3 of your wealth to non-faraid heirs. It is allowed.

Note: Non-faraid heirs includes: adopted family members, non-Muslim family members, domestic partners, friends etc.

3) Consider setting up a Trust

If Wasiat is for the distribution of assets after death, and Hibah is gifting assets away, then Trust is like a contract document – you can set conditions for distributions to your beneficiaries.

It’s cool because you can add clauses like:

• ‘to allocate person X money for medical care if you’re in a coma/have permanent disability or cannot make sound judgement’, and
• ‘to give person Y staggered payments according to agreed schedule after your passing (ie RM2000 per month until the money runs out)’

I believe you need to lock in a fairly large amount of cash for this option (I believe I heard RM50k minimum), and the fees are steep. So you need to be wealthy enough. Discuss with your estate planner is you truly need to set up Trust, it really depends on your situation.

How to do Hibah, Wasiat and Trust documents

You can do Hibah Amanah ASNB and Hibah Takaful yourself, but it is recommended to hire a financial planner, and/or approach companies like AmanahRaya, Wasiyyah Shoppe and As-Salihin if you have assets in multiple bank/investment accounts and/or multiple properties/land.

Which one is the best? They’re all good and reputable Islamic estate planning service providers. My suggestion is pick the one with office convenient for you, because the entire process might take a few visits.

Cost-wise, it depends how complex your documents are – the more properties and beneficieries you have, the more expensive it might get. Personally, I helped my mom do her Hibah and Wasiat documents and it costed RM2,650 in total (2021 price).

I’m aware the price can be steep for some. If you’re familiar with legalese, one budget-friendly option is through Pewarisan.com. For RM330, you will get these legal documents:

• Surat Wasiat
• Perisytiharan Harta Sepencarian
• Perisytiharan Hibah

Step 4: If you want to give EXTRA money to your loved ones (faraid heirs or not), subscribe to Hibah Takaful

Now, you might be looking at all the steps and be like, oh, I don’t have a lot of wealth to pass down anyway, estate planning is not for me.

That’s not true! With Hibah Takaful, you can leave behind six-figure inheritance to whoever you want with just RMxx-xxx monthly commitment. Your spouse, your children, your parents, whoever!

It’s too long to explain in this article but do read my Everything You Need to Know About Hibah Takaful, from a Non-Agent article.

Step 5: If you want to leave (some of) your wealth to charity for the pahala, set up Wakaf

According to our religion,

“When a man dies, his good deeds come to an end, except three: Ongoing charity, beneficial knowledge, and a righteous child who will pray for him.”

The ongoing charity part is important to me, and may be to you as well. Many people do earmark properties or assets to be given to charity after their death. You might have heard the term Wakaf.

You can discuss with your estate planner and/or heirs about Wakaf. But I do want to share, nowadays, thanks to technology, it is easier than ever to do Wakaf. You can even give part of your funds in ASNB for Wakaf through the MyASNB App!

The idea is, the dividends from your Wakaf-ed funds will be channeled to charities benefiting the ummah forever, even after your death. You get continous pahala. Isn’t that neat? 🙂

Do your estate planning ASAP – start with faraid calculator

The simple fact is no one know when they’re going to die. So you have to at least put *something* in place, for the sake of your loved ones.

It’s also practical to get your estate-planning sorted out because why would you spend your life accumulating wealth, just to let your assets go frozen and unclaimed, possibly for decades?

Don’t let your wealth get frozen after your death

And when I say a lot, I mean a LOT. It is estimated that anywhere from RM90 billion to RM105 billion of assets are ‘locked’ as frozen assets, 90% of which belong to the Malay community.

That’s a huge number so let me break it down. Assuming there are 20 million Malays in Malaysia, that’s an average of RM4050 to RM4725 in unutilised wealth, EACH! Money that could have been used for your children’s education or wealth building for the next generation are ‘locked’.

Ensure your wealth goes to people you want it to go to

And that’s if you LIKE your faraid heirs. What if you don’t? You want your money may go to people you may not even like*, because you’re bound by Islamic inheritance laws?

*you’re lucky if you have responsible/non-abusive family members as faraid heirs. Not everyone does

As a special note, Muslim converts NEED to set up estate planning documents as well. That’s because your non-Muslim family members have no claims to your wealth – all/most of it will go to Baitulmal. I’m sorry it works this way, but it does.

Invitation to share your experience

To Islamic Financial Planners/ Estate Planning Professionals – If any info above is wrong or lacking, please comment and share your knowledge. Leave your contacts if you want, so others interested to set up estate planning documents can contact you.

To everyone who has a Hibah, Wasiat and/or Trust in place. Share your experience – which company you used, how’s the process like, how much was the cost, things like that.

So anyway, I’ll end here. I’ve shared the knowledge, now its up to you to take action. Start with trying out the faraid calculator – download the iFaraid Calculator app. Have a blessed Ramadan y’all.