Books and journals Case studies Expert Briefings Open Access
Advanced search

Re-evaluating the practice of hibah trust in Malaysia

Nazrul Hazizi Noordin (IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Muhammad Issyam Ismail (IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Muhammad Abd Hadi Abd Rahman (IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Siti Nurah Haron (IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Adam Abdullah (IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)

Humanomics

ISSN: 0828-8666

Publication date: 14 November 2016

Abstract

Purpose

This paper aims to re-evaluate and thus recommends possible ways in improving the current practice of hibah trust in Malaysia.

Design/methodology/approach

This study conducts a thorough and critical review on relevant literature on Islamic wealth management and estate distribution. Besides, the current practice and application of hibah trust by the Malaysian trustee companies such as Amanah Raya Berhad and As-Salihin Trustee Berhad is analyzed based on information gathered from their publications and direct consultation.

Findings

Based on the comparison made between hibah trust and its conventional counterpart, living trust, this study found that that the hibah trust product mirrors the conventional living trust, which provides a high degree of freedom to the benefactor to decide on the distribution of his wealth without taking into consideration the interest of the eligible heirs under farai’d. Nevertheless, it is undeniable that the practice of hibah trust would be able to expedite the lengthy and complex procedures of inheritance, reduce administrative costs and avoid legal impediments and inheritance tax.

Practical implications

This paper proposes a comprehensive framework for an improved asset distribution under hibah trust within the Malaysian Islamic wealth management industry by highlighting the significance of fara’id and wasiyyah rules. This proposed framework of hibah trust would become a useful reference for the policy makers in designing a dedicated regulation or legal provisions in the established laws that will govern the practice of hibah trust in Malaysia.

Originality/value

The novelty of this paper lies in highlighting the importance of adhering to the law of Islamic inheritance rules as ordained by Allah s.w.t in structuring contemporary Islamic estate planning instruments such as hibah trust, which is not evident in the current practice.

Keywords

  • Islamic finance
  • Fara’id
  • Hibah trust
  • Living trust
  • Wasiyyah

Citation

Noordin, N.H., Ismail, M.I., Abd Rahman, M.A.H., Haron, S.N. and Abdullah, A. (2016), "Re-evaluating the practice of hibah trust in Malaysia", Humanomics, Vol. 32 No. 4, pp. 418-436. https://doi.org/10.1108/H-05-2016-0044

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

Please note you do not have access to teaching notes

You may be able to access teaching notes by logging in via Shibboleth, Open Athens or with your Emerald account.
Login
If you think you should have access to this content, click the button to contact our support team.
Contact us

To read the full version of this content please select one of the options below

You may be able to access this content by logging in via Shibboleth, Open Athens or with your Emerald account.
Login
To rent this content from Deepdyve, please click the button.
Rent from Deepdyve
If you think you should have access to this content, click the button to contact our support team.
Contact us
Emerald Publishing
  • Opens in new window
  • Opens in new window
  • Opens in new window
  • Opens in new window
© 2021 Emerald Publishing Limited

Services

  • Authors Opens in new window
  • Editors Opens in new window
  • Librarians Opens in new window
  • Researchers Opens in new window
  • Reviewers Opens in new window

About

  • About Emerald Opens in new window
  • Working for Emerald Opens in new window
  • Contact us Opens in new window
  • Publication sitemap

Policies and information

  • Privacy notice
  • Site policies
  • Modern Slavery Act Opens in new window
  • Chair of Trustees governance statement Opens in new window
  • COVID-19 policy Opens in new window
Manage cookies

We’re listening — tell us what you think

  • Something didn’t work…

    Report bugs here

  • All feedback is valuable

    Please share your general feedback

  • Member of Emerald Engage?

    You can join in the discussion by joining the community or logging in here.
    You can also find out more about Emerald Engage.

Join us on our journey

  • Platform update page

    Visit emeraldpublishing.com/platformupdate to discover the latest news and updates

  • Questions & More Information

    Answers to the most commonly asked questions here