Beneficiaries: Their Role and Limitations

Many believe that naming beneficiaries for their assets is sufficient to facilitate heirs in claiming their savings, EPF, and SOCSO funds left behind when they pass away.

Hence, some name their spouse, mother, father, children, and even their grandchildren as beneficiaries as a testament of love and to ensure their well-being after one's demise. However, did you know that the 49th National Fatwa Council on 19th September 2000 ruled that EPF and saved funds are inheritances that must be distributed according to the Faraid law?

Hence, the named person is merely a trustee and should distribute the deceased's assets according to the Faraid, not claim it all as their absolute right.

So, even if a husband names his wife as the recipient, the wife is not the absolute recipient. Instead, she must fairly distribute the deceased's assets among all rightful heirs, according to Faraid. Failure to do so would result in the named person bearing the sin.

Unfortunately, this fact is unknown to many, leading most to assume that by naming beneficiaries, the issue of estate management is resolved. Moreover, many beneficiaries become greedy, seizing the assets, and leaving the rightful heirs without their due share.

Those who choose to ignore this might bear the sin of using property and assets that do not belong to them. The claiming process is challenging; representatives or trustees must go to court or Amanah Raya to obtain power of attorney and probate. It might take years if the heirs or trustees fail to reach an agreement or if disputes arise.

Besides taking time, this claiming process incurs certain fees depending on the value of the assets, such as legal and administrative fees. Imagine if you name your 75-year-old mother as the beneficiary;it would be challenging for her to manage the assets you leave behind. If she's incapable, the assets might become unclaimed, and your rightful heirs might not receive their share.

However, don't worry because Islam offers various options to ease estate management, including Wasiat, Hibah, Amanah, and Wakaf.

 But we must proactively manage our assets and not expect everything to be done for free. This careless attitude causes many heirs to become victims, forcing some to sell off assets, including the deceased's house, just to ensure all rightful heirs receive their share.

One known and frequently used method is Wasiat; however, assets under Wasiat are still subject to probate laws. It must be managed according to prescribed processes, including obtaining representative power before the Wasiat can be executed.

One of the best options is Hibah, which designates the recipient as the absolute receiver and can be given to anyone desired, including non-eligible heirs such as adopted children, foster mothers, close friends, and others.

Hibah can also help if all your children are female, as the Faraid claim for those with only female children is more complicated.

Since Hibah is a gift based on love, the amount of property that can be gifted is unlimited, and the property already gifted will cease to be part of the estate.

Using Wasiat and Hibah does not deny the authority of asset distribution through Faraid; it just helps reduce problems that often arise when assets are left as they are, as adequately managed assets will continue to benefit those we love.