Understanding Faraid Process
What is Faraid?
Faraid is an Islamic law on how a Muslim’s property is divided among heirs after their death.
The word faraid originates from the Arabic word meaning "portion" or "division."
According to the E-Syariah portal, faraid is divided into two categories:
a) Immovable assets like land and houses.
b) Movable assets such as bank savings, shares, EPF, Tabung Haji, insurance, cooperative shares, vehicles, jewelry, and similar items.
Assets will be Frozen
When a Muslim dies without leaving any instructions, such as making a hibah (gift) or a will, all the assets left behind are automatically frozen and will be distributed according to faraid.
No heirs or close relatives are allowed to withdraw, transfer, or sell any of the immovable assets of the deceased without first obtaining a Letter of Administration from the Department of the Director-General of Land and Mines (Jabatan Ketua Pengarah Tanah dan Galian) or the Civil High Court, depending on the value of the deceased’s assets.
Before applying for the letter of administration, heirs must first apply for a faraid certificate from the Shariah Court to determine who are the rightful heirs and to determine their respective shares of the inheritance.
Steps to Claim Faraid
The first step is to appoint an administrator from among the heirs, and it must be agreed by everyone. If no agreement is reached, the heirs can choose an administrator from a non-heir, for example a trustee or lawyer, to make the claim, with mutual consent from heirs.
This administrator will then be responsible to obtain the Faraid Certificate and manage the sale or division of the deceased's assets, as well as to withdraw funds from banks, EPF, and other institutions after acquiring the letter of administration.
The administrator must identify all eligible heirs and check the deceased's assets, including conducting searches for bank accounts and any outstanding debts.
Once all assets and heirs are identified, the administrator must file an application for the Faraid Certificate at the nearest Shariah Court.
Documents Required for Faraid Claims
To proceed with the faraid claim will require documents to be well prepared. The documents required are:
- Copy of the death certificate / burial permit / presumption of death order
- Copy of the applicant’s identification card
- Copies of birth certificates / identification cards of the heirs
- Copy of marriage certificate / divorce / reconciliation document
- Copies of asset-related documents, such as land grants, bank statements, and others.
To start the faraid process, the appointed heir or administrator must submit the form and documents to apply for the Faraid Certificate at the Shariah Court, because only the Shariah Court has the authority to determine who are the rightful heirs.
Faraid Hearing Process
Once the application is received, the Shariah Court will set a hearing date. At the hearing, the court will listen to the testimony of the heirs and gather information about all of the involved inheritance.
Based on all of the information collected, the court will then issue a decision on the division of assets. This decision will be issued in the form of a Faraid Order (Perintah Faraid), specifying each heir’s entitlement to the assets.
It’s important to note that the Faraid Order is not a document for asset distribution. It simply confirms the rightful heirs and also their portions according to the Islamic law.
Asset Distribution Procedure
1. Assets not exceeding RM2 million in value
If the deceased’s assets include real estate such as house, and land, with the total value, including cash, jewelry, EPF, shares, and others, not exceeding RM2 million, the application for a letter of administration must be made at the Small Estates Office.
2. Assets exceeding RM2 million in value
If the total assets exceed RM2 million, the application must be made at the Civil High Court, depending on the place of death or residence of the administrator.
3. Assets between RM600,000 and RM2 million
If the assets do not include real estate but are between RM600,000 and RM2 million, the application must go through the Civil High Court.
4. Assets below RM600,000
If the assets do not include real estate and are valued below RM600,000, it will be categorized as a simple estate and should be referred to the Amanah Raya Berhad. Simple estate cases are usually easier to process since it won't require complicated legal procedures or court involvement.
Conclusion
The process of claiming inheritance is not as straightforward as it may seem, especially if it involves large estates.
Therefore, it is encouraged to plan ahead for distribution of assets while still alive to ease the burden on heirs. Effective estate planning also helps to prevent heirs from being shortchanged, particularly if there are only daughters, young children, or adopted children involved.
One of the proactive steps that can be taken while we are still alive is to make a will and Hibah (gift), such as Hibah Amanah.
Key Highlights
1. The heirs must apply for the Faraid certificate from the Shariah Court, which will then identify the rightful heirs.
2. The Faraid certificate is not an instrument of division, rather it confirms the heirs and the amount of their shares from the inheritance.
3. After obtaining the certificate, the heirs must settle any debts, funeral expenses, and matrimonial property claims (harta sepencarian) before starting the asset division.
4. It is advised to plan your estate through wills and hibah to prevent inheritance disputes and ensure the well-being of heirs.
Source: e-Syariah