Trust for Muslims

Estate Planning in Muslims has always been a topic of great confusion.

The Muslim Personal Law only allows 1/3rd of the assets to be part of the Will and the rest should be distributed based on the Shariah Law. This could have been useful a few centuries ago, when very few people in the family used to work and the sizes of the families were very large. In such times, it was the obligation of a Muslim to take care of each and every member of his family. Times have changed. The families have become much smaller. And with greater education and awareness, most people want to be independent and make a living

A good way to do Estate Planning for a Muslim person, is therefore to create a Private Family Trust during his lifetime. This would not only help him and his family during his lifetime, but since the Trust is a living entity, he would be able to pass his Estate to his loved ones in a manner that he deems fit, without the encumbrances of the law.

It is a general notion that a Muslim, even if he wants, is not allowed to create a Private Family Trust but can only create a waqf. However not many people are aware that legally, a Private Family Trust can be created for all the citizens of India irrespective of their religion and there is no prohibition on creation of a Trust for Muslims in India.

The Courts have time and again observed that the Indian Trusts Act, 1882 is applicable to Muslims and there is no bar for a Muslim against creating a Trust. Hence, a Muslim is perfectly within his rights to create a Private Family Trust. However, it is extremely important that the intention of the Settlor is clearly indicated in the document to state that he desires to create a structure none other than a Private Family Trust.

In a Private Family Trust, a Muslim has the freedom to settle his properties, utilize it for his and his family members’ benefits, can reserve the power of alienation to himself or to the Trustees he chooses, amongst various other provisions without any restrictions in respect of the same.

There are enough Case Laws or judgements in the High Courts of India and the Supreme Court of India that have clarified creation of a Trust in case of a Muslim Individual.

The Muslim citizens should take advantage of this benefit by creating a Private Family Trust and prevent their hard-earned assets to go to undeserving persons

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