NOMINATION IN ISLAMIC LAW OF SUCCESSION

WRITTEN ASSIGNMENT

ISLAMIC LAW OF SUCCESSION

(SHAS 3368)

SECTION 2

DR TAJUL ARIS BIN AHMAD BUSTAMI

Group 1 (Tutorial Monday 2-3 pm)

Name Matric No.

1. Nasha Dzulaikha Binti Dzulkarnaen 2010984

2. Muhammad Aslam Bin Akberdin 1822765

3. Muhammad Hafeez Bin Abdul Rahman 2017381

4. Muhammad Arifuddin Bin Khaidzir 2011027

TABLE OF CONTENT

Introduction 3

Who can be nominated 4

When do you make a nomination 6

Advantages of nomination 6

Revoking a nomination 8

Conclusion 8

References 10
Introduction

No matter the wealth, every deceased individual will leave behind an inherited estate for their
heirs. This estate may consist of movable such as a home and land and immovable assets like a
car, saving, and investment accounts. One of the distribution and management tools for Muslims
is estate distribution through faraid1. Al-Qur'an and As-Sunnah both make clear indications
regarding the hukm and method of faraid distribution. However, there is no established method
for managing an inheritance estate2. However, as stated in Surah An-Nisa', verse 11, Muslims are
required to distribute inheritance estates using the faraid system.

However, delays in claiming the inheritance have led to the problem of unclaimed estates. Both
in rural and urban regions, there are many abandoned lands that are not well managed. These
vacant, unoccupied properties will lead to undesirable conditions, criminal activity, and barriers
to local development. Additionally, it will make it difficult to obtain funding from government
organizations for cultivation efforts3. The issue is getting worse as a result of society's lack of
response to the importance of estate planning and the belief that faraid is the only distribution
option4. Individual estate planning is therefore essential to solving this issue.

In Malaysia, different types of property are subject to nomination procedures based on their
categories. The first group includes regular contributions from companies, cooperatives, and
Employee Provident Funds. The second is having a savings account with a financial institution,
such as a Pilgrimage Fund savings account. Share certificates, mutual funds, insurance, and
Takaful plans make up the final group 5. Every depositor and contributor is subject to the duty to
designate the nominee. The nominee is responsible for distributing the nominated property to the
legal heirs in accordance with the Islamic inheritance process known as faraid6.

1 Ahmad Razimi, 2016

2 Hassan & Abdul Rashid, 2019; Nasrul & Mohd Salim, 2018
3 Mohd Shafiai & Moi, 2015
4 Kamarudin, Ibrahim, Ahmad, Abdullah, & Mohamad, 2016
5 Mohammad Shapien & Markom, 2018; Sarip, 2017
6 Hassan & Abdul Rashid, 2014
A Muslim member may choose a person to serve as the administrator, who will have the
authority to withdraw the remaining funds from the member's Private Retirement Scheme (PRS)
account following the member's passing. After passing, in the event that a Muslim member
successfully completes the nomination process. If the person(s) identified in the form die away,
the residual PRS assets will be administered by the person(s) named therein. The person or
people will be responsible for managing the funds per Islamic Law. If the Muslim member does
not nominate a candidate, the balance in the PRS account shall be paid to the legal administrator
of the Member's estate.

Who can be nominated

A nominee may be a Malaysian or a foreigner who has been granted permanent residency in
Malaysia. Any 'natural person' may be proposed as a nominee or administrator. The term "natural
person" only refers to specific persons; it does not include organizations, associations, societies,
welfare organizations, etc. A nomination must be witnessed by a person who is in the right mind
and has reached the age of 18, and must not be a nominee whether a Wasi or a Beneficiary under
the conditional hibah who is named. Moreover, anyone who has reached the age of sixteen may
nominate a person to receive takaful benefits, according to Schedule 10, Section 142,
(Paragraph 2(1)) of the Islamic Financial Services Act 2013 (Act 759). The important word
here is "may," which indicates that making a nomination is voluntary and not required by law. A
nominee may be appointed among family and friends and it is also crucially advisable to appoint
an individual that is fully trusted.
What happens when there is no nomination

It is generally known that if one has an insurance policy, then there is a section where he would
be asked to name beneficiaries/nominees. The same concept of beneficiaries applies to insurance
policies and wills. Basically, all of the money in your will is transferred to your designated
beneficiaries after your death. This is also true of insurance policies. The beneficiaries listed in
your insurance policy will get the rewards if you have passed away.

To ensure that the money from your insurance plans will go to the right individuals after your
death, you should name beneficiaries on your insurance policies. It really is that easy to
understand and simple to grasp. You may designate as few as one beneficiaries and as many as a
set number of beneficiaries. It is largely up to you and your choice how to distribute the funds in
your insurance policy. For instance, if you only choose one beneficiary in your insurance policy,
that person will receive the full amount. You might also choose two beneficiaries and divide the
reward equally between them. Some people agree to split the cost 60/40 as long as everyone
signs the agreement. People frequently designate beneficiaries as members of their family or
close friends. Some people like to change things up for a bit and name a close friend, a mistress,
or anyone who has no blood relations to them. Although complicated, these situations do exist.
Some people fail to designate beneficiaries. Some people occasionally designate charities and
organizations as their beneficiaries. However, this can be disputed in these situations because
relatives may not always support the decision.

In the absence of a beneficiary designation in your insurance policy, Bank Negara Malaysia
(BNM) will get the funds first. Until someone steps forward to claim the money, it will remain
there as unclaimed funds. It's a different situation if you have an estate. The insurance payoff
money will go to your estate if you have one. Your family will need to provide documentation as
proof if they wish to file a claim for the money from your insurance. Your next-of-kin will
receive the money if your insurance policy does not list any named beneficiaries. If you are
married and have children, the money will be split between your partner and your children. The
Distribution Act of Malaysia will govern how the funds are distributed (1953). By the way, there
is no tax on the insurance payout money. The amount that will be given to your next of kin is
shown in the table below. The funds are for the whole sum of money you've left behind, but they
also apply to insurance payout funds.

When do you make a nomination

Nomination can be made when you apply for a takaful certificate or after one has been granted to
you. When it is necessary, you can alter your nomination at any point during the certificate's
duration. All prior nominations, if any, shall be superseded by the most recent one you submit.

Advantages of nomination

The purpose of having a nomination is to ensure the financial protection of your loved ones, in
the scenario that an unfortunate event occurs. With the nomination, the takaful benefit can be
disbursed much faster without the need to obtain the Grant of Probate, Letter of Administration,
or Distribution Order. As a result, your loved ones are able to access the funds quickly. You are
advised to inform the named person that they have been nominated as Beneficiary/Executor for
your takaful certificate.

There are many situations where when the husband died without making any nomination, leaving
his wife and small kids, the husband's sibling makes an issue where they want to be the trustee to
control the property until the brother’s kids become adults.

One of the importance of nomination is money can be disbursed much faster This is because
there is no need to wait for the Faraid certificate or grant of probate or LOA or Distribution
Order which takes a longer time. According to the meeting. The National Fatwa Council in the
96th Kings Council Meeting which was held in 1978 decreed the rule that a nominee is a
person who is authorized to withdraw the money of a deceased person without having to go
through the process of estate distribution. Therefore, a nomination does not give the right of the
nominees to take out the money for themselves but to distribute it to the entitled heirs under
faraid.

As mentioned before, making a nomination can avoid the third-party hassle. This is because it
can avoid the hustle of dealing with the courts and land administrators. Besides that, it also can
avoid extra charges from third parties. This will reduce the management cost and time for
inheritance management

Process of nomination

Generally, there are many methods provided online to make a nomination. As an example, in
order to make a nomination under Private Retirement Scheme (PRS), they will ask you to meet
your PRS consultant or the PRS Provider in person to submit the numerous documents which
must be completed in order. The forms include the Private Pension Administrator (PPA)
Nomination Form and a copy of the front and back of the Identification Card of the member.
Following that, the PRS consultant or PRS Provider must see your ID card and confirm your
identity. The forms would subsequently be made available to the PPA by the pertinent PRS
Provider.

As mentioned, you will need a witness as a witness is required for the nomination process. You
can choose anyone who is 18 years old and above and of sound mind to be a witness to your
nomination. Nevertheless, there are a few people who are not allowed to be a witness in the
nomination which are the persons selected as nominees, the spouse of the nominee, an employee
of the PPA, or an employee/consultant of the PRS Provider. The witness is not required to be
present in person when you submit the nomination form to the PPA or the PRS Provider. Later,
the nomination will become effective when a completed and witnessed nomination form is
received by a PRS Provider.
Revoking a nomination

In the case of revocation of the nomination, if you choose to revoke your previous nominations
and do not wish to nominate any additional individuals to receive your PRS balance upon your
death, you may fill out and send a Revocation of Nomination Form to your PRS Provider or
Consultant.

However, there are other circumstances that would also revoke nominations previously made by
an individual. These circumstances are if all the nominees die before the individual, when the
individual submits a new PPA Nomination Form, in the case where a nominee fails to submit the
withdrawal form within one year from the death of the Muslim member as the one-year deadline
is to ensure the nominee takes action as soon as possible to expedite the distribution of the PRS
balance, and where the nominee is legally incapable to act as an administrator e.g. under the age
of 18 or is certified as having a permanent total disability or mental disability. In addition, a
Nomination shall not be revoked by any Will.

Conclusion

There are numerous methods available that can be used to arrange and handle the estate once the
owner passes away. However, a nomination instrument is thought to be a simpler approach for a
person to manage their estate, especially for savings and investment accounts that are subject to
various laws and regulations. The nomination process is the most useful way to administer an
estate, despite the fact that there are numerous parties to consider. Furthermore, there are no
requirements for candidates for property, therefore non-Muslims have occasionally served as
nominees for Muslim estates.

The status of a nominee, whether trustee or beneficiary, is unclear among Muslims. Despite the
fact that There has been a fatwa issued since 1973, civil and Shari'ah court practices show that
judges have their own ways of deciding. Before issuing the judgment, the judges thoroughly
examined the nomination clause. This is to ascertain the deceased's true intention, whether to act
as a trustee or to receive the estate as a beneficiary. In fact, this practice is consistent with the
Islamic legal maxim that "in contract, the effect is given to intentions and meanings rather than
words and phrases." In this regard, the fatwa issued in 1973 should not be applied to all
nomination clauses in general. It is more important to understand the meaning of the clauses than
the nomination itself.

Therefore, financial institutions that offer nomination services ought to take the initiative to
promote this trend by starting or holding awareness campaigns. These can help Muslims who
mistakenly believe that nomination and hibah are interchangeable avoid misunderstandings and
misunderstandings.
References

Nizaludin*, N. A., Kamarudin, M. K., & Muhamad, N. H. N. (2019). Nomination Status In

Islamic And Civil Law. The European Proceedings of Social and Behavioural Sciences.
https://doi.org/10.15405/epsbs.2019.09.15

The Legal Rights and Duties of Administrators and Executors of Deceased Muslims Property in
Malaysia. (2014). Medwelljournals.com. https://medwelljournals.com/abstract/?
doi=sscience.2014.98.101

Hassan, S. A., & Abdul Rashid, R. (2019). A need for regulatory framework of nominated
property in Malaysia: An issue of rights and duties of nominee. In M. Mohamad Noor, B.
Ahmad, M. Ismail, H. Hashim, & M. Abdullah Baharum (Eds.), Proceedings of Regional
Conference on Science,Technology and Social Sciences (RCSTSS 2016). Singapore: Springer.

‌ AQs PRS nomination by a Muslim member - PPA. (n.d.). Retrieved January 22, 2023, from
F
http://www.ppa.my/wp-content/uploads/2017/07/FAQs-PRS-Nomination-by-a-Muslim-
member-.pdf

Abdullah, M., Arifin, M., Omar, M., Deenmohd, M., & Napiah. (2012). Is aNominee a Trustee
or a Beneficiary? A Study on the Islamic Legal Maxim “In Contracts Effect is Given to Intention
and Meaning and not Words and Forms” and Its Relevance to the Nomination Concept and
Practice in the Administration of a Muslim’s Estate in Malaysia. Australian Journal of Basic and
Applied Sciences, 6(11), 153–159.
http://www.ajbasweb.com/old/ajbas/2012/Special%20oct/153-159.pdf

Inheritance under Muslim law. (n.d.). https://districts.ecourts.gov.in/sites/default/files/jcj

%20palakondawrkshp1.pdf