The issue of housing loan with a deceased spouse, from a Muslim perspective

By Viktor Chong viktorchong@thestar.com.my

WHAT happens to your housing loan when you die?

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Or more specifically, what would happen to your spouse should you pass away without settling the housing loan?

Previously, Messrs Eunice Tan & Partners founder Eunice Tan Mui Lee answered such legalities from a wide perspective in the article titled “What happens to your housing loan when you die?”

However, is it different when the deceased happens to be a Muslim? Islamic inheritance property planner Norisah Ibrahim answers a few burning questions.

1/ If the deceased did not create a will, what are the methods that the heir or heirs could do to take over the ownership of the house?

The presence of a will simplifies the matter of governing the deceased estate and inheritance. If the deceased did not create a will or appoint an executor, then the Faraid heirs will have to discuss and cooperate to appoint among one of them to govern the estate and inheritance of the deceased.

The executor that has been appointed with the consent in writing from all the heirs, will then begin the process of procuring the Letters of Administration and also the Faraid certificate.

Once the Letter of Administration is granted, the executor will act and administer the asset for the deceased. He or she shall then complete the loan payment, and the ownership of the house is given to the heirs after the loan has been settled.

2/ Is this process different from the process involving a non-Muslim?

There is no difference between a Muslim or a non-Muslim in such a situation. The only concern is the way the house and inheritance is distributed according to the law..

Muslim – The distribution of inheritance is through the Syariah Law.
Non-Muslim – The distribution of inheritance is through the Distribution Act 1958.

Distribution according to Syariah Law:

Primary heirs: Spouse, parents, legitimate children

Scenario one

The husband dies, leaving behind heirs such as his father, mother, wife, son and daughter.

The distribution of inheritance according to Faraid heirs after settling all debts and responsibilities in accordance with the law (Syariah) of the deceased are as such:

Father (⅙)
Mother (⅙)
Wife (⅛)
Son (Two portions of the remaining inheritance)
Daughter (One portion of the remaining inheritance)

Scenario two

The husband dies, leaving behind heirs such as his wife, daughter, brother and sister.
The distribution of inheritance according to Faraid heirs after settling all debts and responsibilities in accordance with the law (Syariah) of the deceased are as such:

Wife (⅛)
Daughter (½ if only one)
Daughters (⅔ if two or more daughters)
Brother (Two portions of the remaining inheritance)
Sister (One portion of the remaining inheritance)

When a death occurs, the main thing to do is to:

1/ Determine the heirs that have a valid claim over the inheritance

2/ Once all the Faraid heirs that have a valid claim over the inheritance of the deceased have been identified, they must then discuss together and appoint one person among them as the executor.

3/ Categorise all the assets of the deceased: Movable and non-movable assets as well as his or her debts (Worldly debts and debts to Allah)

4/ As stated above, the executor will begin the job of administrating the inheritance of the deceased by filing for the Faraid certificate and procuring the Letter of Authority. He or she will then settle all the deceased’s debts (worldly debts and hereafter) such as the housing loan, credit card as well as ensure that the desires of the deceased are met, such as the providence of alms to non-Faraid heirs.

The claim towards inheritance can be done at:
1/ Amanah Raya Bhd – If the deceased’s inheritance is composed of movable assets only.
2/ Pejabat Pusaka Kecil – If the deceased has movable and immovable assets that are less than two million.
3/ High court – Movable and non-movable assets that are worth two million and above.

Conclusion

One’s failure to plan his or her Islamic assets carefully during life will incur difficulties later on. Problems may arise when the deceased’s heirs fail to cooperate with each other, making a claim to inheritance difficult.

Conflict during the fight for inheritance will create a condition where the heirs will continue using the assets that do not belong to them, and the debts of the deceased are not settled.

By having a proper asset planning that is comprehensive, we ensure that the assets accumulated during our life can be appropriately distributed to our loved ones. All our debts and desires are solved and met, while the children below age are not neglected.

Related articles:

Can your foreign spouse finance your housing loan in the event of your death?

Different financing alternatives for your housing loan



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