Recently I was given the opportunity to speak at The Islamic Center of Greater Lansing on â€œSimplifying your Shariah Estate Plan.â€ My primary focus for the presentation was two-fold: (a) to provide a greater understanding for the community on the differences between a Revocable Living Trust and a Last Will and Testament; and (b) to inform the community on the importance of a Durable Power of Attorney and a Health Care Power of Attorney.
As the presentation ended and the question and answer period began, I realized that the focus of the questions was on the differences of a Trust and a Will, and which would be more suitable for them individually. Seeing how my article â€œTo Will or Not to Willâ€ has drawn attention from many in our community, I wanted to take the opportunity to write on the other product, the Revocable Living Trust, and hopefully shed some light on the benefits of obtaining such a product.
If you are at the stage where you are prepared to create an estate plan, you may be well-aware of the requirements that are placed on us Muslims: Narrated by Ibn Umar, Prophet Muhammad (s) once said: â€œIt is not right for any Muslim person who has something to bequeath to stay for two nights without having his last will and testament written and kept ready with him.â€
The following is a concise list of facts about Revocable Living Trusts that many may or not be taking into consideration when deciding on their estate plan. I would strongly advise for you to consult with an Attorney about these issues and to get a better, clearer, understanding of how a trust actually operates versus a Will.
1. Avoid Probate: One of the primary advantages of establishing a Trust is that you avoid the probate process; therefore, you avoid having the courts involved in your estate. This is extremely beneficial for multiple reasons: (a) allows you to distribute your assets almost immediately; (b) helps reduce the cost that your estate would otherwise pay; (c) allows you to avoid having lawyers involved; and (d) ensures a much smoother process for handling the estateâ€™s affairs.
2. Costs: One of the biggest drawbacks of establishing a Trust is the upfront cost that is typically associated with it. From my experience, this is what usually deters clients away from creating a trust; however, more often than not, this is because they do not fully understand the benefits and the possible savings a Trust can actually provide. The average cost of going through the probate process is approximately 3-5% of your entire estate. Now, depending on the value of your estate, this cost can be excessive. However, in contrast, once you create a Trust, the only fee you will be required to pay is the actual cost of the Trust.
If you are currently speaking to an Attorney about a Trust, be sure to ask whether there are any hidden costs, e.g. extra charges for making changes or costs for speaking to the Attorney about the Trust after it is created. Although I can only speak on behalf of my firm, we ensure that a client who purchases a Trust with us is given no additional fees, and has essentially retained us for the duration of their life (for their estate planning needs). Please make sure you understand your Attorneyâ€™s fee structure before signing up for any estate planning documents.
3. Private Information: Another important advantage with a Trust is that you do not open yourself up to the public. In other words, under a Trust, your information is kept private between you, your spouse and your immediate family (or whomever you choose). Unlike a Will, where once it is filed with the court, it is open for the public to see; with a Trust there is no requirement of having it filed with the court. For many, this is a very serious issue, as not many Muslims are keen on the idea of having their assets openly disclosed to the public. However, these are also issues that you need to address when creating your own personal estate plan.
It has become far too common for clients to focus too much on the type of estate plan they should create (trust vs. will), and less focused on the requirements that have been placed upon us. If you have yet to establish an estate plan, and if you are stalling the process because you confused on which product is more suitable for you, I highly advise for you to at least satisfy the bare-minimum requirement that Allah s.w.t. has made mandatory on us, and draft a Will; at least until you have informed yourself of the advantages to a Trust, and decided whether or not a Trust is in fact, the better product.
In addition, it is always important to discuss and understand these issues with your Attorney. Make sure you speak to an attorney who will not charge for the initial consultation and is knowledgeable in the area; especially in relation to Shariah law. With Ramadan approaching in less than two-weeks, there may be no better time than now to take advantage of completing a deed and satisfying your requirements; as well as ensuring you have protected your assets and have them distributed pursuant to Shariah law, and not Michigan law.
Adil Daudi is an Attorney at Joseph, Kroll & Yagalla, P.C., focusing primarily on Asset Protection for Physicians, Physician Contracts, Estate Planning, Business Litigation, Corporate Formations, and Family Law. He can be contacted for any questions related to this article or other areas of law at email@example.com or (517) 381-2663.