Vol 10, No 3 - Financial Planning Association of Malaysia

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ISLAMIC FINANCE July - September 2010 The Doctrine of ‘Aul and Its Impact on Estate Planning By Azman Ismail “A particular aspect that has attracted attention among financial planners is the one related to the distribution of estate in Islam. This is especially true among those who specialise in estate planning.” The awareness and interest in Islamic financial planning has grown steadily and there are now many financial planners who have attended the Islamic Financial Planning courses. A particular aspect that has attracted attention among financial planners is the one related to the distribution of estate in Islam. This is especially true among those who specialise in estate planning. However, there are only a few financial planners who are involved in, more so who understand, the various components of Islamic estate planning especially the one related to the Islamic law on distribution of estate. (For an initial understanding of the subject see author’s article, ‘Faraid – The Missing Link’, Personal Money, February 2003) One aspect of the Islamic law of distribution that will have an impact on estate planning relates to the distribution of estate; where when the shares of the Quranic heirs (i.e. heirs that are determined by the Quran) are added together, the sum equals to more than one. To solve this problem, Muslim scholars resort to the doctrine of ‘aul. ‘Aul literally means “increase” and the doctrine of ‘aul states that when the shares allocated by the Quran to the various heirs when added together amounts to more than one, their shares are subjected to a proportionate abatement by increasing the common denominator. What this means is that the shares of the Quranic heirs are proportionately reduced so that each heir now gets less than what is mentioned in the Quran. 8 The 4E Journal
The doctrine of ‘aul was conceived possibly in the sixty-fourth decade, several years after the death of the Prophet Muhammad. It was reported that during the reign of Umar the second Caliph, he was asked to judge on the distribution of the deceased’s estate. The deceased left a husband and two full sisters (i.e. sisters of the deceased with the same mother and same father). According to the Quran, the husband is entitled to a half of the estate whilst the two sisters are entitled to two-thirds of the estate. The Quran says, ‘And unto you belongeth a half of that which your wives leave, if they have no child ….’ (Chapter 4, Verse 12) and ‘They ask thee for a pronouncement. Say: God hath pronounced for you concerning distant kindred. If a man dies childless and he has a sister, hers is half the heritage, and he would have inherited from her had she died childless. And if there be two sisters, then theirs are two-thirds of the heritage…(Chapter 4, Verse 176) “The doctrine of ‘aul was conceived possibly in the sixty-fourth decade, several years after the death of the Prophet Muhammad.” Now when we add the fractions together, it is obvious that the total sum is sevensixth (7/6). Caliph Umar, being a pious man, did not want to take a decision that seems to contradict the Quran and since the law of estate distribution is a very important matter, he consulted several of the Prophet’s companions in line with the Quranic verse, “Those who hearken to their Lord, and establish regular prayer; and who (conduct) their affairs by mutual consultation…” (Quran, 42 : 28). At that time Umar wondered whether he should give to the husband his share first and then give the balance equally to the sisters; or should he give to the sisters their share first and then give the balance to the husband? If he were to implement the former method, then the husband will get a half of the estate and the sisters will get a quarter each. On the other hand, if he were to implement the latter method, the heirs will get one-third each. Either way, each of the heirs will not get his or her share according to the Quran. Umar had possibly wanted to proportionately divide the estate but he needed other companions to confirm this thought. He put forward the issue by saying that he did not know which of them God has preferred over the other. Among the companions who attended the meeting was Abbas bin Abdul Mutalib the Prophet’s uncle, Saidina Ali the fourth Caliph and Zaid bin Thabit the faraid expert. One of the companions suggested that each share be proportionately reduced and argued that this does not go against the spirit of the Quran. It was suggested in a hypothetical proposition that if a man died leaving six dirhams, and suppose that there were two people claiming their debt from the estate where one of them claims three dirhams and the other claims four dirhams, what would we have done? We would apply the rule of bankruptcy and divide the dirhams proportionately between the two. All the companions present at that meeting agreed and thus the doctrine of ‘aul was born. The doctrine of ‘aul says that in the event where there are several Quranic heirs surviving the deceased and their fractional shares when added together amount to more than one, the solution is to proportionately decrease the shares of each heir. This proportionate decrease is done through the following steps: 1. Get the lowest common multiple (LCM) of the denominators of the original fractional Quranic shares. In this case, the LCM of the denominators is 6 being a multiple of 2 (the denominator for half, the husband’s Quranic share) and 3 (the denominator for two-thirds, the Quranic share of the sisters. 2. Add the sum of the numerators. Since the numerators are now 3 (1/2 = 3/6) and 4 (2/3 = 4/6), the sum is 7. 3. Increase the denominator so that it will equal to the sum of the numerators. The denominator is now 7. 4. Allow the numerators to remain. 5. The shares of the heirs are now the new numerators (after the LCM process) over the new denominator i.e. 3/7 and 4/7. In the above example, the husband would get 3/7 instead of half and the sisters would get 2/7 each instead of 1/3 each. This doctrine has now been accepted by almost all the Islamic schools of thought including that of Malaysia. Therefore Islamic financial planners in Malaysia and elsewhere, and their clients, should take into consideration this doctrine when developing an estate plan for their Muslim client. Otherwise, the actual amount that the heirs will obtain will be less than the amount required. Let us take another example. Suppose a man has a wife, parents and two daughters. If the man were to pass away, the wife would get one-eighth, the parents one-sixth each and the daughters get one-third each. These apportionment are based on verses 11 and 12 of chapter 4 of the Quran. In verse 11, the Quran says, ‘…and if there be daughters more than two, then theirs is two-thirds of the inheritance and if there be one (only) then a half. And to his parents a sixth of the inheritance…’. In verse 12, the Quran says, ‘And unto them belongeth the fourth of that which ye leave if ye have no child, but if ye have a child then the eighth of that which ye leave…’ Before applying the doctrine of ‘aul, the sum of the Quranic shares is 27/24 i.e. Father’s share + mother’s share + wife’s share + two daughters’ share xx 1/6 + 1/6 + 1/8 + 2/3 xx 4/24 + 4/24 + 3/24 + 16/24 = 27/24 When the doctrine of ‘aul is applied to the above case, the shares of the various heirs are as follows : xx 4/27 + 4/27 + 3/27 + 16/27 = 27/27 The following table represents the shares of the Quranic heirs before and after the doctrine of ‘aul. Quranic Heir Father Mother Wife Two Daughters Share Before ‘Aul 1/6 1/6 1/8 2/3 Share After ‘Aul 4/27 4/27 3/27 = 1/9 16/27 Let us suppose that before applying the doctrine of ‘aul, a client, in consultation with an Islamic financial planner, has determined that he ought to leave RM180,000 for his family. Suppose he came up with this figure with the assumption that his two daughters will get twothirds of his estate should he pass away. Suppose also that his nest egg has already accumulated RM 100,000 and he needs another RM80,000 in insurance or takaful cover. However, since he leaves behind a wife, parents and two daughters, he now needs an additional insurance or takaful coverage of RM30,000 to fulfill the needs of his family after his death. Confused? Don’t be. Contact your Islamic financial planner. (More cases of ‘aul can be found in the book, “Perancangan Perwarisan Islam” written by the author and published by Amanah Raya Bhd.) The author is the managing director of IIFIN Consulting Sdn Bhd, a one-stop specialist consultancy in Islamic finance and insurance. The 4E Journal 9
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