Ethica Institute of Islamic Finance™

What are the expenses permissible to deduct from the estate before its division among the heirs?

Before calculating the market value of the entire estate, expenses are taken out obligatorily in the following order:

1) Burial: The material, labor and related (e.g. transportation) costs associated with preparing and burying the body should be taken from the deceased’s estate; it is impermissible to use any of the deceased’s estate to give charity (even if given with an intention to benefit the deceased) or to pay for funeral expenses unrelated to burial (e.g. feeding and accommodating mourners);

2) Zakat: Unpaid zakat should be paid from the deceased’s estate, when it is known that the deceased did not pay for any year he was obligated to pay; zakat is not paid for the current year because at least an entire lunar year must pass over the property for zakat to be obligatory, and death before the passing of an entire year removes the obligation thereby;

3) Collateral: Property that currently serves as collateral for an existing transaction must be removed from the estate in order to maintain the contractual obligation to which it is attached;

4) Property: Any property that is not owned by the deceased, whether due to renting, borrowing, non-payment, or the like, should be taken from the deceased’s estate; if the property is lost, damaged, stolen or diminished in a way to undermine its usefulness, it is paid for at its market equivalent price;

5) Estate Taxes: Any estate taxes payable in relation to the division of the deceased’s estates should be taken from the deceased’s estate;

6) Debts: All financial debts (e.g. marriage payment, personal loans, unpaid bills, etc.) other than those mentioned above should be taken from the deceased’s estate;

7) Bequests: Bequests are allowable up to one-third of the estate, though with the unanimous consent of the sane, adult estate heirs, as much as the entire estate (i.e. the combination of the one-third allotted to bequests and the remaining two-thirds allotted to the estate heirs) is bequeathable;

8) Pilgrimage: If an individual obligated to perform the pilgrimage dies before fulfilling the obligation, it becomes obligatory to pay someone to perform a posthumous makeup on behalf of the deceased by deducting money from the deceased’s estate if one-third of the estate covers the cost of the pilgrimage; if it does not, it is permissible for the inheritors to leave the deceased’s obligation unfulfilled; it is also permissible for the inheritors to fulfill the deceased’s obligation from the remaining inheritance (of the sane, adult inheritors) if all the sane, adult inheritors so agree.

After deducting expenses from the deceased’s estate for the categories above, the estate is divided among the heirs.

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