Investigating tendencies of Malaysian Muslims in Islamic estate planning: Insight into its determinants

Norazlina Abd Wahab Norazlina Abd Wahab,Zairy Zainol Zairy Zainol,Selamah Maamor Selamah Maamor,Suraiya Hashim Suraiya Hashim,Hakimah Yaacob Hakimah Yaacob

doi:10.33102/jmifr.v18i2.377

Norazlina Abd Wahab Norazlina Abd Wahab, Zairy Zainol Zairy Zainol + Show 3 more

Open Access

https://doi.org/10.33102/jmifr.v18i2.377

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Abstract

Estate planning is one of the crucial elements of managing property during a person’s lifetime. It involves both handling and managing property during one’s lifetime and after death. For Muslims, the objectives of Shariah, which are known as Maqasid Shariah, can be attained if their finances are planned in a wise and cost-effective manner. Unfortunately, it was reported that frozen inheritance assets have steadily increased from the day of Independence, amounting to RM70 billion in 2020 indicating the seriousness of the matter. The freezing of inheritance property is detrimental to the economy and thus opposes the spirit of Maqasid Shari’ah which recommends that it should be properly managed for the benefit of the public. This is where estate planning plays its role in ensuring quicker and easier distribution of assets and property. Hence, the objective of this research is to investigate Malaysian Muslims’ tendencies in estate management planning and its determinants. A total of 406 respondents throughout Peninsular Malaysia responded to the prepared survey, where the Partial Least Squares Structural Equation Modelling (PLS-SEM) approach was employed as the main data analysis for this study. The findings revealed that altruism, advantages and compliance were significant in influencing tendencies of Malaysian Muslims in Islamic estate planning. Surprisingly, service was found to be an insignificant factor in influencing the tendencies of Malaysian Muslims in Islamic estate planning. This study provides some insights on the role of policymakers and estate planning related industry in ensuring the compliance of estate planning product and increasing the awareness of Muslims to do estate planning by promoting the advantages and importance of doing so. Policymakers are also welcome to engage in this matter by providing earlier education on Islamic estate planning among Muslims in Malaysia.

Highlights

In Islam, the wealth of the deceased is distributed using the faraid system
As the purpose of this study is to examine the influence of the determinants on the tendencies in Islamic estate planning among Muslims in Malaysia which involves a large sample, the questionnaire has been used as an instrument in this study
The results show successful establishment of discriminant validity of this study, given that the vertical and horizontal values are less than the square roots of Average Variance Extracted (AVE) for all variables, which means that the correlations of the other constructs is less than the extracted AVE

Summary

Introduction

In Islam, the wealth of the deceased is distributed using the faraid system. The administration of wealth and assets after a person’s death to his or her heirs is governed by faraid under Islamic law, the principles of which are found in the Holy Quran and the hadith or tradition of the Messenger of Allah. According to a recent statistical report from Amanah Raya Berhad, RM70 billion worth of properties in Malaysia have been frozen from being distributed to any receivers (Borneo Post Online, 13 June 2020) due to several reasons. Among the reasons for the undistributed properties are awareness of the heirs, cost of property claims and legal restrictions. This is evidenced based on a report by the Government of Malaysia that

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