Fatwa #4434426 March 2020South Africa
Taking out a Life Insurance Policy to avoid Estate Duty Taxes
Question
Assalaamu alikum Mufti Saheb. The escalating burden of Estate duty that is being imposed by the South African government once a person passes away has become quite a scary and burdensome scenario for the living dependants. I am told that there is a fatwa that has been passed which allows one to take out insurance on one's life (normally not allowed in Shariah) for the pursposes of paying off the Estate duty cost once one passes away. If there is any further some that is available after paying off the madatory Estate Duty, then that sum must be given away in full to charity. Is this true and if so, can Respected Mufti please elaborate on this issue with any further advice please? If this is not true, what advice can Respected Mufti give to overcome this burden? I thank you for your time and may Allah bless you in both worlds for your dedication and khidmat to the Ummah.
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Brother in Islam,
According to the SARS (South African Revenue Service) website, the estate duty is 20% of an estate exceeding R3.5 million. If the estate is R30 million or more, the estate duty will be 25%.[1] Accordingly, if the estate is R3.5 million, the estate duty will be R700 000 and if the estate is R40 million, the estate duty will be R10 million. The exorbitant amount of estate duty deprives the heirs of their share of inheritance from the estate duty.
In principle, all forms of conventional insurances are prohibited. If one takes out an insurance policy only to overcome and avert the estate duty and to safeguard the rights of the heirs, then that will be regarded as adopting a smaller violation to avert a bigger violation. [2]
Conventional insurance is indeed a violation of Shariah. However, depriving heirs of their rightful inheritance is a bigger violation. It violates the laws of inheritance as well as rights of heirs. Therefore, there is a leeway to take out conventional insurance only to pay estate duty to avert the bigger violation of the rights of the heirs. However, it should be noted that any surplus amount must be given in Sadaqah. This must be recorded in the will and all necessary and legal steps must be taken to ensure that the excess money is disposed of in Sadaqah. It should also be noted that the premiums paid in insurance will form part of the estate. [3]
This is also the opinion of Hadhrat Mufti Taqi Saheb (Madda Dhilluhu) & other senior Muftis.
And Allah Ta’āla Knows Best
Mahmood Suliman
Student Darul Iftaa
Gaborone, Botswana
Checked and Approved by,
Mufti Ebrahim Desai.
[1] https://www.sars.gov.za/ClientSegments/Individuals/Tax-Stages/Pages/Tax-and-Inheritance.aspx
[2] الأشباه والنظائر لابن نجيم (ص: 76)
قَالَ الزَّيْلَعِيُّ فِي بَابِ شُرُوطِ الصَّلَاةِ: ثُمَّ الْأَصْلُ فِي جِنْسِ هَذِهِ الْمَسَائِلِ أَنَّ مَنْ اُبْتُلِيَ بِبَلِيَّتَيْنِ، وَهُمَا مُتَسَاوِيَتَانِ يَأْخُذُ بِأَيَّتِهِمَا شَاءَ، وَإِنْ اخْتَلَفَا يَخْتَارُ أَهْوَنَهُمَا؛ لِأَنَّ مُبَاشَرَةَ الْحَرَامِ لَا تَجُوزُ إلَّا لِلضَّرُورَةِ وَلَا ضَرُورَةَ فِي حَقِّ الزِّيَادَةِ
درر الحكام في شرح مجلة الأحكام (1/ 42)
(الْمَادَّةُ 31) الضَّرَرُ يُدْفَعُ بِقَدْرِ الْإِمْكَانِ]
يَعْنِي لَوْ دَخَلَ عَلَيْكَ سَارِقٌ مَثَلًا فَادْفَعْهُ عَنْكَ بِقَدْرِ إمْكَانِكَ، فَإِذَا كَانَ مِمَّنْ يَنْدَفِعُ بِالْعَصَا، فَلَا تَدْفَعْهُ بِالسَّيْفِ، كَذَا إذَا اغْتَصَبَ شَخْصٌ مَالَ آخَرَ وَاسْتَهْلَكَهُ فَلِأَنَّ إرْجَاعَ الْمَالِ الْمَغْصُوبِ الْمُسْتَهْلَكِ بِعَيْنِهِ غَيْرُ مُمْكِنٍ يَضْمَنُ الْغَاصِبُ مِثْلَ ذَلِكَ الْمَالِ إذَا كَانَ مِنْ الْمِثْلِيَّاتِ وَقِيمَتَهُ إنْ كَانَتْ مِنْ الْقِيَمِيَّاتِ. كَذَلِكَ إذَا حَصَلَ عَيْبٌ حَادِثٌ فِي الْمَبِيعِ عِنْدَ الْمُشْتَرِي، ثُمَّ ظَهَرَ عَيْبٌ لَهُ قَدِيمٌ فَلِأَنَّ الْعَيْبَ الْحَادِثَ مَانِعٌ لِلْمُشْتَرِي مِنْ أَنْ يَرُدَّ الْمَبِيعَ بِالْعَيْبِ الْقَدِيمِ فَيُزَالُ الضَّرَرُ بِقَدْرِ الْإِمْكَانِ، وَذَلِكَ بِأَنْ يَرْجِعَ الْمُشْتَرِي عَلَى الْبَائِعِ بِنُقْصَانِ الثَّمَنِ
[3] الأشباه والنظائر لابن نجيم (ص: 76)
الرَّابِعَةُ: [إذَا تَعَارَضَ مَفْسَدَتَانِ رُوعِيَ أَعْظَمُهُمَا ضَرَرًا بِارْتِكَابِ أَخَفِّهِمَا]
نَشَأَتْ مِنْ هَذِهِ الْقَاعِدَةِ قَاعِدَةٌ رَابِعَةٌ، وَهِيَ مَا:
إذَا تَعَارَضَ مَفْسَدَتَانِ رُوعِيَ أَعْظَمُهُمَا ضَرَرًا بِارْتِكَابِ أَخَفِّهِمَا"
مجلة الأحكام العدلية (ص: 19)
(الْمَادَّةُ 28) : إذَا تَعَارَضَ مَفْسَدَتَانِ رُوعِي أَعْظَمُهُمَا ضَرَرًا بِارْتِكَابِ أَخَفِّهِمَا
(الْمَادَّةُ 29) : يُخْتَارُ أَهْوَنُ الشَّرَّيْنِ
درر الحكام في شرح مجلة الأحكام (1/ 41)
(الْمَادَّةُ 28) إذَا تَعَارَضَ مَفْسَدَتَانِ رُوعِيَ أَعْظَمُهُمَا ضَرَرًا بِارْتِكَابِ أَخَفِّهِمَا
إذَا تَعَارَضَ مَفْسَدَتَانِ رُوعِي أَعْظَمُهُمَا ضَرَرًا بِارْتِكَابِ أَخَفِّهِمَا.
لِأَنَّ الضَّرُورَاتِ تُبِيحُ الْمَحْظُورَاتِ، كَمَا وَضَّحْنَا فِي الْمَادَّةِ 21، فَإِذَا وُجِدَ مَحْظُورَاتٌ وَكَانَ مِنْ الْوَاجِبِ أَوْ مِنْ الضَّرُورِيِّ ارْتِكَابُ أَحَدِ الضَّرَرَيْنِ فَيَلْزَمُ ارْتِكَابُ أَخَفِّهِمَا وَأَهْوَنِهِمَا، أَمَّا إذَا كَانَا مُتَسَاوِيَيْنِ فَيُرْتَكَبُ أَحَدُهُمَا لَا عَلَى التَّعْيِينِ، كَمَا لَوْ رَكِبَ رَجُلٌ فِي سَفِينَةٍ فَاحْتَرَقَتْ تِلْكَ السَّفِينَةُ فَهُوَ مُخَيَّرٌ بَيْنَ أَنْ يَبْقَى فِي السَّفِينَةِ وَبَيْنَ أَنْ يُلْقِيَ بِنَفْسِهِ إلَى الْبَحْرِ لِتَسَاوِي الْمَحْظُورَيْنِ عَلَى أَنَّهُ لَا يُعَدُّ فِي كِلَا الْحَالَيْنِ مُنْتَحِرًا وَلَا يَكُونُ آثِمًا
درر الحكام في شرح مجلة الأحكام (1/ 41)
(الْمَادَّةُ 29) يُخْتَارُ أَهْوَنُ الشَّرَّيْنِ
هَذِهِ الْمَادَّةُ مَأْخُوذَةٌ مِنْ قَاعِدَةِ (إنَّ مَنْ اُبْتُلِيَ بِبَلِيَّتَيْنِ يَأْخُذُ بِأَيَّتِهِمَا شَاءَ فَإِنْ اخْتَلَفَتَا يَخْتَارُ أَهْوَنَهُمَا؛ لِأَنَّ مُبَاشَرَةَ الْحَرَامِ لَا تَجُوزُ إلَّا لِلضَّرُورَةِ وَلَا ضَرُورَةَ فِي ارْتِكَابِ الزِّيَادَةِ) وَحَيْثُ إنَّ هَذِهِ الْمَادَّةَ عَيْنُ الْمَادَّةِ 28، فَلَا حَاجَةَ لِشَرْحِهَا