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What is hibah? Why does it make your property planning more convenient?


Death brings out the worst in families and it is quite common for us to hear disputes over an inheritance among heirs of the deceased. Heartbreaking stories like this can be avoided if hibah is prepared and documented when the owner of the assets was still alive.

Hibah memudahkan pengurusan harta pusaka anda
© Imagehit Asia / 123RF

This article was translated from Apa itu hibah? Kenapa ia memudahkan pengurusan harta pusaka anda? by Damia Norwin.

There are a few types of property planning instruments after death. One of the most popular ones is hibah. While a lot of you may have heard of this, how much do you know about this instrument? Let’s take a closer look at it.

What is hibah

Hibah in Islam means the act of voluntarily granting ownership of property from one person to another when the settlor is still alive, without asking for anything in return/ reprisal (‘Iwad). It is different from a will as a will is granted to the beneficiaries after someone passes away. Hibah is encouraged in Islam as Allah SWT commanded: 

“….and in giving away one’s property in the love of Him to one’s kinsmen, the orphans, the poor and the wayfarer, and to those who ask for help, and in freeing the necks of slaves, and in establishing Prayer and dispensing the Zakah” (Surah Al-Baqarah 2.177)

  • What hibah means

Hibah simply means ‘gift’. It is a gift of movable or immovable property that occurs during the life of the settlor. 

  • What is hibah in estate planning

Hibah in estate planning means you become a beneficiary of assets that are bequeathed to you. For example, if the legal owner of an asset, such as a piece of land or a house bequeaths his or her properties to you, you then become the beneficial owner of the property or estate.

  • What is hibah in Islamic banking

Hibah is a Sharia contract that is used in the Islamic banking and financial framework in Malaysia. Usually, hibah is given by the bank to wadiah account holders who execute a contract or savings agreement with a Sharia-compliant financial institution.

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Why is hibah important

Hibah is important because it allows a settlor or a property owner to distribute more of his wealth to anyone – family members and non-family members, regardless of their religion. This is different from faraid where rights and the heirs’ portion of a deceased’s inheritance is based on the provisions of the Sharia Law.

4 requirements and conditions in the contract of hibah 

why is hibah important
© Katarzyna Białasiewicz /123RF

There are four requirements and conditions that must be met:

  • A hibah settlor (Al-Wahib)

A hibah settlor (assignee) must be an adult on sound mind, has reached full adult maturity (puberty), and is a sensible person (rusyd). The settlor also must be the legal owner of the assets that are to be granted as hibah, and he or she must have full authority over it.

  • Hibah beneficiaries (Al-Mawhub Lahu)

A hibah beneficiary can be a Muslim or Non-Muslim and must have the ability to own property either as an adult (mukalaf) or a minor (non-mukalaf). If the beneficiary is a non-mukalaf or a person with a disability, a representative (Wali Mal) or trustee may be appointed to accept the asset on his or her behalf but the control and possession of the property must be given to the beneficiary.

  • The assets bequeathed as hibah (Al-Mawhub)

Assets endowed as hibah must be halal, valuable according to Islamic Law (Sharia Law), the settlor also must have ownership over the assets, ownership of assets also must be in existence when transferred or handed over to the beneficiary.

  • Offer and acceptance/ Ijab and kabul (Sighah)

Sighah is a verbal agreement, non-verbal agreement, or conduct that signifies the offer and acceptance of hibah.

Types of hibah

types of hibah
© belchonock / 123RF

Hibah falls into two categories, namely;

i. Absolute hibah (Absolute assignment) 

It is also known Al-Hibah Al-Munjizah. It is given as a gift (free) when the settlor is still alive. Nevertheless, there are a few drawbacks when it comes to absolute hibah, such as: 

  • Higher cost
  • The settlor lost his or her ownership on assets with immediate effect
  • The asset will be an inheritance in the case where the beneficiary/ recipient passes away 

ii. Conditional hibah (Umra and Ruqba)

A conditional hibah is a contractual hibah where the settlor places certain conditions together with the hibah contract (akad) for the transfer of ownership to happen. There are a few types of conditional hibah, but the main ones are:

  • Umra 

Ownership of assets is given to a person by fixing or limiting the ownership period, based on the death of the beneficiary/ recipient or the death or settlor.

  • Ruqba

Transfer of ownership from one person to another, which is if one of them (settlor or beneficiary) passes away, the property that is endowed as hibah (mawhub) will be owned by the one that is still alive. The takaful industry in Malaysia adopts the Ruqba hibah concept due to several advantages.

Advantages of hibah

advantages of hibah
© szefei / 123RF

The advantages of the Ruqba hibah concept are as follows: 

How does hibah make your property planning easier

Before deciding on which property planning instrument you should be opting for, let’s see the differences between hibah, will and faraid.

  • Faraid 

According to the faraid law, only heirs of the deceased person are eligible to receive an inheritance. Distribution of inheritance according to faraid on the other hand is based on the provisions and rulings of Islamic Law. 

If an asset’s owner does not make a will when he still lives or allows his assets to be managed according to faraid after his death, it will take a very long time for the inheritance to be distributed to heirs due to factors like administrative (bureaucracy) in wealth distribution, disputes among heirs, legitimacy of a will and a lot of other factors that sometimes cause the assets to be long forgotten by family members.

 Difference between hibah and will

If faraid is solely for the heirs of the deceased, now let’s take a look at the differences between hibah and will. 

  • Will

A will is only for non-heirs. Assets bequeathed to recipients cannot exceed ⅓ of the total inheritance.

  • Hibah 

However, hibah can be given to anyone desired by the settlor, be it an heir or non-heir. Not just that, hibah can be nominated to non-Muslims as a token of friendship, and not for prohibited (haram) activities. There’s no limit as to the number or amount of assets that you wish to endow as hibah and it is totally up to you.

Can hibah be cancelled or withdrawn 

concept of hibah
© faizalramli/ 123RF

According to the Hanafi school of thoughts (madhabs/ maddhab), the act of a settlor withdrawing hibah that has been gifted to the beneficiary is makruh (discreditable) and the settlor can withdraw the hibah even though it has been returned (Qabd) unless the hibah is made with something in return (‘Iwad).

According to the Syafie, Hanbali, and some fuqaha’ of Maliki school of thoughts, the withdrawal or cancellation of hibah can happen if the ijab and kabul happened without the transfer of hibah property or asset. 

Nevertheless, if the offer and acceptance of assets (Al-Qabd) happened, then the hibah cannot be withdrawn or cancelled unless for hibah assigned by the father (including mother, grandfather, grandmother, and other heirs) to his children.

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Edited by Rebecca Hani Romeli

Disclaimer: The information is provided for general information only. Malaysia Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

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