Trust

Trust is known as Al-Amanah in Islam and the following Quranic verses emphasise its importance:

"Do not devour one another's wealth by false and illegal means"

Surah Al-Baqarah verse 188

"Allah does command you to render back your trusts to those to whom they are due and when you judge between man and man that you judge with justice. Verily, how excellent is the teaching which He (Allah) gives you. For Allah is He who hears and sees all things."

Surah Al-Nisa verse 58

A trust is a legal obligation that comes into existence when an individual or other legal entity (known as the settlor) transfers the legal ownership of his assets to another person or persons (known as the trustees) to hold not for their benefit but for the benefit of the beneficiaries who can be individuals or otherwise. The trustees become the legal owners of the trust assets once the assets are transferred to them. Thereafter the beneficiaries, ipso facto, become the beneficial owners of the trust assets.

Simply put, a trust is a right of property, whether immovable or otherwise, held by one party for the benefit of another.

Forms of Trust

A trust can exist in any one of the three forms, namely:

  • Testamentary Trust (i.e. created in a Wasiat and takes effect on the death of the Testator
  • Statutory Trust (i.e. created by operation of law, e.g. under Section 26(2) of the Muslim Wills (Selangor Enactment) 1999 where a trust is automatically created to protect the interest of a minor under a Wasiat or intestacy.)
  • Living Trust (i.e. created during the lifetime of the Settlor and takes effect immediately when the trust deed is signed by him and the property conveyed to the Trustees.)

Duties of Trustees

Stringent statutory rules (such as those contained in the Trustee Act 1949 and the Trust Companies Act 1949) are imposed upon trustees in the performance of their duties, but none are more onerous than those that are provided in the Al-Quran:

"O you who believe! Betray not the trust of Allah and the Messenger, nor misappropriate knowingly things entrusted to you."

Surah Al-Anfal verse 27

The trustee's duty, noted the learned Yusoff Ali in his commentary on the above verses, is to guard the interest of the person on whose behalf he holds the trust and to render back the property and accounts when required according to the terms of the trust. This duty again is linked to the sanction of Religion which requires a higher standard than law.

Trust as a vehicle in Islamic Estate Planning

Through the concept of hibah (i.e. the Islamic gift) Islamic-compliant trusts can be used for a variety of reasons including educational and maintenance purposes. Properly established, they are indispensable tools or vehicles in Islamic Estate Planning.

Trustee Services at as-Salihin

At as-Salihin we offer a Trustee service which is truly Islamic and comprehensive in the following areas:

  • Education
  • Maintenance
  • Corporate
  • Charitable
  • Takaful / Insurance