Pri-Hibah

Hibah is a transfer of property without exchange of consideration with a definite proposal on the part of the person who gives the gift and acceptance on the part of the person to whom the gift is given. “Pri-Hibah” is a product of as-Salihin so named to reflect the use of “Hibah” as a mechanism to protect the rights of the children of the Settlor how low so ever. In effect, it is a gift instrument.

What is Pri-Hibah?

Pri-hibah is a declaration of Hibah by the owner of a specific asset stating that he gives the asset to the beneficiary and he is holding the asset for the benefit of the beneficiary. It is a written document wherein the terms and conditions on which the settlor is holding the assets are set out.

Characteristic Pri-Hibah at as-Salihin

  • It takes effect immediately (at the time the declaration is made)
  • Only gift from parent to child is revocable
  • It is not subject to Faraid but subject to the terms of the Declaration of Hibah

Advantages of creating Pri-Hibah

  1. The Pri-Hibah asset is not considered part of Settlor’s estate (as it takes effect immediately according to the terms and conditions in the Declaration of Hibah) and consequently is outside the Faraid distribution rules. It can therefore be used to balance distribution.
  2. The settlor has the power to revoke the Hibah.
  3. The settlor can be sure that the intended beneficiaries are taken care of even upon his incapacity, not solely on death.
  4. The settlor continues to enjoy part of the benefits of the Pri-Hibah asset while he is alive and can appoint a protector to safeguard minors’ interests.

*Declaration of Hibah can only be created if the beneficiary can receive benefit from the asset from the time the declaration is made.