If someone passes away and leaves behind assets, their debts must be settled using those assets, even if it means using everything. In this case, the family has no claim over the assets until the debts are fully paid.
However, if the deceased didn’t leave any assets, the family isn’t obligated to settle the debts. This is based on the Prophet SAW’s saying:
إِنَّهُ لَا يَحِلُّ مَالُ امْرِئٍ إِلَّا بِطِيبِ نَفْسٍ مِنْهُ
“It is not lawful to take a person’s property unless they willingly consent to it.” (HR Ahmad, authenticated by al-Albani in Sahih al-Jami’)
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That said, it’s still encouraged for the family to help settle the debts. It’s considered a good deed and can ease the deceased’s burden in the hereafter.
So, if the heirs cannot afford to pay the debt, they are not at fault. Even if they can afford it but choose not to pay, it’s still not a sin.
Why Takaful Matters
This is why I always advise my clients to consider a Takaful plan specifically to cover their debts after they pass away. If the client has a trustworthy family member, they can sign up for Takaful and nominate them as a nominee (not as hibah).
For those who prefer a professional approach, it’s better to prepare a wasiyyah (will) and take up a Takaful policy without a nominee. This is an unpopular opinion among Takaful agents, but it’s a practical solution.
Here’s why: When a Takaful policy doesn’t have a nominee, only someone with a Letter of Administration or Grant of Probate (in the case of trustee companies like As-Salihin or a person who has been appointed as executor/wasi) can claim the payout.
By writing a wasiyyah, you’ll also appoint a wasi (executor). Only the executor named in the wasiyyah can apply for the Grant of Probate. The executor is bound by the wasiyyah to settle the deceased’s debts as one of their first tasks. If the estate is insufficient to cover the debts, the Takaful claim can be used to settle them as the Takaful claim is now part of the estate (due to no nomination).
Some information to take note of :
Things to Handle After Someone Passes Away
1. Funeral Expenses
The first priority is to handle funeral costs. This includes transportation, body preparation, and burial fees. In Malaysia, funeral expenses for Muslims typically cost around RM1,000.
2. Settle Debts
Next, clear any outstanding debts of the deceased. This is based on the Prophet Muhammad’s (SAW) teaching:
“The soul of a believer is held back because of their debt until it is settled.”
3. Carry Out the Will
If there’s a will (wasiat), it must be carried out as stated, provided it doesn’t exceed one-third of the total estate and benefits non-heirs.
4. Resolve Joint Property Claims
For joint property, a claim must be made before distribution. If there’s a joint property agreement, apply to the Syariah Court to confirm the shares. Trustee companies like As-Salihin offer Harta Sepencarian Services to ensure a fair division and prevent disputes.
If no agreement exists, the court will determine the rightful share of the surviving spouse first. Only after this will the remaining property be distributed according to faraid (Islamic inheritance law).
5. Inheritance Distribution via Faraid
Finally, any remaining assets are distributed to the rightful heirs according to faraid calculations, once debts, wills, and joint property matters are resolved.
Would you be interested in me sharing about faraid?
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