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EIMAN AL-SHANQAITI
20081571
Chapter 6: Islam and Private Wealth
Management
Outline..
Wealth
and Islam
The Islamic Perspective on Wealth Creation Management, and
Distribution
Cycle of wealth..
Wealth creation
Wealth enhancement
Wealth protection
Wealth cleansing and distribution
Zakat
Types of zakat
Faraid
Will
The differences between Muslim and non-Muslim will
Prospects for Islamic Wealth Management
Wealth and Islam
wealth can be obtained through..
effort
inheritance
all wealth (maal) belongs to Allah and mankind is only
a trustee of this wealth.
wasting wealth is scorned.
Money should be earned, invested, and spent in
approved (halal) ways.
The zakat tax system is one of the five pillars of
Islam.. It is effectively redistributes wealth from the
“haves” to the “have-nots,”
Islamic Inheritance law.. ensure that wealth is evenly
shared among the ummah.
The Islamic Perspective on Wealth
Creation Management, and Distribution
wealth serves many purposes and should not be spent
on unlawful products and services.
the need to attain wealth provides the motivation to
work hard.
the need to manage wealth provides the discipline to
save in order to support family and society
By saving even a small portion of income or profits a
Muslim can help fight consumerism and inflation.
Wealth creation
wealth can be obtained through effort (business or work)
or through inheritance.
Allah is the absolute owner of wealth and mankind is the
trustee of wealth.
Wealth should be earned and multiplied in an Islamically
permissible way, which
means it must not be generated from prohibited business
activities.
wealth enhancement
Enhancement of wealth in Islam is achieved through..
investing only in Shari’a-complaint financial products
that is, products entirely free from riba, gharar ,and
maisir.
For example:
investing in financial products such as..
stocks, investment funds bonds (sukuk), insurance (takaful)
plans, wadiah and mudharabah savings plans.. Etc.
The goal of IWM, which is similar to the goal of
conventional wealth management is to garner
reasonable capital growth while preserving
accumulated wealth.
Wealth protection
The protection of wealth is important according to
Islam.
every possible financial risk and threat must be
considered and provided for.
Wealth protection
play an important role in the practice of IWM..
risk management.
Islamic insurance (takaful).
What is risk management?
Risk management ensures that an organization
identifies the risks. also guarantees that the
organization creates an effective plan to prevent
losses or reduce the impact if a loss occurs.
Risk management process
Takaful
is the Islamic insurance system
The main parties :
The Operator
The Participants
Takaful has no contact with ghrar.
The takaful fund provide the necessary money to
cover the sum of damages that may happen to
participant. (the main purpose of takaful)
Takaful is a profit-loss sharing .
investing in Shari’a-compliant financial products that
are being structured to avoid gharar is consistent
with the Islamic protection of wealth
Wealth Cleansing and Distribution
Islam requires both physical and spiritual
cleanliness.
Cleanliness of the spirit involves cleanliness of the
mind..
so that it is free of bad intent or desire to commit
unlawful act.
cleanliness of the heart..
so that is free of jealousy, hypocrisy, and evil
desires.
Spiritual cleanliness is associated with hope,
truthfulness, forgiveness, and compassion.
Cleansing
Creation of
wealth
Distribution
of wealth
Cleansing
(physically
and
spiritually)
Protection of
wealth
Enhancement
of wealth
To achieve spiritual cleanliness and wealth purification,
Islam espouses the zakat tax system.
Zakat
Zakat is a means of narrowing the gap between
rich and poor and a way to help meet the needs
of less fortunate members of society.
zakat
Paying zakat is considered to be a form of
worshipping Allah.
Paying zakat is an obligation for Muslims to fulfill. and
It is the third of the five pillars of Islam.
types of zakat
Zakat fitr is due from the start of Ramadan until the
prayer ending Ramadan (eid al-fitr).
Zakat on maal: This type of zakat is payable on
traditional types of wealth, such as agricultural
produce, reared animals, a business, gold, and
silver.
The wealth is a gift from Allah, everyone has the duty
to use part of it to help the needy . This
redistribution of wealth is a way to reduce social
inequality
faraid
Islamic inheritance law
Faraid is the inheritance law of islam and its based on
the al-Quran, al-Sunnah, the consensus of the
Prophet's (peace be upon him) companions and their
ijtihad.
faraid
Islamic law is explained in detail in sourat
Al-Nisa regard to the beneficiaries and their portions
in the inheritance..
The principle of inheritance distribution in Islam is that
the portion for a male beneficiary is equivalent to
two parts of the female beneficiary.
faraid
“Allah instructs you concerning your children: for the male, what
is equal to the share of two females. But if there are [only]
daughters, two or more, for them is two thirds of one's estate.
And if there is only one, for her is half. And for one's parents,
to each one of them is a sixth of his estate if he left children.
But if he had no children and the parents [alone] inherit from
him, then for his mother is one third. And if he had male
siblings [or Female siblings], for his mother is a sixth, after
any bequest he [may have] made or debt. Your parents or
your children - you know not which of them are nearest to you
in benefit. [These shares are] an obligation [imposed] by
Allah. Indeed, Allah is ever Knowing and Wise” (al-Quran,
surah al-Nisa‟ 4: 11)
faraid
"And for you is half of what your wives leave if they have no
child. But if they have a child, for you is one fourth of what
they leave, after any bequest they [may have] made or debt.
And for the wives is one fourth if you leave no child. But if
you leave a child, then for them is an eighth of what you
leave, after any bequest you [may have] made or debt. And if
a man or woman leaves neither ascendants nor descendants
but has a brother or a female sibling, then for each one of
them is a sixth. But if they are more than two, they share a
third, after any bequest which was made or debt, as long as
there is no detriment [caused]. [This is] an ordinance from
Allah, and Allah is Knowing and Forbearing” (al-Quran, surah
al-Nisa‟4: 12).

An example..
faraid
“They request from you a [legal] ruling. Say, "Allah gives
you a ruling concerning one having neither descendants
nor ascendants [as beneficiaries]." If a man dies, leaving
no child but [only] a female sibling, she will have half of
what he left. And he inherits from her if she [dies and]
has no child. But if there are two Female siblings [or
more], they will have two-thirds of what he left. If there
are both male siblings and Female siblings, the male will
have the share of two females. Allah makes clear to you
[His law], lest you go astray. And Allah is Knowing of all
things” (al-Quran, surah al-Nisa‟ 4: 176).

The distribution of inheritance among the beneficiaries
must be made after all debts being made either
debts to Allah such as zakat, kaffarah or debts to
fellow human beings and after the deceased's will is
settled on a 1/3 rate or less from the total
inheritance amount.
the Islamic law of inheritance
automatically includes..
The spouse
The parents
The children
Does not automatically include..
Grandchildren
adopted children
illegitimate children
Foster parents
non Muslim parents
non-Muslim children
non-Muslim family members
will
A Muslim may dispose of one third of his estate as he wishes through the will.
A will may be either oral or written.
You can distribute only one third of the wealth to who you mention in the will.
the will must be declared in the presence of two witnesses in order to be valid.
(an exception exists, according to the Islamic schools)
a will is still acceptable if it is written in the known
Hand writing of the testator or bears his known signature.
The differences between Muslim and non-Muslim
wills are enumerated in
Prospects for Islamic Wealth Management
HNW indivisuals becoming more interested
in islamic wealth management.
The demand for islamic financial services is increasing.
Challenges
the shortage of skills.
the numbers of sufficient credential religious scholars
that can issue new products are limited.
the numbers of bankers, lawyers and technical staff
who are needed to develop new products are
limited.
In conclusion
Islam does encourage the accumulation of wealth but it
must come from halal sources
and the money must not be spend on things which are
against the teaching of islam.
Muslims have to pay zakah. And in case of death the
inheritance should be distributed as in teaching of
islam

THE END
Thank you
Any Questions?
REFERENCES
shamugam, B., & zahari, Z. R. (2009). A primer on islamic finance. CFA Institute.
Retrieved from http://www.cfapubs.org/toc/rf/2009/2009/6
bekkin, I. R. (n.d.). what is takaful?(islamic insurance). Retrieved from
http://www.takafol.ru/eng/rubrika.php?rub=5
Awang, M. R. (n.d.). The islamic inheritance law (faraid). Retrieved from
http://www.islam.gov.my/sites/default/files/islamic_inheritence_law_farai
d.pdf
Faraid or muslim inheritance law. (n.d.). Retrieved from
http://www.muslimpersonallaw.co.za/inheritancedocs/Law Awareness Faraid or Muslim Inheritance Law.pdf