Wakaf

To Muslims, estate planning is not just to provide financial assistance to their loved ones, but to also gain merits in the eyes of the Almighty. One of the ways in which Islam encourages the act of charity, is to dispose of property by way of wakaf.

The first question to ask is, what constitutes a wakaf? Four elements must be met before a wakaf can be created.

• Founder (wakaf) - He or she must be the legal and beneficial owner of the property which is to be utilised as wakaf. He must be above 18 years of age and of sound mind. The declaration to wakaf the property must also be done voluntarily and without coercion.
  

• Party who creates the wakaf (beneficiary) or object (mawquf alaih) - The beneficiary can be virtually anybody or any legal entity that has the capability to own property, be it moveable or immoveable . Thus, a wakaf can be created in favour of family members, the orphanage, foundations, charitable organisations, the Muslim ummah in general, or even non-Muslims as long as it is not against the syariah.
  

• Mawquf - The subject matter of a wakaf can be anything that can exist in perpetuity. This can be land, money, shares, bonds and so forth. By that same reasoning, anything that is considered perishable, such as food, cannot be dedicated for the purpose of creating a wakaf.
  

• Sighah - It can be either direct or indirect. A direct sighah is where a person donates his land to a particular person. An indirect declaration could be: "I donate my property to the poor, whereby this property cannot be sold, given away as a gift (hibah) or be the subject matter of inheritance".

To complete the understanding, we now look at the characteristics of a wakaf:

• Wakaf property cannot be sold, given away as a give (hibah) or be the subject of inheritance.
• Under strict conditions, property that has been designated as wakaf property by the founder can be substituted for another property of similar or higher value.
• A wakaf takes effect immediately after declaration unless the time for commencement is specifically stated, for example, "at the time of my death'.
  

Every Muslim has to bear in mind that in sofar as Islam is concerned, the purpose of estate planning is not merely to provide financial assistance to the loved ones but to also gain merits in the hereafter.

Source: SmartInvestor, April 2006, Wakaf by Jasmin Jamaludin of As-Salihin Trustee Berhad

Living Trust

A trust is always deemed sacred and something which should not be treated lightly. Its fulfillment is not an act for wanton human recognition but for worship in its purest form. Thus, taking care of your family is a trust. Seeking knowledge is a trust. As the Quran in Surah Al-Nisa verse 58 puts it:

"Allah does command you to render back you 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."

In legal parlance, a trust is a legal obligation that comes into existence when an individual or other legal entity (The settlor) transfers the legal ownership of his assets to another person or persons (The Trustee) 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 trust assets once the assets are transfered to them.

The clear benefits of Living Trusts are many:

• They are not governed by the laws of Faraid;
• They can be enjoyed immediately;
• They are not liable for the deceased's debts;
• They are not restricted to the one third rule as per any testamentary bequest.

To avoid such a complication, Trustees should be chosen from amongst a number of trust corporations. They can exist in perpetuity and are controlled by stringent statutory rules (such as those contained in the Trustee Act 1949 and the Trust Companies Act 1949).

All assets, moveable or otherwise, are technically frozen once a person is deceased. Each and every Muslim would have to weigh the best mode on how to manage his assets but manage he must, for truly whatever has been endowed upon us is indeed a gift entrusted by Allah.

Source: SmartInvestor, February 2006, by Jasmin Jamaludin of As-Salihin Trustee Berhad

Humanizing Insurance & Takaful

When eTiQa launched the new branding with it's value proposition to "humanizing insurance", some people may have questioned what it means. It is really about going back to the basics and the core foundation of the insurance business, which is people. It is the reason we exist and it is also the reason why we must progress to strengthen this core value.

Yes, the insurance industry has been under attack for many years and has carried with it a "perceived" bad connotation to both the industry and it's people. Little do we realize that this industry has been around for a very long time. It has survived the test of time because for one, insurance companies are very conservative. But that alone is not enough. Insurance companies must honor the contracts with it's policy holders. If this does not hold true, how long would an entity be able to continue as a going concern. Yes, maybe there is very little publicity when claim are paid out. But there are reasons behind this. As you may imagine, not many families want to announce such a sensitive situation. Imagine the devastation ones family goes through. Even with a claim that comes in to elevate the situation of the family, having it publicized would be the last thing on their mind. Wouldn't it be the same for you?

Why Build A Financial Fortress

I believe each and everyone of you have your own dreams and reasons for wanting to build wealth.

Here I share some of my reasons why I want to be wealthy.

First, I wanna have fun.
The kid in me always wants to have fun. I always remember mom or dad asking me to behave and as a reward for behaving I get a toy ... wow, that was fun. Maybe you have reached your peak in building your wealth, so as a reward you can buy the toys that you want, great. Should you wear a RM30,000 watch? Should you drive a RM668,000 car? Should anyone live in a RM800,000 condominium? Of course the should. The problem is that a lot of people buy into all these things when they can afford it. Been there, done that.

So I am now in the process of building my financial fortress. Yes I do have money still, but I don't yet have a fortress to back me up. When your money makes more than you do, you are officially wealthy.

So go buy that new watch. Buy her that diamond ring. Buy that new M3 and move into that brand new bungalow. You can do all this when you have millions of ringgit. Take the family and extended family for a holiday overseas, and don't feel bad about it, because money is to be enjoyed. I think that is a good enough reasoning for the kid to want to build wealth.

Second, I wanna have a profit account.
The adult inside me likes to make investments, because this part makes me wealthy. But here's the deal .... have you ever played monopoly or the cashflow game? Just like that, you can be ahead or you can fall behind. Exactly like the stock market, it fluctuates ... so what do we do? I am not a stock analyst neither am I a spot trader. I just ride the waves and stay in for the long term. That's what building a financial fortress is all about.

In meeting people, sometimes they fear that they might make a loss in their investment. I often tell them that "timing" or "buy low sell high" is not the formula to wealth. You must be "positioned" properly. If you have quality investments with good long-term track records, then you are in a position to make profits. Another key is continuous and consistent investment, to ensure our nest egg grows. Besides, I don't need my nest egg all at once to retire on, I just need the income from it. So it would be silly to cash everything out while the market is at the bottom. We need to be patient with the market, there is always a correction, what ever goes down will come up.

Unless you are a sophisticated investor and have more than RM10.0 million, I would keep investing very simple. I don't want to clutter my life with a list of extremely complex investments that leads to unnecessary stress. I have chosen to use simple mutual funds and other paper investments - very clean, simple investments with some basic tax advantages. Once this side of my financial fortress is done, I will go into some debt-free real estates, that should be fun.

Strategy on Building a Financial Portfolio

The financial pyramid concept is also a strategy
on how we build a solid financial portfolio.

Build it from the base, with solid foundation.