Applied Islamic Banking

By:
Prof. Dr. Mohd. Ma’sum Billah
masum@applied-islamicfinance.com
masum2001@yahoo.com
+6019-3699542

Hibah is one of means to distribute one's assets in Islamic financial planning. It may be used either in one's lifetime or in estate distribution of the deceased. It is very simple, yet influential tool in estate planning in the sense it may influence the portion of some heirs if one executes the hibah when one is about to die. Hibah is an Arabic term, derived from the word 'habubah', which literally means 'passing' or 'blowing'. In the religious term it means giving one's wealth to others without the expectation of any replacement or exchange with the transferring effect on the ownership. Thus once a hibah is executed, the giver cannot take it back. Like waqf or other charity, hibah is the transfer of property from the giver to the recipient during his lifetime. However hibah in general sense may include Ibra', sadaqa and hadiyah which respectively means release from; releasing one's wealth from his ownership, alms giving; giving part of his wealth to needy, and reward which needs an exchange.

In Islam, the habit of giving and charity has been recommended as Bukhari reported that the prophet peace be upon him says, "Give each other and love each other". Thus it is clear that hibah first of all, the recommended to be given to those whom we love and those who are nearer to us. In this regard, God has arranged the most appropriate recipients of hibah as He says "…and do good to parent, kinfolk, orphan, those in need, neighbors who are near, neighbor who are strangers, the companion by your side, the wayfarer (ye meet), and what your right hand possess: For God loveth not the arrogant, the vainglorious" (Qur'an 4:36).

Hibah is basically recommended among the family first then close among the neighbors and so forth. This is evident when Aishah, the wife of the prophet, wished to give one of her two neighbors a gift and asked his advice, he replied, "Give to the one whose door is nearer to you". However it does not means one cannot give a gift to those who are not near and not close to him. One of the reasons to do so is that it will help enhancing the love and special relationship among the members of the family and neighbors, who are in the surroundings.

On the other hands, the prophet peace be upon him reprimanded those who looked down on gift. As Abu Hurayrah narrated that the prophet once said

"…None of you should look down upon the gift sent by your neighbor even if it were the trotters of the goat".

In this regard, the prophet did not reject any gift except when the law did not permit it as Ahmad, Abu Daud and tirmidzi narrated that prophet once said when a polytheist gave the prophet and he asked him

"Were you a Muslim? He said no, and the prophet said, "I am prohibited to receive a gift from polytheists".

Hibah is the third dimension in estate planning structure; complementing faraid and wasiyyat (will). Hibah may come into discussion when the rule of faraid does not allow some heirs to get the right of inheritance and wasiyyat was not made on him when one is facing the death. It is known that the rules of faraid only apply to Muslims; in the case of different religions between the heirs and the deceased, the heirs will not get anything from the inheritance. Thus hibah may solve the particular circumstances by giving certain portion of his wealth to the heirs who have different religion and particular blocked heirs (heirs who are not entitled to get inheritance, being blocked by other heirs) before he passed away.

Furthermore, in the case of father who wants to give his son more than what he supposes to get in estate planning, the only choice he has is to execute hibah. If he chooses to do it under wasiyyat (will writing), the son is only entitled to one third of the estate. So if the father feels that the son is entitled to get more than a third and wants to ensure that he receive it, the only way is hibah in his lifetime. If this hibah is executed in time where he is about to die, it may be in the form of will writing (wasiyyat). Thus it recommended appointing a professional trustee to execute the hibah. Even though the hibah belongs to the recipient technically, it is trustee who will manage, maintain or dispose of it. One can put condition on the trustee that the hibah is given to the recipient only upon the death of the giver. By doing this, one not only expedites the process of distribution, as the hibah will not be subjected to the laws of faraid, the estate is protected as well. Therefore it will allow the son to legally own the property. As a result, wasiyyat and hibah are devices that we can use to provide for the distribution of our estate upon our death.

There is a difference between hibah and sadaqah. Sadaqah is given with the intention of reward and to cool the wrath of Allah. It is normally given to the poor and the underprivileged. Hibah, on the contrary, is given as a token of well-wishing, friendship, camaraderie, mutual esteem, and for the general upkeep of family relations. In sadaqah, the reward is achieved by giving the item or money, while in hibah, the rewards emanate from the benefits, which the hibah stands to offer the give

According to Hanafi the pillars of hibah is offer and acceptance or ijab and qabul trough the qiyas. However the jumhur ulama’ said there are four pillars of hibah. There was the giver, acceptor, subject matter and expression or sighah.

The giver is the ones who give the good. If he is original owner, he has the right to give the good. However if he sick or died the giving is only 20% from his wealth.

The acceptor is everyone and the giver must give the good according to agreement. The giver can’t give his wealth to his children and it is makruh according to jumhur ullama’.

The sighah or expression

The most important in ijab and qabul was expression. The expression of ijab can be state clearly or sometime unclear. The clear statement likes’ I give this good to you’ and unclear statement is ‘I already gave the good to you’.

The good must have good maintenance.
The good must be halal
The good must be valid for sell and purchase transaction.
No replacement
The good was give to the right person.
Acceptance from the acceptor.
The good must be take care before it was use.
The hibah transaction is complete.
There is no fixed in term of time.
The giver should be independent, matured.
The good must be in wealth.

The giver must have the capacity to think, baligh and matured.
The father is not allowed to give hibah if he doesn’t has the enough wealth or it will add the burden to him. Because the hibah transaction is from the free consent and not the compulsion.
The father can’t ask their children to give back or replace back what he already gave to them.

If the giver want to give a baby cow that not already birth, the contract is invalid because the subject has not exist yet and also the parties do not know whether the baby cow life or die when it get birth.

That why the gift cannot happen if the subject is unlawful, death or blood. The gift also cannot in form of lawful drink like wine.

The giver cannot give to receiver the properties that not really belong to the giver. For example, person A is a representative for person B to manage the B’s property. In case of giving a gift, A cannot give anything from B’s property without any permission from person A because A are not really own the good.

According to Hanafi torts, the good cannot be transfer if the good is already damage or the giver know the object will damage after give to the receiver is not allowed. The majority also agreed with hanafi torts.

For example if someone gives land with the plant, the transaction is not consider hibah because the gift cannot have relation with other thing.

According to Hnafi and Ibnu Akil the acceptance of the gift is the obligation pillars in the hibah. So, the receiver must accept the gift. So the transaction will consider valid.

If the owner of the good does not give the permission to transfer the good, the transaction is invalid.

A gift, by an offer by the donor and acceptance by the benefactor, becomes a concluded transaction, and by receipt of the article it becomes complete. Words like "I have given gratis" or "I have given" or "I have made a gift" is sufficient to convey the meaning of giving property gratuitously.

Expressions also which is evidence of conveying ownership gratuitously also conveys the implication of gift; like a husband who buys a pair of earrings for his wife and tells her: "Take then and wear them."

In the case of a gift, if the donor merely informs the recipient of gifting something to him, but the recipient did not answer. Later on he accepted delivery of it, this will be an indication of his accepting the gift. In other words, in order to repudiate a gift, the denial or reprove of the recipient is necessary in words or in action.

If someone gifts the amount of money, which he is to receive from his debtor and the debtor accepts, the gift is valid. When the parent/guardian/tutor of a child gifts something to a child, by his merely saying, "I have given," the gift is complete. There is no need for the child or infant to take immediate possession or receipt of the article. However, a gift by a stranger to a child, if received by the child’s parents or guardians, is complete. It is not proper to gift anything depending on some future date. Example, "I have gifted this property from the first of the following month" or "I will give you my property if I buy another house." In such a case, when the occurrence takes place (when he buys another house), the gift will have to be re-transacted or re-considered in order to be valid.

A gift, accompanied by a condition, is valid. For example, one says: "I am gifting this house to you so long as you support me for the rest of my life." This condition is valid, and the donor can only revoke or cancel his gift (in this case, the house) if the recipient does not support him. But if the recipient is faithful to his promise, the donor cannot revoke or annul his gift.

At the time of gifting, the commodity should be existent. If one says: "I will give you grapes when my vineyard at home starts producing grapes," such a gift is not valid. The thing gifted should be the property of the donor. A gift made of a third person’s property is only valid if he agrees to it. A gift of a stolen commodity will have to be immediately returned to its original owner on demand.

The article should be known and fixed. Words like "I give you something from my property" or "I am giving you one of these two cars" without stipulating which one or the amount is not valid. But if the donor says: "Choose whichever one you want," and the recipient chooses in the presence of the donor, it is valid. But if he chooses in the absence of the donor, it is not valid.

When the donor gives, he should be of sound mind and of mature age. The gift of an insane person, an immature child, and an imbecile is not valid. However, some scholars claim that if minor gifts anything with the approval of his/her parents, and such gifts are of a normal occurrence, then the gift are valid. Example, a child gives his teacher a sweet, or his uncle a pen, or his friend a book.

When giving, the approval of the donor is necessary. If the article is gifted under duress and compulsion, it is not valid.

The original recipient is his or himself. But the condition is still the person is eligible mind. That why, immature kid and insane cannot hold the receipt the gift.

The agent or representative will carry up or manage the gift of that kid until that kid can manage the gift with his or her own.

The original law is relating the possession to the gift without any replacement.

According to Hanafi Torts, the law of giving hibah is not depend on the possession of the gift, so that the giver can take back the gift that have been given. Meanwhile, according to Maliki torts, the possession of the gift will be done depend on the ‘aqad and have to follow with the recipient. The gift can be taking back from the son by his father according to Maliki depend on these 5 conditions:

The son / daughter are not married after get the hibah
No renew the matured debt
The gift are not changing
Receiver not changing the item
Buyer or receiver are not suffer in ill

The recipient, by accepting the gift, becomes its immediate owner. He can do whatever he wishes to do with it thereafter. But before the recipient receives the gift, the donor can revoke the gift, not thereafter.

In the case where the donor gifted the item, but before the recipient could take possession of the said item, the donor prohibited him from doing so, the revocation will be valid. After the recipient takes valid possession of the gift, on his own accord, he can return the gift to the donor.

If however, the donor unlawfully takes possession of his gift, and it perishes in his hand, he is to be held responsible and liable to pay compensation to the recipient.

A person gifting anything to his ascending (parents upwards) or descending relations (children downwards) or to his brother or sister or to their children, he cannot revoke the gift.

In case of married contract, a husband giving something to his wife, and the marriage are dissolution, the gifts are valid and are not to be returned. The wife now own the gift, the husband cannot taking back the gift.

When a lawful revocation of gift takes place, it is only valid if the gift is still in its original form. For example, if one gifts paper and the recipient write on it, it cannot be returned. This is because the paper is out of use. Or for example, if one gifts a barren piece of land, and the recipient builds on it, it cannot be revoked. The building will still on the land. But if the change in it does not affect the original position of the gift, for example when a gifted ewe gives birth to a lamb, then the ewe is to be returned, and not the lamb.