Humanomics: Article Information

Humanomics
Inter-generational transfer under Islamic perspective

Abdul Ghafar Ismail Bayu Taufiq Possumah Mohd Najib Abdul Kadir
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Abdul Ghafar Ismail Bayu Taufiq Possumah Mohd Najib Abdul Kadir , (2014),"Inter-generational transfer
under Islamic perspective", Humanomics, Vol. 30 Iss 2 pp. 95 - 121
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Inter-generational transfer under Inter-generational

transfer
Islamic perspective
Abdul Ghafar Ismail
Islamic Research and Training Institute, Islamic Development Bank,
Jeddah, Saudi Arabia and Research Center for Islamic Economics
95
and Finance, School of Economics, Universiti Kebangsaan Malaysia,
Bangi, Malaysia
Bayu Taufiq Possumah
Institute of Islam Hadhari, Universiti Kebangsaan Malaysia, Bangi,

Malaysia, and
Mohd Najib Abdul Kadir
Department of Al-Quran and Al-Hadith, Universiti Kebangsaan Malaysia,
Bangi, Malaysia
Abstract
Purpose – The aim of this paper is to examine the inter-generational transfer by not only looking at the
monetary transfer as discussed by many economists and sociologists but also by advancing the
conceptual discussion and illustrating it with some examples of empirical comparison.
Design/methodology/approach – This paper provides recent theoretical and empirical work on
inter-generational transfer from the viewpoint of different systems and compares it to the Islamic view of
inheritance.
Findings – One finding of this paper is that the Islamic inheritance system is a socially and
economically more comprehensive and broad framework than inter-generational transfers from
another system.
Originality/value – This paper is considered as an original approach to the framework of the Quranic
basic source and Islamic literature regarding inter-generational transfer compared to another system.
Keywords Inter-generational transfer, Islamic inheritance
Paper type Conceptual paper
1. Introduction
Questions of inter-generational transfers have been widely discussed among the economists,
policymakers and the like in recent years (Hambor, 1987)[1]. Now there is a large body of
theoretical and empirical studies, including the sociological theories of the sociological
antecedent and consequences of transfer, economic theories of the reasons and motives for
transfer giving, sociobiological theories of why transfers evolved and where they are directed.
Sociological theories normally address variations in social structure, culture and
institutions, while economic and sociobiological theories are more universal in their
aims. But, the latter must also deal with the changing social contexts of transfers as
sources of specific opportunities or restraints for the expression of universal properties. Humanomics
Vol. 30 No. 2, 2014
Thus, problems of comparisons arise in all foundations. So far, the Islamic view has not pp. 95-121
© Emerald Group Publishing Limited
0828-8666
The authors benefited from the research grant no. UKM-11KH-05-FRGS0087-2009. DOI 10.1108/H-12-2013-0084
HUM been taken up systematically due to both a lack of discourse and a lack of issue
conceptualization. To our knowledge, only Carrol (2001) has done a study on
30,2 inter-generational transfer under the law of succession. But, her foundation focuses on
narrowly defined transactions involving the transfer of, or the reservation of, rights in
the usufruct via hibah and waqf.
In this paper, we are motivated by referring to the following hadith: Abu Hurairah
96 (may Allah be pleased with him) reported Allah’s messenger (may Allah’s blessings and
peace be upon him) as saying,
Among the actions and good deeds for which a believer will continue to receive reward after his
death are knowledge which he taught and spread, a good son whom he left behind, or a copy of the
Qur’an which he left as a legacy, or a mosque he built, or a house which he built for the traveler, or
a stream which he caused to flow, or a shadaqah which he gave from his property when he was
alive and well, for which he will continue to receive reward after his death[2].
This means that Islam has recognized the transfer of wealth, transfer of ‘ilm and
“transfer” of nasb.
In this paper, we will examine the inter-generational transfer that looks only at the
monetary transfer as discussed by many economists and sociologists (Davies, 1982;
Ferrara, 2007)[3]. We also want to advance the conceptual discussion and illustrate it
with some examples of empirical comparison (for a different view).
Then, the next section will discuss some models and motives of inter-generational
transfer in a different system and ideology. But each one of the views shows that
inter-generational transfer can be explained by different views. Section three provides some
examples of inter-generational transfer in a different economic system. A discourse on
inter-generational transfer from the Islamic perspective will be discussed in section four.
Economic implications of inheritance have been discussed in section five, and section six
includes the conclusions.
2. Theoretical foundations
So far, most studies on the inter-generational transfers have been done in economics[4]. The
theoretical foundations from those studies seem to converge on two basic issues. The first is
the importance of transfers and bequests for current wealth accumulation (Wedgwood, 1929;
Benhabib and Bisin, 2007) and wealth distribution (Carrera, 2009; Desai and Shah, 1983). The
second is how a family functions as an agency of economic redistribution and security for its
members. For both issues, the motive of giving transfers (e.g. altruism, as proposed by
Wilhelm, 1996) or strategic exchange (also known as exchange of love, Bernheim et al., 1985)
is often considered crucial[5]. The purpose of distinguishing between motives is not to offer
a full psychological explanation, but to assess how people will react to changing incentives,
such as those of the economic policy[6].
Since Barro’s (1974) and Becker’s (1991) pioneering work, economists have
increasingly come to the conclusions that inter-generational transfers are to a
considerable extent motivated by altruistic concerns of parents with regard to their
children, while the motivation of bequests remains more problematic. For example, as
argued by Masson and Pestieau (1997), economists divide bequest into three parts:
(1) accidental or unplanned bequests;
(2) voluntary or planned bequests; and
(3) capitalistic or entrepreneurial.
This definition is either grounded on mere exchange or on various strategies (Masson, Inter-generational
1997, p. 57). However, as argued by Lafaye (2008), this definition is quite described from
the traditional and popular picture of bequest. But it is specifically relevant because it
transfer
allows us to identify the following:
• the vector of the bequest;
• the kind of relations existing within the family;
• the structure of preferences;
97
• kind of information held by each member of the family; and
• the characteristics, in terms of capabilities or life expectancy, of the family
members.
Each of the aforementioned models, which focus on specific motivations for wealth
transmission, becomes apparent such that this taxonomy is very different from the popular
image of inheritance and that the economic foundation does not follow the same track as the
one adopted by other social scientists (Masson, 1997). Therefore, an interesting foundation
for the explanation of transfer behavior that has been gaining ground lately is that of
evolutionary (or sociobiological) theory. It has correctly predicted the finding that resources
always flow from the elderly generation down to their descendents (Low, 1998). In addition,
parents also make intentional and unintentional wealth transfers to their descendants. In
particular, wealthier parents support their children in numerous ways. They invest in
education and abilities of their children, and through socialization, they influence their
natural talents. Furthermore, they provide inter-generational transfers and post-mortem
bequests of different kinds of wealth (Bowles and Gintis, 2002). It shows that the economic
literature focuses on material inheritance.
The sociology of inter-generational relations, has over the past three decades, refuted
the later findings. As discussed by Bengtson (2001), he says that we should take into
account many dimensions of solidarity. Kohli (1999) suggests, among others, the
nuclearization of the family and the concomitant weakening of the bonds beyond the
nuclear households as the examples of those dimensions[7]. Both are linked to effective
bonds and personal help and to economic support.
Therefore, sociological theories tend to be structural, institutional or cultural (or a
combination of these). A structural foundation to the explanation of changing family
transfers might focus on the changing family characteristics, such as size or
composition, or the changing educational and occupational status between the sexes. An
institution foundation focuses on the institutions that regulate family transfers such as
legal obligations of inter-generational transfers (Shariah court), legal regulation
(inheritance law) and taxation of bequests or inheritance or relevant family policies.
In the macroeconomics field, a seminal paper by Paul Samuelson published in 1958
may be as starting point of the modern theory of inter-generational transfers. Samuelson
stated that in a world which workers wished to provide for consumption in old age and
without durable goods, the competitive market for borrowing and lending would lead to
a negative interest rate with high consumption when young and very little consumption
when old. Life cycle utility would be correspondingly low. However, if the population
impose a social compact in which workers would transfer income to the old without
expectation repaid by them, or with the assurance that they would be similarly treated
when they were old, then consumption could be more evenly distributed across the life
HUM cycle and the life cycle utility would also be higher. In place of the negative rate of
interest provided by the market outcome, people would earn an implicit rate of return
30,2 that is equal to the population growth rate (plus, in a more realistic context, the rate of
productivity growth) through the transfer system. Thus, inter-generational transfers
supported by a social contract could make everyone in every generation better off.
The systems are called pay-as-you-go, or PAYGO, because the obligations
98 created are not backed up by assets accumulated in a fund; rather, future payments
of benefits come from future contributions by future workers. The system is
relatively easy to start – at least when the age distribution of the population is such that
the size of the working-age population is much larger than that of the old-age population
(hence modest per-capita contributions by the former can provide generous per-capita
benefits for the latter) – because all current and future generations apparently gain.
However, these systems are very painful to end, because if the contract is terminated, the
last generations of workers end up making transfers to the elderly but receive nothing in
their own old age. At any time during its operation, such a transfer system has an
implicit debt that is owed to those who have already paid in, thus acquiring an
entitlement for later support.
Traditional familial support systems for the elderly are PAYGO transfers, but these
are sustained by individual values and social norms instead of a formal social contract
(although private transfers can sometimes be reinforced by law, as is the case in
Singapore). Public pension systems in much of the industrial world, including the US
Social Security system, are operated on a pay-as-you-go basis. The transition from a
family support system to a public system is relatively painless, as the implicit debt to be
repaid is just transferred from one system to the other.
Slow population growth and rising life expectancy make both familial and public pension
systems much less attractive compared to such systems in situations when the population is
growing rapidly and expectation of life in old age is short. Nonetheless, despite growing
dissatisfaction with such arrangements generated by the emergence of demographic
conditions marked by slow population growth and longer life expectancies, and the appeal of
potentially higher rates of return available from other kinds of investments, the systems
cannot be shut down or converted to privately funded systems without repaying the implicit
debt. For families, such a shift would mean that one generation would have to support both
its aging parents and save for its own retirement.
For public sector programs, currently the existing implicit debts are typically huge –
often one to three times the size of annual gross domestic of the country’s product – and
often larger than the existing explicit government debt. Nonetheless, a number of
countries, mostly in Latin America and most notably Chile, have made or initiated the
transition to a funded system.
In the late 1980s, Becker and Murphy (1988) developed an influential theoretical
construct that would link the provision of public education and public pensions, so as to
bring about an efficient level of investment in education when parents’ altruism is
insufficient to ensure such a level, and institutions that would enforce repayment of
inter-generational familial loans do not exist. The introduction of a modified public
pension system would compel the children who received the education to repay their
parents through their contributions to the system, and no generation would get a
windfall gain or suffer a loss (Becker and Murphy, 1988).
3. Some examples of inter-generational transfer in different economic Inter-generational
systems
For all the aforementioned foundations, the advantages of having international
transfer
comparisons may seem obvious. But, what exactly is the interest of an economist
perspective on inter-generational transfers? On the one hand, the objective of the
comparison may be theoretical. If the task consists in explaining transfer occurrence and
transfer outcomes in terms of general behavioral tendencies, the variations among the 99
economic system, whether structural, institutional or cultural, become relevant as
variations in the pattern of opportunities, restraints and preferences that condition the
expression of these tendencies.
Thus, on this basis, the conventional economic system, as explained by Szydlik
(2004), which is built on the principles of rationalisme and utilitarianism[8], the
inheritance occurs because:

• the rule that binds over who is entitled to receive the transfers and the limit of the
amount depends on the owner’s property. For example, the rules governing
marriage (monogamy versus polygamy) are also considered or the existence of
individual property rights, which determines whether parents can transfer or
bequeath property to their children, and the laws and customs regarding
inheritance (primogeniture, partible inheritance and exclusion of daughters from
bequests). Moreover, parents evaluate their children’s welfare with their own
preferences, to bequest the estate; and
• it is not an obligation because it refers to the concept of ownership in the economic
system. The property owner is fully entitled to the assets of these estates.
He/she might want to deposit or even give to people who do not have family ties.
Because there is no obligation, there are several studies, such as those of Pezzin and
Schone (1999), Blau and Duncan, (1967), Featherman and Hauser (1978), that approve
inter-generational transfer in a conventional system, causing inequality in economic
security and stability, and its influence on the annual income and lifetime resources is
small, while in the latter case, it is ambiguous.
Therefore, in the conventional system, transfers generally have a horizon that extends
over the lifetime of the wealth holder. As mentioned by Masson and Pestieau (1997), they
are not primarily motivated by family considerations even though the dynastic family is
used as the channel allowing for the serenity of the estate[9]. They normally consider the
inheritance as accidental, unplanned and therefore unexpected. Sometimes, it does not
express any desire of the parents but only their concern for themselves (i.e.
precautionary savings) and a preference for deferred consumption[10].
Culturally, La Ferrara (2007) argues that inheritance in the Western systems may be
classified under two dimensions. The first is the bloodline along which the property is
transmitted. Historically, most societies have featured patrilineal inheritance, where the
property passes from fathers to sons. Some cultures, however, maintain matrilineal
inheritance systems, where the property is transmitted along the female line. Another
distinction relates to the division of the property among heirs. At one extreme there is
primogeniture, where the entire property goes to the eldest child (typically, son) of the
deceased. At the other extreme, there is equal division, where each child inherits the same
share. Intermediate forms of particle inheritance are also common (Ferrara, 2007).
HUM Equality measuring in the distribution of the estate is based on the value of the
benefits or the family closeness relationship. There is no difference between men and
30,2 women. However, this statement is not absolute because these are practically different.
Tomes (1981) used survey data from Cleveland to show that most parents divided their
estates unequally (Wilhelm, 1996, p. 874). It is commonly assumed that inheritance is a
major source of wealth inequality and that the offspring of wealthy families tend to be as
100 rich as their parents due to the bequests. This perception is one reason why many people
support taxing estates at death. But an individual’s skills and personal choices are far
more important in determining household wealth than the inheritance. In fact, the
contribution of inheritance is surprisingly small. More importantly, skills acquired
through education, entrepreneurship and hard work determine whether individuals
move from one wealth level to another (Gokhale and Villarreal, 2006).
Based on nationally representative survey data, there is a range of countries which

have transfer studies. In addition to the USA, they included France (Attias-Donfut, 1995;
Attias-Donfut and Wolff, 2000), Germany (Kohli, 1999; Kohli et al., 2000), Israel (Litwin,
2002; Spilerman et al., 1993), Norway (Gulbrandsen & Langsether, 2000) and Sweden
(Klevmarken, 2002). These studies have generated a rather similar pattern of results,
which in the stylized form may be summarized as follows:
• Inter vivos transfers in the family are given at a considerable rate.
• These transfers occur mostly in the generational lineage, and they flow mostly
downward, from the older to the younger generations.
• Transfers from parents to adult children (or grandchildren) are often targeted to
the more needy children (which means that, in economic terms, they are
altruistically motivated). For Germany, the results from multivariate analyses
show that parent– child transfers depend on attributes of the parents (especially
their income and wealth), the children (especially their need) and the parent – child
relationship (especially contact frequency and residential proximity).
• Bequests also occur at a considerable rate, and this rate has increased for younger
cohorts[11].
• In contrast to inter vivos transfers, bequests are mostly divided equally among all children.
• For both inter vivos transfers and bequests, no significant gender differences exist, in
contrast to what some smaller studies reveal to have been the case a few decades ago.
• With regard to the reproduction of social inequality, the empirical results so far show that
ongoing inter vivos transfers do not increase income inequality among the recipients, and
may even lower it because they are targeted to the more needy children (Attias-Donfut &
Wolff, 2000; Künemund et al., 2003). For bequests, on the other hand, our German evidence
shows a clear increase in inequality (Szydlik, 2004).
To some extent, differences in family transfer regimes may plausibly be related to

differences in public welfare regimes. In Esping-Andersen’s (1990) typology of welfare
states, the USA and Germany are exemplars of two different types, the liberal and the
conservative (or corporatist) one, respectively, with France (while being somewhat less
easily classified) close to the latter as well. France and Germany should therefore have
similar transfer regimes and be different from the USA (where public pension incomes make
up a substantially lower part of the pension incomes). However, other differences are to be
considered, differences that might be grouped under the label “family regimes”. These Inter-generational
include the usual dimensions of family policy, but go beyond them to other policy fields (such
as taxation of wealth and inheritance), and to dimensions of the demography and culture of
transfer
the family. Germany and the USA differ both in terms of welfare and family regimes, and
these differences seem to cancel themselves out with regard to inter vivos transfer rates.
As shown previously, inter vivos transfers and bequests in the Western system appear to
follow different logic and have different effects; therefore, they need to be examined as 101
separate processes. However, they are systematically linked in empirical and institutional
terms. As Klevmarken (2002) shows for Sweden, almost all gifts go to households that also
inherit. Inter vivos gifts can be used to reduce the size of the bequest, so that under the usual
taxation rules, the total tax amount can be lowered. For the USA, it has been shown that
wealthy parents do appear to take advantage of tax-free giving to spend-down their estate,
but not to the full extent permitted by the law (McGarry, 2000).
The evolution of inheritance rules over time is a fascinating topic. Platteau and
Baland (2001) review inheritance practices in Medieval Europe and in contemporary
developing countries, contrasting primogeniture with partible inheritance. They argue
that while some regions (typically Asia) have resorted to primogeniture as a way of
maintaining the integrity of the family real estate, in Sub-Saharan Africa there is a
widespread attachment to the equal division norm. They anticipate that as land scarcity
becomes more severe in the face of growing population pressure, traditional land tenure
arrangements are likely to give way to market transactions. While it is not possible in
the present context to analyze the evolution of inheritance rules as an endogenous
response to economic conditions, it can be interesting to examine some of the
implications of these norms for the allocation of resources within and between
households. In particular, in the following discussion, our focus will be on a small
number of studies that have analyzed the consequences of matrilineal inheritance rules
in contemporary developing countries.
The “capitalist or entrepreneurial” bequest is the result of an accumulation for its
own sake. The person who initiated this accumulation is the main beneficiary of it.
Hence, although accidental bequests are typically limited to the consumer’s life cycle,
voluntary bequests are essentially based on family considerations, but particularly,
there are three models of household behavior used by economists – the life cycle model,
the altruism model and the dynasty model – and all models have different impacts for
bequest motives and bequest divisions. Modigliani and Brumberg (1954) life cycle
model assumes that people are selfish and that they do not harbor feelings of altruism
toward their children. This model then implies that they will not leave any bequests at
all or that they will leave only unintended or accidental bequests arising from an
uncertain lifespan and/or uncertain medical and long-term care expenses (Levhari and
Mirman, 1977; Kotlikoff, 1989), selfish or strategic bequests (i.e. bequests that are a quid
pro quo for the care and attention their children provide them during their old age
(Bernheim et al., 1985, Cox, 1987) and/or bequests that are left pursuant to an implicit
annuity contract between them and their children whereby their children agree to
support them financially until they die in exchange for receiving a bequest when they
die (Kotlikof and Spivak, 1981). Moreover, in the latter two cases, the life cycle model
implies that people will leave bequests only if their children provide care and/or
financial support during old age and that people will leave their entire bequest to the
child or children who take care of them and/or provide financial support.
HUM By contrast, the altruism model of Barro (1974) and Becker (1974, 1981, 1991) assumes
that people harbor inter-generational altruism toward their children and thus implies that
30,2 they will leave a bequest to their children, regardless of whether their children take care of
them and/or provide financial support and that bequests will be compensatory (i.e. that they
will give more to the child or children with less earnings capacity and/or greater
consumption needs). Finally, the dynasty model of Chu (1991) assumes that people care
102 about the perpetuation of the family line and/or the family business and thus implies that
they will leave a bequest only if their children carry on the family line and/or the family
business and that they will leave their entire bequest to the child or children who carry on the
family life and/or the family business. Thus, the three models of household behavior have
very different implications regarding bequest motives and bequest division, and looking at
data on people’s bequest motives and attitudes toward bequest division can shed light on
which model of household behavior applies in the real world.

Therefore, the properties of these various kinds of bequests need to be described.
Which motivations does each one have in each case? (Lafaye, 2008, pp. 3-5). Among
several economic theories of such inter-generational transfers, when the bequest is
voluntary, its motivations can not only be by altruistic reasons but also by strategic or
paternalistic reasons (Masson and Pestieau, 1997). This means that parents bequeath
because they gain utility from the utility or lifetime resources of their children. It follows
that bequests are compensatory. Barro (1974) and Becker (1974) said that parents will
bequeath unequal amounts to their offspring, compensating children who have low
earnings. In addition, bequests compensate inter-generational differences, with lower
average earnings of children eliciting larger bequests from parents (Wilhelm, 1996).
While inter-generational transfers are pervasive in all societies, with the rise of the
modern welfare state, there has been an increase in public sector transfers and a
decrease in private transfers. Study of these transfers is important for many reasons, as
they affect individuals, families and entire populations.
The inter-personal distribution of income is a major influence of inter-generational
transfers have a major influence on the interpersonal distribution of income because a high
proportion of total household income is reallocated from the earner to some other person,
either through public or private channels. Beyond the distribution of income, transfers are
important in the study of families. A major component of the costs of rearing children is
borne by parents. Although the level of such transfers is subject, within certain limits, to
parents’ discretion, they constitute a crucial element in parental fertility decisions. If parents
intend to leave a bequest for each child, the level of these intended bequests is also a part of
the cost of child rearing. Related to the level of private costs, or the size of the transfer to
children, decisions are also determined by the human capital of the next generation.
Therefore the greater share of elder care is also provided by relatives, rather than by
alternative institutional arrangements. A further reason to study transfers is that the
patterns of inter-generational transfers, both public and private, are a major determinant of
the financial consequences of changing population age distributions and specifically of
population aging. Private transfers can add to, substitute for or be crowded out by public
transfers. To design policy, and to understand the impact of existing age- or need-based
policies, it is essential to understand and quantify these processes of substitution and
crowding out. In particular, the interaction between public and private transfers depends in
part on the motives for private transfers – for example, whether they are motivated by
altruism (in which case there should be a high degree of substitution and crowding out
because altruists care about the well-being of another person rather than about the transfer Inter-generational
itself) or by exchange (in which case there should be very little crowding out because there is
an obligation to repay).
transfer
In traditional societies patterns of inter-generational transfers play important role in
shaping fertility decisions and trigger the onset of secular trends (as is argued, for
example, in John Caldwell’s theory of the demographic transition). Patterns of transfers
in pre-industrial societies also may play an important role in evolutionary processes 103
affecting fertility and mortality. Theorists suggest, for example, that the elderly
contribute to the reproductive fitness of their children and grandchildren, which may
explain why humans have such long post-reproductive survival. The theorists such
Kotlikof and Summers (1981) argue that the desire to make familial inter-generational
transfers, particularly bequests, may be the dominant motive for saving, investment
and capital formation in industrial countries more so than the life cycle saving motive
(Kotlikof, 1981, pp. 706-732).
These three features of pre-industrial societies together guaranteed that inheritance was
the single first-order factor determining the wealth and wealth distribution of any particular
birth cohort. First, begin with the length of a “generation”: how long the average piece of
wealth remains in the possession of a member of one particular birth cohort. The shorter a
“generation”, the more important inheritance will be in the relative wealth accumulation of
any cohort; the amount of wealth gained through inheritance is equal to the total capital
stock divided by the length of a generation; and the amount of wealth gained through
accumulation is simply equal to the net investment and it is invariant to the length of a
generation. At first glance, it is not clear what is the effect of longer life expectancies found
today – life expectancies at birth in the 1970s compared to pre-industrial life expectancies at
birth in the 1930s, according to Livi Bacci (1992) – on the length of a generation. One retains
one’s wealth until one is older, yes, but one also receives one’s inheritance when one is older.
However, it is clear that primogeniture played an important role in shortening pre-industrial
generation length; inheritances descended overwhelmingly from the deceased male
wealthholder[12] to his eldest male child (or other eldest male heir). Today, by contrast,
inheritance descends from the deceased wealthholder to all his or her children (or other heirs)
in approximately equal shares. With roughly equal number of children surviving to
adulthood today and in the pre-industrial past, the spread in years between the eldest
surviving male and the middle child makes it overwhelmingly likely that the pre-industrial
generation length was shorter by a matter of years.
Second, consider rates of population growth back before the industrial revolution. The
consensus estimates of population growth in Eurasia in the 1500-1800 period average some
0.25 per cent per year (Livi Bacci, 1992). Moreover, even that low rate vastly outstrips what
demographers believe were average rates of population growth found back in the pre-1500
Middle Ages. Maddison’s (2001) estimates of the rate of growth in output per worker over the
1500-1800 period are some one-eighth of a per cent per year. This is the upper limit to
pre-industrial revolution, early modern growth rates; any faster rate of growth over that
period would have required that standards of living in the first half of the last millennium be
at levels that were too low to support human life (Pritchett, 2000).
In sum, each country came out with a different system which is based on their
respective religion and belief. Therefore, law origin plays a significant role in designing
the inheritance system in a particular country.
HUM 4. A discourse on inter-generational transfer under the Islamic
perspective
30,2 In Islam, inheritance (or faraidh) is a type of distribution of wealth in the
inter-generational transfer. As well as in a field of Islamic economics, we appreciate the
contribution of Syarbini in his book entitled Mughni Al Muhtaj, Part 3, where he
discussed the inheritance jurisprudence in the categories of heirs who are eligible to
104 receive the inheritance, who are not entitled to receive, as well as which parts are
received and how to calculate the distribution (Rofiq, 2001).
Therefore, the rules on inheritance have to be implemented to avoid harm to anyone
who will receive faraidh distributions. These rules were stated in the Quran and
explained by Al-Hadith an the Ijtihad of scholars. Among the verses on inheritance are:
[…] and a share for women from what is left by parents and those nearest related, whether, the
property be small or large-a legal share[13].
As discussed by Muhammad bin Al Imam (2008), there are three issues highlighted in
those verses: the reason of family inheritance, kinship relationship and set the common
transfer (Al Imam, 2008, p. 36) Al Mawardy said that this verse was revealed because
The Jahiliyah or the Ignorant does not give the inheritance to women and is just for men
(Athiyyah, 1991, p. 527). Sa‘id bin Jubayr and Qatadah said,
The Jahiliyah used to give adult men a share of inheritance and deprive women and children of
it. Al Biqa’i said, this verse is a sign that there is no difference between women and men in
Quran, both are because of inheritance[14].
Therefore, everyone is equal in Allah’s decision to inherit, even though their shares vary
according to the degree of their relationship to the deceased, whether being a relative, spouse,
etc. Ibn Marduweyah reported that Jabir said, “Umm Kujjah came to the Messenger of Allah
and said to him, ‘O Messenger of Allah! I have two daughters whose father died and they do
not own anything”[15]. Then, Allah revealed:
There is a share for men from what is left by parents and those nearest in relation[16].
Al Qasimi said, “the philosophy of the mens’ share more than women, because man need
to give living, capital business, as well as other things”. As Thobary reported with good
sanad from Qatadah, “They (jahiliyah) did not give a share to women” so Allah revealed
this verse. Al Syinqity said, in this verse Allah has not explain yet about how much
share is for man and for woman, but explained it in two verse after. First:
Allah commands you for your children’s (inheritance) […][17].
And second, in the closed verse from this glorious Sura (Ibnu Basyir, 1999, p. 10):
They ask you for a legal decision. Say: Allah directs (thus) about those who leave no descendants or
ascendants as heirs[18].
This verse was revealed by Allah Subhanahu wa Ta’ala because the Jahiliyyah usually
prevents women and children from inheriting property and is dedicated to the men with
the view that young children do not know how to manage property and work (Said bin
Jubair and Qatadah)(Ibnu Katsir, 2000, p. 359). Ibn Al-’Arabi thinks that this shows
great ignorance in them, because the small and weak beneficiaries are more in need of
the property compared to those who have the strength to work and accumulate property
from their jobs (Ramzi, 2006).
In this verse, Allah clearly eliminates the usual form of tyranny upon two types of Inter-generational
human weakness, women and children. Allah with His compassion and wisdom
sympathizes with them by restoring their full inheritance rights. In that verse, Allah
transfer
gave inheritance rights without distinction of small or large or male or female, without
distinguishing those parts a lot or a little, and whether the heir was willing or not willing,
Allah has surely set for relatives of the heir because of the nasab relationship; however,
this paragraph does not come with a detailed explanation of the size of inheritance rights 105
(Shabuni, 1995, p. 1).
In the following discussion, our focus will be on highlighting the basic concept of
inheritance in Islam.
4.1 Everyone is equal

In the pre-Islamic world[19] and even in modern societies, the ancients regarded only
men as the means of preserving the progeny. The father of the family not only gave life
to his son but also passed to him his religious beliefs and rituals. According to the Hindu
Vedas and the Greek and the Roman laws, the power of procreation was confined to men
only, and hence family religions were the monopoly of men, and women had no hand in
religious affairs except through their fathers or husbands. As they could not take part in
the execution of religious ceremonies, they were naturally deprived of all family
privileges. Hence, when the system of inheritance came into being, women were
excluded. Another interesting feature of the Sasanian culture was that when a boy
reached the age of puberty, his father married him to one of his own numerous wives.
During that period, a woman had no legal personality. The father and the husband had
vast powers over her property. It was the duty of the father or the head of the family to
marry a girl when she reached the age of 15. But the age of marriage for the boys was 20.
After being married, a girl was not entitled to receive any inheritance from her father or
guardian. She had no right to choose her husband herself, but she could contract an
unlawful marriage if her father failed to marry her when she reached the age of puberty.
In that event also she did not inherit from her father. The number of women a man could
marry was unlimited. The Greek sources mention cases where a man had several
hundred women in his house. The Zoroastrian religious books show that the rules of
marriage during the Sasanian period were complex and confusing (Nafisi, 1964, p. 42).
Evils inherent of inheritance laws in women may be summed up in the following points:
• Women had been completely denied a share of the inheritance; they were rather
regarded as a part of the property of the deceased and, therefore, their right to
inherited property was out of question, sources.
• In pre-Islamic Arabia, and other countries where there had been tribal societies, not
only were women deprived of the right of inheritance, but even weak and sick persons
and minors (children) were given no share in the inheritance. The common principle of
inheritance was that he alone is entitled to inherit who wields the sword.
• Then, in certain societies, there was in existence the law of primogeniture, which
exists even today in some of the so-called civilized parts of the world and entitles
only the eldest son to inherit the whole of the father’s property or at least to get the
lion’s share.
HUM 4.2 The importance of inheritance
Abu Hurairah (Allah be pleased with him) reported that Allah’s Apostle (may peace be
30,2 upon him) said about the importance of inheritance as saying,
He who leaves property that is for the inheritors; and he who leaves behind destitute children,
then it is my responsibility (to look after them). This hadith has been narrated on the authority
of Shu’ba with the same chain of transmitters.
106 This verse from Al Qur’an and Hadiths is one of the basic laws from Al-Quran of
inheritance and corrected understanding and Jahiliyyah practices (Ramzi, 2006). Imam
Syafi’i thinks that this verse was revoked by the eighth verse of Surah An-Nisa (Kitab
Al-Umm), (Al-Farran, 2008) and many Hadiths explain the verse about the recipients of
heritage property (Kitab Al-Risalah) (Al-Farran, 2008).
4.3 Motives of transfer giving

In equitable distribution of inheritance, Islam has a perspective of equitability or justice,
which is of course very different from other systems. Justice is a very fundamental
teaching in Islam and covers all aspects of life, economic, social, political and
environmental issues. For the extent of applicative dimension of justice, the Quran
defines equality with various meanings, such as: “something that is true, impartial
stance, protection the individual rights, the right way in making decisions, balance, and
equality”(Siddieqi, 1979)[20]. In the economic context, Choudhury (1986) interprets the
distributional equity (distributive justice) as the main pillar of economic justice.
On the sociological level, equality means that “everyone should be treated as they
should, without pressure or unfair discrimination” (Choudhury, 1986). So it includes “a
fair treatment, equality and sense of proportion and balance”(Ahmad, 1995. Without
justice in life, the social order will also distort and ultimately be harmful to oneself. The
justice is the horizontal dimension of Islam, and in a more practical perspective, includes
physical–spiritual, immaterial–material, individual–social balance.
The above discussion on justice distribution leads to the following rules related to
inheritance, and the rules of inheritance can be divided into general and specific rules.
The general rules say that:
• First, as Ibn Abdil Barr states in Tamhid “Faraidh and share in the inheritance
cannot be taken except through texts of alqur’an and sunnah with a saheeh isnaad
and not disputed by the scholars”.
• Second, Ibn Taimiyah one of classical scholars said that “all heirs fall if there is
one closer to their heirs”.
• Third, Arab or non-Arab agreed that the people most entitled to inheritance rights
of people who have died were relatives and arham.
• Fourth, Ibnu Qayyim states that a group that has more heirs get precedence over
ashobah, either in a state of pure fardh or in addition to fardh, ashabah also in one
condition, whether ashobah nafshihi or ashabah bi ghairihi.
• Fifth, kinship associated with the dead man through intermediaries, including
broker relatives, so he is more powerful than if it was a different kind of kinship.
• Sixth, legacy issues are built on some fundamental basis, such as normal relations,
advocacy and compassion, in rank without an agreement, because it is not the
standard and not the general nawamis built thereon. As described in the Qur’an:
[…] and blood relation among each other have closer personal ties in the decree of Allah than Inter-generational
the believer and the Muhajirin, except that you do kindness to those brothers. That has been
written in the book[21]. transfer
• Seventh, any special law for one group of heirs of one person, inside an association
of two or more persons, such as the child’s mother (brothers, sons of our mother),
children, daughters than sons (granddaughter), brothers in venter (sibling) or his
half-brother. 107
• Eight, kinship is serialized, lacquers male and female, not a separate ruling,
siblings, not the same as his half brother or sisters (Al Imam, 2008, p. 33). While
the specific rules, as revealed in the following verse:
Allah (thus) directs you as regards your Children’s (Inheritance): to the male, a portion equal to
that of two females: if only daughters, two or more, their share is two-thirds of the inheritance;
if only one, her share is a half. for parents, a sixth share of the inheritance to each, if the
deceased left children; if no children, and the parents are the (only) heirs, the mother has a third;
if the deceased left brothers (or sisters) the mother has a sixth. (the distribution In all cases (’s)
after the payment of legacies and debts. ye know not whether your parents or your Children are
nearest to you In benefit. these are settled portions ordained by Allah. and Allah is
All-knowing, All-wise[22].
This verse is one of the verses about the basic laws of inheritance. Ibn al-’Arabi thought
that someone is entitled to his property when he was alive, unless he was sick before his
death. When he was in these circumstances, the two-thirds of the property went to the
heirs. He expressed some opinions on the cause of this verse:
• The Jahiliyah does not give the right to inherit property to the poor children and
women.
• Property is inherited by children, parents and kindred, but God rejected the
practice (Ibn Abbas).
• Sa’ad bin al-Rabi said that daughters do not get any heritage property because all
were taken by his uncle, and then Allah S.W.T. explained the situation (Hadith
Narrated Abdullah bin Muhammad bin Uqail).
• Jabir asked Rasulullah S.A.W. on the property when he was very sick
(al-Bukhari).
Interpretation of this verse is explained further by the scholars on the meaning of words
and the distribution method of the heritage property as required by God. Estate
divisions include the distribution to son, daughter, parents, grandparents, brothers and
sisters of the deceased. Ibn al-’Arabi thought that before the distribution, the inheritor
was entitled to the property to use the management body until the burial, pay off debt
and wills and deeds that expire during the life of worship. Heirs must meet all the
property rights of the inheritor before dividing his properties by faraidh, like to settle
debts, fulfill the will and Ibadah that he not do before he died, such as the hajj, fasting
and so on (Ramzi, 2006). Imam Syafi’i considered when interpreting this verse that Allah
Subhanahu wa ta’ala set inheritance only to the class or party mentioned in the Quran.
So, there should not be any increase or decrease in it and the property division cannot be
returned. He thinks there is no bequest to heirs because of the hadith Rasulullah Shalla
HUM allahu alaihi Wasallam revoked the verse of bequest for both parents and relatives
(Al-Umm)(Al-Farran, 2008).
30,2 There are several issues and questions about this verse also, as per the following:
• The law of inheritance does not equate shares between male and female,
daughters and sons, husband and wife, sister and brother and mother and father
(with no children). These are the most frequent cases.
108 • In a few cases, males and females, mother and father (when the deceased is
survived by children), maternal sisters and brothers, and paternal grandfather
and any grandmother are equal.
• One case where males takes five times as much as females: mother and father with
at least two siblings.
• The case where a female prevents a male from getting anything: full sister with
paternal brother.
• The case where it pays to be a female: when the deceased is survived by parents,
husband and one child; if the child is male he takes 5/12 (65/256) while she gets
6/13 (72/256) if the child is female. The difference is even larger in the case of two
children; if they are two girls, each gets 4/15 (⫽16/60), but two boys only get 5/12
each (⫽12, 5/60 each).
• There are numerous cases in which a closer female gets more than a farther male;
daughter with more than one brother, mother with more than five sons, wife with
more than three brothers, etc.
• Cases where there are two daughters or more with no brother.
Why the shares are differences? First simply because of the text in the Qur’an.
Second, there are clear correlations between the inheritance code and family and
property laws in Islam. There are viewpoints to understand it. Marriage in Islam is
a civil contract, and the mahr (shadaqah) is a mandatory gift to the wife. On this
reason absolute and complete financial responsibility is on the hand of man
(husband, father, son, brother) in the family, as well as independent property of
husband and wife, financial responsibility after marriage, divorce, gifts and
alimony. In the case where there are two daughters or more with no brother, the
majority of jurist may explain that a daughter can obtain 2/3 from the entire estate
[…] If only daughters, two or more, their share is two-thirds of the inheritance […]
Ibnu al Mundzir in al Ijma’ (9/11) explained, Scholars agreed that two daughters or more
can obtain 2/3 from the estate (Al Imam, 2008, p. 95).
Surah an-nisa: Ayat 12
In what your wives leave, your share is a half, if They leave no child; but if They leave a child,
ye get a fourth; after payment of legacies and debts. In what ye leave, their share is a fourth, if
ye leave no child; but if ye leave a child, they get an eighth; after payment of legacies and debts.
If the man or woman whose inheritance is In question, has left neither ascendants nor
descendants, but has left a brother or a sister, Each one of the two gets a sixth; but if more than
two, They share In a third; after payment of legacies and debts; so that no loss is caused (to any
one). Thus is it ordained by Allah? And Allah is All-knowing, Most Forbearing [23].
This ayah states inheritance of Al-Kalalah. Many scholars of Tafseer discuss the Inter-generational
Al-Kalalah in this verse. There are many opinions about the Al-Kalalah, but the selected
opinion for Ibn al-’Arabi is based on the opinion of Abu Bakr and Umar that Al-Kalalah
transfer
is a person who has no children and parents. This view was also supported by the Imam
Syafi’i in his book Az-Zahir.
Surah an-nisa: Ayat 176
They ask you for a legal decision. say: Allah directs (thus) about those who leave no 109
descendants or ascendants As heirs. if it is a man that dies, leaving a sister but no child, she
shall have half the inheritance: if (Such a deceased was) a woman, who left no child, Her brother
takes Her inheritance: if there are two sisters, They shall have two-thirds of the inheritance
(Between them): if there are brothers and sisters, (They share), the male having Twice the share
of the female. Thus doth Allah make Clear to you (his law), Lest ye err. And Allah hath
knowledge of all things.
Ibn Al-’Arabi think this verse is revealed because of a sick Jabir bin Abdullah asked the
Prophet about brothers and sisters because he has no heir. This ayah explains about the
legacy of Al-Kalalah. God, in these three verses which are all embodied in the surah of al
Nisa, specifies which parts of each heir is entitled to receive it. Signs are also clearly
explained and the terms and conditions of people who are entitled to a legacy and the
people who are not eligible, and also describes the situation of each heir, when he took
part in a “certain” and when he also received an “ashabah”. We need to know that a third
verse is the principle of faraidh science. These are containing the procedures with
respect to inheritance rights and the complete division.
Therefore, the person who was awarded the knowledge and memorized the
verses, it will be easier to know a part of each heir, as well as recognize the wisdom
of Allah. Imam Al Qurtuby in his commentary reveals that the third verse in Surah
al Nisa is one of the pillars of religion, law reinforcement and parent of divine
revelations by him was Faraidh have a very great degree, until his position became
half of science in Islam. This was reflected in the following Hadith, the Abdullah Ibn
Mas’ud that the Messenger of Allah said:
Learn the Quran and preach to others, and learn faraidh and preach to others. I am a person
who will die, and even this knowledge will be gone until the resulting libel. Even two people
would disagree in terms of division, but they did not find anyone who can resolve the dispute.
Al Qurtuby further said, if we know the essence of the science how tall and regal mastery
of the Shahabaht prophets of this knowledge. How amazing their views on the science of
inheritance. However, unfortunately, most people especially in the present did not even
care abusing it (Qurtuby, 2002).
Surah al-Baqarah: Ayat 180
It is prescribed, when death foundations any of you, if He leave any goods that He make a
bequest to parents and next of kin, according to reasonable usage; This is due from the
Allah fearing.
This verse describes the bequeathed property to the parents and close relatives. This
sentence was revoked by the Hadith, narrated by Ashabus Sunan from Amr bin
Kharijah that no bequest to the heir, and Ibn Kathir thinks this will revoke verse by
verse by beneficiaries (Ibnu Katsir, 2000, p. 365).
HUM 4.4 Principles of inheritance law in Islam (Rasyid, 2008).
4.4.1 Worship principle. Implementation of inheritance by the Islamic law is a part of
30,2 worship to Allah S.W.T., which will be rewarding if adhered to like the implementation
of another Islamic law. We can know that condition because Allah closes the verses of
inheritance with the verse:
These are the limits (set by) Allah, and whosoever obeys Allah and His Messenger, will be
110 admitted to Gardens under which rivers flow (in Paradise), to abide therein, and is the great
success. And whosoever disobeys Allah and His Messenger, and transgresses His (set) limits,
He will cast him into the Fire, to abide therein; and he shall suffer a disgraceful torment[24].
This is because he changed what Allah has ordained and disputed with His judgment.
Indeed, this is the behavior of those who do not agree with what Allah has decided and
divided, and this is why Allah punishes them with humiliation in the eternal, painful
torment. Imam Ahmad recorded that Abu Hurairah said that the Messenger of Allah said,
A man might perform the actions of righteous people for seventy years, but when it is time to
compile his will, he commits injustice. So his final work will be his worst, and he thus enters the
Fire. A man might perform the deeds of evil people for seventy years, yet he is fair in his will.
So his final work will be his best, and he thus enters Paradise (Ibnu Katsir, 2000, pp. 383-383).
4.4.2 Property right principle. In this sense the property rights, means that only whose
rights and obligations of any material can be bequeathed to heirs, while the rights and
obligations in the field of family law or the rights and obligations of a personal nature such
as husband or wife, position, expertise in a science and something that cannot be inherited.
4.4.3 Basic right principle. Human rights is the fundamental right of the heirs, which
mean that even if the beneficiary is a newborn or someone dying while he was still alive
when the heir to the deceased, as well as husband and wife, who have not divorced,
despite being separate residence, then deemed competent to inherit. The rights of
inheritance are four kinds of causes of an inheritance, namely, family relationships,
marriage, wala’ and co-religionists.
4.4.4 Necessity principle. The Islamic inheritance law automatically give right to
transfer wealth from someone who has died (the heir) to heirs according to the
commandment of Allah SWT, means that is hung to the will of a person without, either the
heir or heirs.
4.4.5 Bilateral principle. This principle implies that a person receives the right of
inheritance from both parties from the relatives of male offsprings and from
descendants of female relatives.
There is a share for men and a share for women from what is left by parents and those nearest
in relation, whether the property be small or large – a legal share[25].
Therefore, everyone is equal in Allah’s decision to inherit, even though their shares vary
according to the degree of their relationship with the deceased, whether being a relative,
spouse, etc (Ibnu Katsir, 2000, pp. 7-10) Al Qurtuby said that some of our scholars said “in
this verse there are three lessons, first explaining the causes of inheritance, second the
generally of family relationship, third the universality of nashiiban mafruudhah” (Qurtuby,
2002).
4.4.6 Individual principle. This principle states that the estate can be divided among
each of the heirs to be owned by one individual. The execution of the entire estate is
expressed in a particular value which is then distributed to the heirs entitled to receive Inter-generational
it according to the respective levels
transfer
And to everyone, We have appointed Mawali of that left by parents and relatives. To those also
with whom you have made a pledge (brotherhood), give them their due portion (by wills).
Truly, Allah is Ever a Witness over all things[26].
Ibn ‘Abbas, Mujahid, Sa‘id bin Jubayr, Abu Salih, Qatadah, Zayd bin Aslam, As-Suddi,
Ad-Dahhak, Muqatil bin Hayyan and others said that Allah’s statement (and to 111
everyone, we have appointed Mawali) means “Heirs”. ’Ibn ‘Abbas was also reported to
have said that Mawali refers to relatives. Ibn Jarir commented, “The Arabs call the
cousin a Mawla” (Ibnu Katsir, 2000, pp. 10-11).
4.4.7 Justice principle. This principle implies that there must be a balance between the
rights obtained of one of the estates with the obligation or cost burden that must
implemented. Men and women’s life, for example, share which is comparable to
assuming the obligations of each (later) in the family and community life. Man is in
charge of the family life, sufficient for the child and his wife life.
The responsibility of justice is an obligation that must be implemented, regardless of
the issue of whether his wife is able or not or whether children need help or not. Based on
the balance between the rights acquired and obligations to be fulfilled, what is actually
obtained one male and one female from the same inheritance benefits would they feel.
Let the rich man spend according to his means, the wealthy father or his representative should
spend on the child according to his means and the men whose resources are restricted, let him
spend according to what Allah has given him. Allah puts no burden on any person beyond
what He has given him[27].
4.4.8 Death principle. The meaning of this principle is that the new wave appears when
someone dies.
This means that inheritance solely as a result of someones death. According to the
Islamic inheritance laws, property transfer to another person who is called wave occurs
after the person who has the treasure has passed away, meaning that the property
cannot be switched to others (through the distribution of the estate) if the person who
has the treasure is still alive, and any form of transitional treasures of someone who still
lives to others, either directly or to be carried out later after his death, is not included in
the category of inheritance according to the Islamic law.
4.4.9 Out treasure principle. Divide up all the heritage that was left was not the principle
of completion of the division of inheritance. From counting and completing division in a way:
determine who the heirs with each part, purify the estate as debt and testament, to carry out
the division to its conclusion. So, when there was a situation where the number part of all
heirs greater than the specified problem, or vice versa occurs a situation where the number
part of all heirs are smaller than the original problem set, has been set up to run out the estate
was divided in accordance with the provisions of.
5. Economic implications of inheritance

In conventional economic discourse, according Joulfaian (2006) from the US Department
of the Treasury, inheritance significantly affects the distribution of welfare or affects the
behavior of consumption and saving, which is still under debate among economists
(Joulfaian, 2009, p. 3). In fact, these questions have received almost no attention in the
economic literature (Blinder, 1971). Josiah Stamp’s lament said that scientific economic
HUM inquiry in to the subject has been very scanty (Stamp, 1926, pp. 347-348). Economic
literature study of inheritance may start from different angles to answer two research
30,2 questions (share of inheritance on total wealth and motives of the bequest):
• Perspective of the recipient: (Wolff 2003) finding that bequests have an equalizing
effect on wealth distribution are gained by concentrating on the perspective of the
recipients. However, Laitner and Ohlsson (1998) show in a theoretical model that
112 altruistic transfer increase the concentration of wealth. To study the received
inheritances involves rather problematic recall bias (Wolff, 2003). This
perspective is taken mostly in surveys.
• Perspective of the donor: This perspective can be studied on the basis of the estate
data (however this is not available in a number of countries) or by asking about
motives of bequests. The latter perspective is about intentions and is problematic,

as motivations may change over time. The composition of the bequetable wealth
is not very informative.
• Perspective of the non-recipient/non-donor: The perspective of non-heirs and
non-donor on inheritance is almost never analyzed in economic literature. As these
people do not inherit anything, this may seem adequate. However, information from
non-recipients will allow examination of whether the focus on motives for bequests is
adequate. People with no intention to bequeath anything may not lack altruism or
strategic exchange motives but just income or wealth resources. Thus, reasons for not
giving bequests and receiving inheritances have to be studied. Such data would be
helpful for consistency checks with the survey data on inheritances.
5.1 Transfer of Wealth

The discussion of wealth transfers in a system will not escape from the concept of moral
economy adopted for these systems, then instruments and mechanisms adopted by
individuals and states, in determining the source and how the distribution of wealth is done.
Moral concepts in Islamic economics associated with property and wealth are one of the
goals to maintain equality and erode the gap between rich and poor and sustainability of
welfare from the current generation to the next generation. Two things that Allah has
mentioned,
In order that it may not become a fortune used by the rich among you. And whatsoever the
Messenger gives you, take it; and whatsoever he forbids you, abstain (from it). And have
Taqwa of Allah, verily, Allah is Severe in punishment[28].
Let those (disposing of an estate) have the same fear in their minds as they would have for their
own if They had left a helpless family behind: let them fear Allah, and speak words of
appropriate (comfort)[29].
Islam realizes and respects that recognition of individual ownership through honest
means is very important. Every result of Muslim economic activities becomes his
property entirely because private property is recognized as the basis of the social and
economic system and the basic motivation of economic activity. Motivation guides
human beings to compete in adding and retaining their ownership.
In the psychological view, human as a homo economicus, Islam has warned that
humans love immortality and the instinct to “want to control everything”. Therefore, the
people always make every effort to get his needs during the individual life cycle[30], for
individual welfare and for their next generations. In these two verses there are some Inter-generational
urgent issues that need to be evidence that the rules of Islam have had a significant
impact on the economic system as follows:
transfer
• Two verses assert that in Islam, estate is not the end of a goal, but just a surrogate for
distribution to a more eligible and need. To drive into people’s consciousness the fact
that they are not the absolute masters of the wealth they produce but are only trustees
and are therefore not authorized to pass this wealth on to others as they like. 113
• The first verse shows how Islam maintains a balanced distribution of income and
wealth. Even this paragraph contained the general prohibition of monopoly prices and
production. So, the mechanism of income and market mechanism are running
balance. By breaking up the concentration of wealth from the hands of few individuals
and spread it out in society and to the next generation.

• In the second of two verses, the issue also closely associated with the first paragraph.
When Islam forbids monopolies of wealth, it provides solutions for wealth that does
not accumulate on one side only, in a way reminiscent to fulfill the rights of others
or the next generation through inheritance, saving, bequest/wasiyah and
consolidation of the family system, which is the social unit of an Islamic society.
• How Islam takes care to maintain the present and future sustainability of economic
growth, sustainability and equality of welfare events.
The primary contribution of the Islamic law of inheritance toward the economic
structure of its society is that it runs counter to the concentration of wealth which is just
in a few hands. The wealthy man during his life is denied unearned increments by the
abolition of interests. He is goaded to enter creative occupations like industry or trade
and he has to pay Zakat on his income whose incidence would be proportionate to the
requirement of social security.
Besides this obligatory charity, he is argued to give charity in the way of Allah. If he
still amassed wealth or has built up a large property, it will not be concentrated in a
single hand after his death. Islam recommends him to make a will for charitable objects
which shall not exceed one-third of the whole estate, and the remainder shall be shared by
almost all the relatives. So, the huge estate which had been built up during the person’s life
time is reduced to tiny portions. The inheritors might again, by their industry, build up
fortunes for themselves in spite of the heavy Zakat duty, but when they die, their fortunes
will again be fragmented among their relatives, males as well as females.
The Islamic law of inheritance is anti-capitalistic. In this system, a person may not
dispose of more than one-third of his property by testamentary directions. While he is in
the enjoyment of normal health, he may dispose of his property freely, subject, of course,
to the moral obligations, but neither by will nor by gift, once he enters on a stage of
illness which terminates in death. By such disposition, he may provide legacies for
friends, servants and charity. Compare it to some other system of inheritance whose
property rights were regarded as being entirely from the owner, so he may give it to
anyone who he thinks is entitled. Preference entirely on the owner, or also permit a
person to give away his wealth to a single child, with the exclusion of all others, and that
child can amass and build up still greater fortune till in the course of a few enterprising
generations, resulting in the formation of a colossal estate. The result is something like
HUM the Mitsui in Japan who own 12 per cent ½ of the entire national wealth, while millions
in Japan have to live on subsistence wages.
30,2 In Islamic inheritance, a person may be allowed to donate his entire estate to charity
on the condition he has no heirs and ashobah/residuary. According to Ibn al-Qayyim in
his book I’lamu Muwaqqi’in (4/52), in this case there are two opinions of Ulama. But, the
best second opinion is that the man is allowed to that. Based on a narration of Ibn
114 Mas’ud, he said, “O Yemen’s people, in fact if anyone of you die and do not have a’
residuary heir (kin), allowed you to put part of your property wherever you will[31].
5.2 Connectivity between meed, Maslahah and inheritance

In Islamic view, humans must control and direct their want, so that it can bring
Maslahah and not Mudharat for the current life and thereafter. While, need emerges
from thought or an objective identification of the necessityto get benefits for life. Need is
directed by normative and positive rationality, namely, rational Islamic teachings; thus,
need is finite and measurable in quantity and quality. When a Muslim consumes a good
or service to meet a need, it means to obtain the maximum benefit for his life. This is the
principle and objectives of Islamic law itself. The objectives of Shari’ah is Maslahah
al-ibad (welfare of human being), as well as a way to get maximum falah. Therefore, all
goods and services which effect Maslahah (welfare) are the needs of human beings. Or,
all human activities to secure his and the generation’s welfare which affect Maslahah is
a part of need compliance, and inheritance is one of it. Rationality in Islamic economics,
always pays attention to Maslahah for themselves, their families, society and the next
generation; utility is not a priority, but is not removed. For Islamic economist, therefore,
Maslahah is a more objective concept than utility for analysis of the behavior of
economic agents. Analytically, the concept of Maslahah can more easily be manipulated
followed by the utility concept (Khan, 1995, p. 35) Implications of applying these need
concepts to realize Maslahah against family and next generations are as follows:
• Ensuring abstinence from Israf (prodigality): a Muslim consumer will always
consider Maslahah for themselves and their families in consuming a good or
service and avoid the Israf. He will not obey his want to get the maximum utility, if
it was found contain Israf. For example, a Muslim will not consume expensive food
even though his income makes it possible to buy it while he knows that his neighbors
are starving because they have no food. He will choose to offer a part of his income to
the neighbor or keep it as savings or inheritance. In that way, it means that he is
putting maslahah to maximize utility for his personal self (Khan, 1995, pp. 34-35).
• Giving priority to the hereafter: in basic life, a Muslim will be faced with two choices
between consuming economic goods only and nature worship (Ukhrawi). Using
higher goods or services for worship consumption than for current consumption, is a
greater value because its orientation is al-falah who will get the reward from Allah, so
it is aimed more for life hereafter. Hence, the worship consumption is essentially for
future consumption, while worldly consumption is only for the present consumption.
Greater worship consumption results in the achievement of higher al-Falah and vice
versa (Kahf, 1992, pp. 96-98).
• Consistency in the fulfillment of needs at the three levels (Daruriyyah, Hajiyyah and
dan Tahsiniyyah): a human need in consumption has a level of importance that’s not
always the same. There are priorities among one of another that shows the level of
expediency and urgency in its fulfillment. The scholars have divided it into three Inter-generational
priorities, namely, al-Dharuriyyah, al-al-Hajiyyah and al-Tahsiniyyah. A Muslim needs
to allocate its budget according to a priority level consistently. Needs must be met in
transfer
the order of Dharuriyyah at first, then Tahsiniyyah and Hajiyyah in the last (Mannan,
1993, p. 48). This priority should be applied to all kinds of purposes, faith (al-din), life,
property, reason (’aql) and posterity (nasl). Inheritance included in Maslahah Hajiyyah
as they relate to family and descendants (nasl), as contained in the surah of al Nisa 115
verse 9.
• Ethics and norms[32]: Shariah has a set of ethics and norms that must be followed in
all activities of life. These ethical norms are, namely, simplicity, justice, cleanliness,
halalan toyyibah, equality and others. In summary, a Muslim in activity, particularly
in consuming goods or services must necessarily br guided by ethics and norms that
have been determined by the Islamic law. It means, he prefers Maslahah from getting
utilities to meet his relatives’ unlimited wants, equality and so on. Additionally,
included in the ethics or norms that must be fulfilled is to not let the family and
descendants live in poor conditions, as the Messenger of Shalla Allahu Alaihi wa
Sallam said:
In fact you leave your child in a state of wealth is better than you leave them in poor condition
and stretch out their hand to other[33].
6. Conclusions
In this paper, we have presented a number of inter-generational transfer models and
motives in economic view and different systems, then widely discussed comparison
with the inheritance system in Islam. In the Western and conventional systems,
inter-generational transfer has different model and behaviour, built on the principles of
rationalism and utilitarianism. And because no fixed rule has its own characteristics on:
• the rule that binds over who is entitled to receive the estate and the limit of the
amount depend on the owner’s property. Moreover, parents evaluate their
children’s welfare with their own preferences, to bequest the estate;
• it not an obligation because it refers to the concept of ownership in the economic
system. The property owner is fully entitled to the assets of these estates. He/she
might want to deposit or even give to people who do not have family ties; and
• motives can be various, altruism, cultural or economical and profit.
The primary contribution of the Islamic law of inheritance to the economic structure of
its society is that it runs counter to the concentration of wealth in in just few hands.
Because in the Islamic view, humans must control and direct their wants, it can bring
Maslahah and not Mudharat for the current life and hereafter. While, need emerges from
thought or an objective identification of the necessity to get benefits for life. Therefore,
all goods and services which effect Maslahah (welfare) are the needs of human beings.
Or, all human’s activities to secure his and generation’s welfare which effect Maslahah,
is a part of need compliance, and inheritance the one of it. In Islam, there is no horizon
that extends over the lifetime of the wealthholder’s benefit.
HUM Notes
30,2 1. Frank A. Cowell, Inheritance and the Distribution of Wealth, STICERD, London School of
Economics and Political Science. Jaime Alonso-Carrera, et al., Fiscal policy, composition of
inter-generational transfers, and income distribution, Barcelona Economics Working Paper
Series no. 387/2009.
2. Narrated by Ibn Majah and Baihaqy.
116 3. Our future work would be on the derivation of economic growth model in the existence of
transfer of wealth, knowledge and good human actors.
4. We might refer to the earlier studies such as Stamp (1926), Wedgwood (1928, 1929).
5. Bernheim et al. (1985) found evidence in the Longitudinal Retirement History Survey that children
visited and called their parents more frequently when their parents had larger amounts of
bequeathable wealth. They interpret this finding as evidence of an exchange theory of transfers in
which bequests are made to children in exchange for their earlier attention and care. Parents are
able to elicit attention because they can threaten any child for not providing attention with the
credible promise to disinherit him in favor of his siblings. However, parents with only one child
would be unable to credibly make this threat, and, consistent with this argument, the positive link
between visits and bequethable wealth was not found in one-child families Wilhelm (1996),
Bequest Behavior and the Effect of Heirs’ Earnings: Testing the Altruistic Model of Bequests, The
American Economic Review, USA, Vol. 86, No. 4 (September), p. 875.
6. Becker (1991) and others like, Economic policy such as retirement age and social security system.
7. Due to modernization, some studies such as those by Ruggles (2007) predict that inheritance
would lose its salience in modern societies, although Kohli (2004) denies it.
8. It shows how the principles of rationalism and utilitarianism, that are always proposed to
people, ought to desire to maximize their utility, much impacted to their inheritance system.
These principles are also widely used in discussing the macroeconomics subject under the
subtitle of overlapping generation models, such as A. John and R. Pecchenino (1994) An
Overlapping Generations Model of Growth and the Environment, The Economic Journal,
104(November), 1393-1410.
9. A. Masson and P. Pestieau, Bequests Motives and Models of Inheritance, G. Erreygers & T.
Vandevelde (eds.), Is Inheritance Legitimate?, Heidelberg, Springer, 1997, p. 58-59.
10. The deferred consumption has been discussed in a macroeconomic subject under the heading of
overlapping generation model, among others, as discussed by Delia Velculescu, Consumption
habits in an overlapping-generations model, 2008, International Monetary Fund, European
Department, HQ1-08-212H, 700 19th Street NW, Washington DC 20431, USA […] […]H7.
11. Among the respondents of the German Aging Survey, almost one-half have already received
an inheritance; for about one-fourth of these, the amount inherited has been above €50,000.
The youngest age group (40-54 years) has inherited most often, which demonstrates a strong
cohort effect that overcompensation that the expected life course effect.
12. With the only a significant exception being the provisions for widows discussed by Peter
Diamond in his comment is of especial interest because these widows’ provisions were a
non-marketable right that survived the extinction of other customary, feudal and
non-marketable restrictions on property for centuries.
13. QS. 4:7
14. Op.cit, p.41 Inter-generational
15. Reported by Muslim transfer
16. QS.4:32
17. QS.4:11
18. QS.4:176
19. Refer to asbabul nuzul of ayat on the inheritance given to women 117
20. See also, Nejatullah Siddiqi, Kegiatan Ekonomi dalam Islam, translated by Anas Sidik,
(Jakarta: Bumi Aksara, 1988), p. 42
21. QS.7:75
22. QS.4:11
23. QS.4:12
24. Qur’an, 4:13-14
25. Qur’an,4:7
26. Qur’an 4:33, see also 4:7-8,11,12,176
27. Qur’an,65:7
28. Qur’an,58:7
29. Qur’an,4:9
30. In a wealth distribution study, generally, life cycle of human wealth searches is divided in four
phases. First, Accumulation Pashe: early career, fulfill human ends in the short term, but in this
phase, the individual’s income is not big. Second, Concolidation Pashe, has passed the mid-career
individuals. Revenues have exceeded expenditures. In this phase, individual invests their funds for
long-term goals. Third and Fourth, spending/gifting phase: in these two phases, individuals enter
a period of of investment and distribute excess assets to the next generation.
31. Ibnu abi Syaibah, Al Mushannaf, No.30903, with Shahih sanad.
32. M. Fahim Khan, 1995, op. cit., p. 78.
33. Bukhori and Moslem
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Humanomics

Inter-generational transfer under Islamic perspective

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Inter-generational transfer under Inter-generational

Institute of Islam Hadhari, Universiti Kebangsaan Malaysia, Bangi,

inheritance occurs because:

Based on nationally representative survey data, there is a range of countries which

To some extent, differences in family transfer regimes may plausibly be related to

which model of household behavior applies in the real world.

4.1 Everyone is equal

4.3 Motives of transfer giving

5. Economic implications of inheritance

motives of bequests. The latter perspective is about intentions and is problematic,

5.1 Transfer of Wealth

and spread it out in society and to the next generation.

5.2 Connectivity between meed, Maslahah and inheritance

finitely lived agents”, Mimeo, NYU.

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