Shariah Trust - an Islamic approach to wealth planning
With the emergence of Islamic banking, it is increasingly possible for Muslims to bank in accordance with their values. This month, the wealth planning experts at HBSC Private Bank discuss Shariah-compliant trusts.
Historically assumed to be incompatible with Islamic law, many followers of Islam fail to take advantage of the benefits a trust can offer. If structured properly, however, a trust can help enhance compliance with the Shariah while also accomplishing other key objectives.
As an independent business line within HSBC Private Bank, Global Wealth Solutions benefits from the services of HSBC Amanah, the Islamic financial services division of the HSBC Group. With dedicated professionals in Dubai, Riyadh, London, New York, Kuala Lumpur and Jakarta, HSBC Amanah represents the largest Islamic finance team of any international bank.
“Worldwide, we are well positioned to understand, structure and deliver Shariah-compliant solutions,” comments Brian Carey, Global Wealth Solutions, Dubai. “This is achieved through consultation and constant monitoring with well reputed Shariah Scholars highly qualified in Islamic finance and broader religious and ethical matters. Indeed, in developing a Shariah-compliant trust structure Global Wealth Solutions has been guided and supervised by an independent committee of scholars to ensure all Shariah requirements are met.”
Distribution and investment
Through Global Wealth Solutions clients can now enjoy the many benefits a trust can provide while also fulfilling their religious obligations. In addition to privacy, emergency planning and asset consolidation, the Shariah Trust offers Shariah-compliant distribution and succession planning. Investment of the trust’s underlying assets and the arrangement of financing solutions will also be conducted in a compliant manner.
“As is the case with most modern trusts, the Shariah Trust retains flexibility for the trustee to invest in a wide range of investments,” explains Brian Carey. “To ensure that investments are in compliance with the Shariah, however, the trustee’s power to invest is limited to Shariah-compliant assets.”
HSBC Amanah represents the largest Islamic finance team of any international bank
The structure also ensures that the trust assets are distributed to the beneficiaries in accordance with the Islamic rules of succession. The heirs’ interests will not be adversely affected by settlement of the trust. Indeed, their interests may be better protected as the delays associated with probate and estate administration can be mitigated.
Tailored solutions
“While local presence, global reach and depth of services are all important, success is also a question of attitude and culture,” explains Brian. “That means we work to understand the specific needs of our clients and then strive to deliver the most appropriate solutions. Only this way can we build and retain long-standing relationships which endure from one generation to the next.”
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