Fatwa ID: 04023

Answered by: Maulana Nabil khan

Question

Salam. Are trust funds allowed?

بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم

In the name of Allah, the Most Gracious, the Most Merciful

Answer:

A trust is an arrangement whereby a person (a trustee) holds property as its nominal owner for the good of one or more beneficiaries. By this definition a wade’ah can be defined as a trust.

This concept of wade’ah has been documented in the books of jurisprudence with great detail. Generally speaking, a trust or wade’ah is permissible and there is no harm it provided one understands the rulings pertaining to it. However, since trusts are considered to be legal entities and the entrusted assets must fall within the limits of those implications that vary from country to country, it is important that the individual utilizing a trust system understands the Shariah restrictions and rulings. Keeping this in mind, it is permissible to use a trust.

Reference: Al-Fatawa Al-Hindiyyah: Kitab Al-Wade’ah: 382 pg

Only Allah knows best

Written by Maulana Nabil khan

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham