Answered by Shaykh Abdurrahman ibn Yusuf Mangera
In the name of Allah the Inspirer of truth
First I would like to congratulate you for your good intentions. May Allah grant you the ability to overcome your problems and keep you steadfastness on your faith.
Your questions can be answered as follows:
1. Your Wife's Zakat
You are not responsible for your ex-wife's assets or her zakat payments thereof. This is her responsibility, more so now that she no longer remains your wife.
2. Unlawful Investments
You have to try to extract yourself from each one of your unlawful investments and insurance plans as soon as possible. (Please see fatwa on 401k plans to better understand the nature of various investment options.) When you cancel these plans the amount which was invested by you (payments or installments) is for you to take back and keep but any amount received beyond that (interest and payoffs) are to be disposed off to the poor without the intention of gaining reward.
Muslims, as much as others, are encouraged to plan for their future and security. It is permitted for one to pursue all permissible means in this regard. This includes matters related to this world but more importantly matters related to the next. However, adopting unlawful means (however lucrative they may seem) is tantamount to destroying the security and salvation of the hereafter for the supposed security of this world. Allah has promised security for those who fear him and follow His commands. He says in Surat al-Talaq, "Whoever fears Allah He will suffice him," and "Whoever fears Allah, He will make an opening for him, and will provide for him from where he did not imagine."
3. Wife's Share in Investments
It is up to you settle with her (as you have nearly done) to the percentage of ownership in the investments you have. Since you are going back a few years in terms of zakat payments, you may consider the entire amount yours, and for which you will pay zakat, until you settle with her as to how much is to be allotted to her.
4. Calculating Your Zakat
For calculating your zakat you must first determine the amount of your total assets and debt in the first year of not paying zakat. All cash you possessed, properties, amounts invested in various schemes, etc will be considered assets. As for your debt, it will be divided into two categories. One, the amount borrowed excluding any interest to be paid. Two, the interest amount you have paid or have to pay on the capital borrowed. The capital amount that was borrowed will be deductible in zakat but not the interest.
You will first calculate how many payments you had made into your mortgage until the first year of not paying zakat. The total amount repaid will be considered a repayment of the actual capital (Islamically), even though the mortgage company may consider it all interest or part interest and part repayment of loan. The amount that now remains of your borrowed amount will be considered part of your debt and thus deductible from your assets. For instance, if your property had cost 260 000 Rands for which you took out a loan and you paid the mortgage company 50 000 Rands till that year, your zakat deductible debt will be 210 000 Rands even though the mortgage company may see it otherwise.
When you have subtracted your total deductible debt from your total assets any remaining amount will be zakat-able at 2.5% for that first year. For each subsequent year, you will similarly calculate your assets and debts and then remove 2.5% of it as zakat. However, when calculating the zakat in your case for each subsequent year, the amount to be paid as zakat for the previous year (2.5%) will also be deductible from the total assets of the next year since it is also considered a debt. To provide a simple example, if your zakat-able assets come to $1000 for the first year of not paying zakat, your zakat would be $25.00 for that year. In the next year (if your assets remained the same) your zakat will be 2.5% of $975.00 now, since $25.00 is the zakat amount payable from the previous year. Hence your zakat for the second year will be $24.37. Likewise, you will calculate the zakat for each year until the present year.
And Allah knows best.
Abdurrahman ibn Yusuf
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