We’d like to make it clear to you that basically, non-Muslims are not allowed to inherit Muslims. But a Muslim can donate or bequeath some money that does not exceed the third of his property to a non-Muslim. If a bequest that exceeds more than the third of the property is given to someone, it is up to the heirs, either to agree or not.
Shedding more light on the issue, we’d like to cite what Ibn Qudama, a Hanafite scholar, states in his book “Al-Mughni”: “It is permissible for a Muslim to bequeath some of his property to a Dhimmi (a non-Muslim citizen of an Islamic state), and he Dhimmi can do the same for his fellow Dhimmi. This is the view maintained by Shuraih, Ash-Shu`abi, Ath-Thawri, Ash-Shafi`i, Ishaq and other people of the Hanafi school of jurisprudence, and no dissenting view was recorded on this.
Moreover, Muhammad bin Al-Hanafiah, `Atta’a and Qatadah construed the Qur’anic verse “…except that ye should do kindness to your friends” (Al-Ahzab: 6) as referring to the bequest of a Muslim to a Christian or a Jew. Said reported, on the authority of Sufyan, quoting Ayyub, who quoted `Ikrimah as saying that Safyyah bint Huyay sold her rooms to Mu`awiah for 100,000 dirhams or dinars. Having a Jew brother, she called him to Islam so that he could inherit her, but he refused. Hence, she made a will that he should be given third of her money.
From this we derive that it is permissible for a Muslim to donate or bequeath some of his money to a person from the People of the Book and, in fortiori, the bequest of any of those to their brothers in faith or to Muslims is permissible.
However, it should be stressed that such cases of bequest are all governed by the same regulations that govern Muslim’s bequest to his brother in Islam. Thus, if a non-Muslim (from People of the Book) bequeaths some money to one of his heirs or makes someone a beneficiary to more than the third of his property, it will depend upon the inheritors’ approval, with the same conditions to which Muslims are subject.