Dr. Monzer Kahf, a prominent economist and counselor states: The principle is that having different religions prevent inheritance between person who may otherwise inherit from each other. My opinion is based on the definitions of inheritance in Shari’ah and in Western laws. Western laws allow a person to determine her/his heirs and the shares assigned to each through a last will or a similar document, and if a person dies without any such document the law determines the persons and shares for giving away the estate. Shari’ah defines inheritance as the distribution of the estate as given in the Sources of Islam while it defines a last will as a determination of the destination of a part if the estate that dies not exceed one third provided none of the Wasiyyah is given to an heir.
This means that a Muslim who lives under a Western law must prepare a document that assures that her/his estate is to be distributed according to the Shari’ah (thus utilizing the Western meaning of a last will for the purpose of Islamic inheritance) and at the same time also prepare a Wasiyyah (that may be incorporated within the last will) if she/he likes to distribute any thing within the concept of the Islamic Wasiyyah. While in the body of a last will that is intended to implement the inheritance system it is not permitted to assign any portion to a non-Muslim relative including a wife, In the part that is intended as Wasiyyah a Muslim may assign to any non-Muslim relative any part within the rules of Wasiyyah (which is not considered inheritance because inheritance does not take place with the difference in religion).
By the same token, if a non-Muslim assigns any part of his/her estate to a Muslim through a last will, it is permissible for a Muslim to take it because this is not inheritance but a Wasiyyah and we cannot force our condition of “maximum one third” on a non-Muslim. It is also permissible for a Muslim to take any property given to her/him by virtue of the law of the land (if there is no last will) because in both cases this is not inheritance as defined in the Shari’ah.
Where does then the principle of “no inheritance among persons from different religion apply? In a land that applies the Islamic inheritance system as the law of the land. Under such a law what is given by law is inheritance and no distribution of inheritance between persons from different religions. Does the Wasiyyah still applies both ways? yes of course but with the difference that we still do not enforce our one third limit on a non-Muslim.”