All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.
If a person possesses the Nisaab and a whole lunar year elapses on it, then he is obliged to pay Zakah on it, which is 2.5%, and he is not permitted to delay paying it out. If he failed to pay the Zakah (on his money) for several years, he is obliged to pay it for all those years and he is not permitted to pay it to his daughter or to save it for her even if she is poor or handicapped, because Zakah should not be paid to one’s parents or children, as we clarified in Fatwa 85910.
As regards how to correct your mistake, then –as we already mentioned –you may do so by paying out the Zakah for all the previous years which you were obliged to pay Zakah on your money but failed to do so.
With regard to the issue of debts, you did not clarify to us whether or not you had during that period the amount of money which could cover your debt other than the money which you are obliged to pay Zakah for, like an estate and the like.
In our view what you should do now is that if you still have debts, then you should deduct it from the money on which you were obliged to pay Zakah and then pay Zakah on the remaining amount, however, if you had already repaid those debts by installments, then you should pay Zakah on the money of all the previous years without subtracting those debts which you had already paid by installments, as long as you are still obliged to pay the Zakah.
With regard to the debt which you have taken in order to buy the house, if it was a loan with Riba (interest and/or usury), then you committed a forbidden matter and a grave major sin and you are obliged to repent to Allaah.
As regards how to distribute the two houses, if you mean distributing them on your children after your death –as it appears from your statement ‘we have made a will…’ –then it is not permissible to make a will for an heir, as the Prophet said: “Allaah has given each one his right and there is no will for an heir.” [Al-Bukhari and Muslim]
However, if the heirs agree to this will, then it is permissible for them to do so. Moreover, it is an obligation to treat the sons and daughters equally when gifting them.
If the handicapped daughter is poor and unable to earn her living, then her nearest relatives are obliged to spend on her with some conditions, among which is that the relative should be an heir to her (if she dies), and he should be rich so that he can spend on her from his excess money. If one of her relatives meets these conditions, then he/she is obliged to spend on her. If a group of her relatives meet these conditions, then they should spend on her according to the extent of their share of inheritance from her.
The fact that some of her relatives live far from her does not exempt them from the duty of spending on her if he is obliged to spend on her and is able to send the expenditures to her. There is no doubt that her full brothers are closer to take the responsibility of spending on her more than the brothers from the father’s side only. This is in regard to the obligation of spending on her.
As regards the obligation of assuming the responsibility for her and taking care of her, then you may make a will to one of your heirs or any other relative to take care of her and have witnesses on this will. If you do not make a will to this effect, then it is the court which will appoint someone to take care of her.
Your sons are not responsible for the money of your handicapped daughter unless you make a will on this or if the Islamic court appoints someone to do this.
Allaah Knows best.