It’s never too soon to start planning for the future. For expatriates living in the UAE who might have assets in their homeland in addition to their assets in UAE, ensuring a valid will is in place is absolutely essential. Expats often assume that simply writing a will is enough and that inheritance laws are governed by the same principles as in their home country. This is not the case at all.
Failure to put a legally valid will in place can result in all assets being frozen and inheritance being referred to Sharia (Islamic jurisprudence) courts. Many Western expats assume that if there is no will in place, it is natural for assets to revert to the spouse, but this is not the case in the UAE. According to Sharia law, only one sixth would revert to the spouse, with the rest automatically distributed to children, and even parents and siblings of the deceased.
Top ten tips for expats to avoid inheritance issues:
1. Appoint a professional to have your will prepared and approved by a court of law in your home country (probated). Avoid any ‘one size fits everybody’ options.
2. Have your approved foreign will translated into Arabic.
3. Have your translated will stamped by the Ministry of Foreign Affairs. This is then passed to the Inheritance for Non-Muslims at the Federal Family Court.
4. If you own UAE property it might be possible to allow it to be owned by a Jebel Ali offshore company. There will be a charge for transferring the title of the property to the Jebel Ali offshore company, but this is minimised (from two per cent to 0.125 per cent) if the shareholders of the Jebel Ali offshore company are the same as the owners of the property. This gets around the Sharia Law on UAE property, since it is the shares of the Jebel Ali offshore company that are owned by the person, and the transfer of these would be governed by the will under the home country law, whereas property in UAE is always governed by Sharia Law, regardless of the individuals home country law.
5. Avoid any ambiguity in the foreign will and keep it to the point.
6. Civil Code Article 243 states that a third of the deceased total estate value can be distributed however he/she likes. Take advantage of this by having a Sharia will prepared stating that the UAE assets are less than a third of the total estate value.
7. Keep separate bank accounts, since on notification of death bank accounts can be frozen until the estate has been settled.
8. For those with children, in addition to appointing full-time guardians in your foreign will, also appoint temporary Dubai-based guardians for children until they can be united with the full-time guardians.
9. For ultimate security, wrap each asset into a specific asset protection structure such as a trust or foundation. Foundations such as those in Panama, Jersey and Isle of Man have their own self-governing legal status, but they don’t have any shareholders. Once registered, the assets are owned and controlled by the foundation which is governed by Foundation Council and directed by a Letter of Wishes, supplied by the Founder, which specifies how assets are handled and/or distributed. It is usual to insert a Protector into the structure, this role is to oversee the implementation of the Letter of Wishes and can grant the Protector rights of consultation or even rights to remove or replace the Foundation Council. Whilst it is also possible to have a similar Protector role in a trust structure, the unique status of the foundation means that a Founder may be able to assume the role of Protector, without impacting the discretionary nature of the Foundation Council, therefore delivering more control.
10. Discuss your estate planning with your partner and family to ensure that they know what to do and who to contact if the need arises. Also make sure your family at home know the name and contact details of your solicitor. Your partner should be involved every step of the way and this should be viewed as a sensible provision for your future, just like retirement, rather than a subject to be avoided.