Protecting Your Assets to Prevent Complications and Ensure Your Family’s Future.
Dubai: Purchasing your ideal apartment or villa in the UAE is a significant achievement, likely anchoring your long-term plans to reside here. However, there’s one crucial step remaining – securing your property legally.
In the unfortunate event of your passing, not having a will can add stress during an already challenging time. Lawyers interviewed by Gulf News highlight that while many expatriates are eager to invest in UAE property, a significant number are unaware of the critical importance of asset protection and inheritance planning.
The Importance of Property and Asset Protection:
A common misconception among expatriates is the belief that their assets will automatically pass to their family members according to their wishes or the laws of their home country. Nita Maru, managing partner and solicitor at TWS Legal, who specializes in wills and estate inheritance in the UAE, clarifies that UAE inheritance laws follow a specific legal framework, especially when no locally registered will exists. Additionally, having a will allows expatriates to apply their home country’s laws to their estate.
Expatriates are strongly advised to create a will upon acquiring property, particularly in regions where inheritance laws differ from those of their native countries. In the UAE, where Sharia law may govern estates by default, possessing a legally valid and registered DIFC or ADJD will ensures that an expatriate’s intentions regarding property distribution are respected.
Nita Maru, Managing Partner and Solicitor at TWS Legal
Consequences of Inadequate Protection:
Owning property in the UAE without proper legal protections, such as a will or an inheritance plan, can lead to numerous challenges. The primary issue is the complexity involved in managing assets across different jurisdictions.
“Expatriates often own properties or have investments both inside and outside the UAE, necessitating careful coordination to protect all assets under relevant laws. Without a comprehensive legacy plan or will, there’s a risk of asset fragmentation, where properties might be treated differently across various legal systems, causing delays and potential disputes in distribution,” Maru explains.
Potential Delays and Complications:
In the absence of a will, family members might face unexpected delays and complications. “Without a clearly defined will, relatives may undergo lengthy legal processes to access the deceased’s assets. In cases of jointly owned property, the surviving spouse might encounter obstacles in maintaining full ownership without a will,” she adds.
Joint Property Ownership Doesn’t Ensure Automatic Transfer to Your Spouse
“A frequent misunderstanding among homeowners is that joint ownership or simple property registration adequately protects their assets. Many assume that co-owning property with a spouse ensures seamless transfer to the surviving partner. However, the UAE does not recognize the rule of survivorship. Without a proper will, UAE law or Sharia principles may default, leading the asset into local court probate. This can result in delays and outcomes that might not align with the expatriate’s personal wishes,” Maru states.
Options for Property and Asset Protection – Wills, Trusts, and Foundations!
Diana Hamade, founder and managing partner of Diana Hamade Attorneys at Law and a registered wills draftsman in Dubai International Financial Courts and the Abu Dhabi Judicial Department (ADJD), outlines the applicable laws and protection options available to expatriates.
“Expatriates in the UAE are governed by two primary laws based on religious demographics: one for Muslims and another for Non-Muslims. Non-Muslim expatriates fall under Federal Decree-Law No. 41 of 2022 on Civil Personal Status and Abu Dhabi’s Law No. 14 of 2021 on Personal Status for Non-Muslim Foreigners. This also applies to Muslim expatriates from countries where Sharia Law is not practiced,” Hamade explains.
Without a will, properties are subject to these laws, which ensure equal inheritance rights for men and women and allow wills to be executed upon the testator’s death.
Beyond wills, Hamade highlights two additional options expatriates can consider: trusts and foundations.
“These structures are governed by regulations from offshore jurisdictions such as the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), and the Ras Al Khaimah International Corporate Centre (RAK ICC),” Hamade states. Here’s a breakdown of each option:
1. Wills:
“Muslim expatriates can distribute up to one-third of their inheritance to their heirs through wills, provided all heirs agree, following the latest amendment to Federal Personal Status Law No. 28 of 2005. Alternatives include DIFC Wills, exclusively for non-Muslims, and Abu Dhabi Judicial Department wills, which cater to both non-Muslims and Muslims from countries where Sharia law doesn’t apply,” she explains.
Key Considerations When Drafting a Will:
- Choose a qualified, registered wills draftsman in a regulated jurisdiction.
- Determine the type of will needed (e.g., mirror, single, property-specific, guardianship).
- List your assets or leave provisions for future wealth.
- Decide who will inherit your assets.
- Appoint an executor for your will.
- Designate guardians for minor children.
- Include any charitable donations.
- Ensure witnesses are present when signing your will.
2. Trusts:
For individuals with substantial assets, trusts can be an effective estate planning tool.
“A trust is a common law structure involving three parties: the settlor, the trustee, and the beneficiary. The settlor contributes assets to the trust, which the trustee manages. While the trustee holds legal title to the assets, they do so for the beneficiary’s benefit. Trusts are ideal for managing significant and diversified wealth and for providing for beneficiaries who are minors,” Hamade explains.
“It is advisable to consult a legal expert to determine if a foundation best serves your succession planning needs,” she adds.
3. Foundations:
Foundations are particularly suitable for family businesses and those with extensive property or asset holdings.
“Foundations established in the DIFC and ADGM are accessible to both expatriates and UAE nationals. They offer a local solution for managing wealth, protecting assets, and organizing succession planning. UAE foundation regimes are popular among families in the Gulf Cooperation Council (GCC) as they help preserve family legacies and ensure the smooth transition of successful businesses across generations,” Hamade states.
By proactively establishing these protections, expatriates can ensure their assets are inherited according to their wishes, minimize legal complications, and provide peace of mind for themselves and their families.
