UAE Inheritance Law for Expats Myths and Facts

Dr Clemens Daburon

Abu Dhabi, Sunday, 24 February 2019, 4 pm

AHK Conference Room, Abu Dhabi Mall, West Tower, 1st Floor

Contents

• Key Facts - UAE Inheritance Law

• Myths vs Facts – Misconceptions and Corrections

• Will Options:

1. DIFC Wills Service Centre

2. Non-Muslim Wills Registration Office Abu Dhabi

3. Dubai Courts / Notary Public

4. Home Country

• Key Take-Aways

• Q & A

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Key Facts - UAE Inheritance Law

• Applicable Laws: Federal Law No.5 of 1985 (UAE Civil Code) / Federal Law No.28 of 2005 (Personal Status Law)

• Sharia rules:

• “Forced heirship” for 2/3 of estate

• Set formula for each family member’s share

• Dependent on relationship / degree of relation to deceased

• Sons get double daughter’s share

• Husband dies: 1/8 for wife with children; 1/4 for wife without children

• Wife dies: 1/4 for husband with children; 1/2 for husband without children

• Muslim husband dies: male relative guardian of children

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Myths vs Facts

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Myth: Without a last will, my wife, my children, my company will all be lost.

Fact: No.

• Pragmatic approach by UAE judges (unless there is a dispute, no investigations as to other relatives)

• Pragmatic approach of the UAE authorities regarding child custody and guardianship

• Extension of visa for widow for one year

• Distribution of assets as per Sharia might not be so different if minors are involved (widow is handed over minor’s shares; widow controls minor’s share in companies etc.)

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Myth: I can always be sure which law will apply to my estate in the UAE.

Fact: No (unless there is a DIFC will in place).

• UAE Civil Code Article 17 (1): “Inheritance shall be governed by the law of the deceased at the time of his death” (i.e. law of the deceased’s home country)

• UAE Civil Code Article 2: “The rules and principles of Islamic jurisprudence shall be relied upon in the understanding, construction and interpretation of these provisions”

• Potential conflict between articles 17(1) & 2 different interpretations

• Application of Sharia to Muslim estates and also non-Muslim estates; rarely application of foreign laws or implementation of foreign wills

• Even if foreign law is applied, Sharia law usually applied to real estate (UAE Civil Code Article 17(5))

• Relatives/heirs can prove the laws of the deceased’s home country with the courts costly and lengthy

Myth: If I (an expat, non-Muslim father) die, one of my male relatives will become guardian of my children.

Fact: No, in practice this is not the case.

• Personal Status Law differentiates custodian and guardian

• Custodian: upkeep and taking care of the child without interfering with the

right of the guardian of the child

• Guardians: responsible for the child financially, morally and physically

• Upon death of a parent court case to determine custody / guardianship

• For Muslims: Guardianship of the child/children under Sharia will pass to

closest male relative on the father’s side (e.g., uncle / grandfather); custody

typically awarded to mother

• For non-Muslims: in UAE court practice, if no male relative claims to be the

guardian, the mother based in the UAE will be the sole custodian and

guardian. 7

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Myth: If I have a will, my bank accounts in joint names will not be frozen.

Fact: No, they will be frozen in any case.

• Bank accounts in the deceased’s name will be frozen, with or without a will

• Includes joint bank accounts – no immediate accrual of funds in the account to the other signatory

• Accounts remain frozen until instructions given by UAE court & payment of all deceased’s UAE debts (incl. traffic fines)

• Potentially lengthy process & no access to deceased’s assets during court proceedings

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Myth: If I make a will in the UAE, my will in my home country will be invalid.

Fact: Not necessarily.

• Only if the new will stipulates that all previous wills are

revoked

• Depends on wording of the will and home country laws

• e.g. in DIFC wills reference explicitly only to Dubai / RAK

assets

• If two wills, both must be mutually exclusive – “carve out”

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Will Options in the UAE

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Will – Potential Content

• Choice of Law: for foreign wills under EU regulations only law of the expat´s home country; DIFC: law of the DIFC; Abu Dhabi – testator’s choice

• Appointment of executors and trustees

• Guardianship appointment

• Appointment of distant / non-family members as heirs

• Gifts

• Imposition of conditions for designation as heir

• Should deal with all assets: remaining employment benefits, insurance, real estate, moveable assets etc.

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1. DIFC Wills Service Centre

• Certainty of outcome – DIFC Court Probate Orders based on DIFC will are

enforced by Dubai/RAK courts without verification/amendment

• Non-Muslims above 21 years with fixed assets in Dubai or RAK

• 5 types of Wills:

• Full Will – covers all assets, no real estate limit, guardianship (AED

10,000 single / 15,000 mirror)

• Guardianship Will – children below 21 living in Dubai or RAK,

permanent & interim (AED 5,000 single / 7,500 mirror), subject to

UAE ordre public

• Property Will – real estate only, up to 5 properties in Dubai or RAK

(AED 7,500 single / 10,000 mirror)

• Business Owners Will – company shares, 5 separate shareholdings

(AED 5,000 single / 7,500 mirror)

• Financial Assets Will – Bank & brokerage accounts, 10 accounts limit

(AED 5,000 single / 7,500 mirror)

Pros: Safest option, comparatively fast probate procedures

Cons: High registration fees, only for Dubai and RAK assets

2. Non-Muslim Wills Registration Office Abu Dhabi

• Non-Muslim above 21 years

• No need to be a resident in Abu Dhabi or even UAE

• Proof of asset ownership required (e.g., bank statements / share

certificates / title deed etc.)

• Translation into Arabic by legal translator (costs: a few hundred AED)

• Registration costs AED 950

• Asset distribution, guardianship appointments, applicable law

Pros: cheap, no geographical restriction as to assets in whole UAE,

strong backing and oral confirmation by the Registration Office

Cons: Implementation of wills (also as regards real estate) untested; length of procedure untested

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3. Dubai Courts / Dubai Notary

• Despite Dubai Law No. 15/2017 – no Dubai Courts Will

Registry

• Wills made before Dubai Notary

• Arabic / bilingual

• Registration costs AED 2,165

• Asset distribution, guardianship appointments, applicable law

• HOWEVER: As Dubai Courts practice, judges do not accept

wills under foreign law but instead apply Sharia (confirmed by

Dubai Courts representatives)

Pros: None identifiable

Cons: Implementation of will highly unlikely

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4. Home Country

• Procedure:

• Drafting of will in home country as per the laws of the home

country at notary public

• Full legalisation up to the UAE embassy in home country

• Translation into Arabic and legalised by the Ministry of Foreign

Affairs in the UAE

• Inconsistent implementation – most judges in Dubai apply Sharia;

Abu Dhabi mixed implementation

Pros: just one will for all assets; easier access/understanding of

home country laws

Cons: Implementation of wills (also as regards real estate) not sure;

extremely lengthy procedure (up to four years)

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Key Take-Aways

• No “Sharia”-panic

• Last will at Dubai notary not recommendable

• Both spouses should have independent access to funds (offshore / home

country accounts with debit card for emergencies)

• Consult a lawyer / notary in your home country if you have assets there

• If you have children, better to provide for interim / permanent guardianship (e.g.

Abu Dhabi will)

• Consider DIFC will if significant assets in Dubai / RAK

• Abu Dhabi Non-Muslim Wills Registration Office recommendable for AUH assets

• Other option is to distribute assets as per Sharia and then “re-adjust” among the

heirs (e.g. surviving wife and minor children), especially if not so significant

assets, as this is a very fast option to finalize the probate procedure and obtain

any frozen funds

• Be careful when drafting a new will, either in the UAE or the home country 16

Q & A

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THANK YOU

Dr Clemens Daburon, Partner

Daburon & Partners Legal Consultants LLP

24th Floor Al Sila Tower, Abu Dhabi Global Market, Abu Dhabi

Telephone: +971 2 694 8655

Fax: +971 2 694 8666

Mobile: +971 50 443 5303

Email: clemens@daburon-partners.com

Web: www.daburon-partners.com

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