How Expatriates Can Protect Their Property And Assets In The UAE
The United Arab Emirates (UAE) has a rising expatriate community of over 8 million people, and a large percentage of these expats have assets in both the UAE and their home country.
This blog is for expats living in Dubai or Abu Dhabi who wish to learn more about wills in the UAE. Writing a will is part of estate planning and should be included in your own financial strategy. As an expat, you will need to discover how the will writing system in your country of residency works, as there may be numerous variances from what you are used to.
Read on to discover:
What Are the Benefits of Writing a Will?
A will is a written document that explains your instructions and preferences for how your estate (money, property, possessions, and other assets) should be distributed after your death. A will can be as simple as a remark or as complex as a document.
If you have dependents, such as small children, disabled children, or elderly parents, you must write a will. Your will can be as simple or as complex as you want it to be. It specifies who should care for your minor children or elderly parents and how your inheritance should be transferred after your death. In a difficult time, this makes settling your estate for your loved ones much easier and less stressful.
Wills do not need to be registered in the UAE because it is not required. In spite of this, it is highly recommended that expatriates living in the UAE or those who own immovable or movable property in the UAE register a will pertaining to their movable and immovable assets, including real estate, investments, and any bank accounts in the UAE. This is done to avoid the legal complications that the legal heirs may face on the death of a testator, which is the person who grants the will.
Five Primary Vehicles for Protecting Assets and Property in the UAE
If you live abroad in the UAE and own property or other assets, it would be in your best interest to establish a long-term plan to secure them. If you fail to do so, the Sharia law will apply to your estate which will limit the benefits your loved ones can receive.
It is essential to obtain legal advice when setting up any of these five vehicles. However, once they are established, and you have a long-term working relationship with an advisor with whom you can handle changes in your circumstances, you will be able to relax knowing that your UAE assets and property are adequately safeguarded.
Read on to examine the five types of protection for your property and assets in the UAE.
1. A DIFC WillThe DIFC Courts Wills Service was established to give the non-Muslim community who own assets in the United Arab Emirates the clarity and certainty they need to avoid applying Sharia law and transfer their assets in accordance with their own intentions after death. It allows non-Muslim expatriates to make wills under regulations resembling those of England and Wales and offers testamentary freedom for the Sharia law system of compelled heirship.
You can register a DIFC Will if you are older than 21, are not a Muslim, and have assets in the UAE. To draft your Will, you will require a draughtsman who is registered with the DIFC. You can transfer your assets as you see fit by registering a DIFC Will, and the probate procedure is also quicker and more efficient than it is for non-DIFC Wills.
The five primary reasons why non-Muslims should register their wills with the DIFC Courts Wills Service are as follows:
- Your assets can be transferred as you wish
Non-Muslim individuals with assets in the United Arab Emirates can register their Wills in English through the DIFC Courts Wills Service.
- Non-residents and residents alike can use the service
The registration of your Will does not depend on whether you reside in or outside the UAE.
- A signing process that is simple
In order to register a Will, the testator must go to the offices of DIFC Courts Wills Service located at Dubai International Financial Centre and sign it formally in front of a Wills Service officer.
- A clear legal framework
As in the UK, Singapore, and Malaysia, the DIFC WPR Rules are based on common law principles and legislation.
- Streamlined probate process
A Will registered with the DIFC Courts Wills Service requires the DIFC Court to issue probate grants and court orders for the distribution of estates and guardianships according to the requirements of the will.
As a result, a non-Muslim over the age of 21 who has assets in the UAE would need to prepare and register their Will with the DIFC Courts Wills Service if they do not wish Sharia Law to govern the distribution of their assets and the guardianship of minor children.
02. Abu Dhabi WillsThe Abu Dhabi Wills Registry was established by the Abu Dhabi Courts Judicial Department to give non-Muslims with assets in Abu Dhabi/UAE and/or children the option to register their alternative wishes instead of adhering to Sharia law.
The establishment of the Abu Dhabi Wills Registry is a significant step toward ensuring that non-Muslim expatriates’ intentions are accurately expressed in the documentation and registered while also providing them with the assurance that Sharia law would not be applied to their Abu Dhabi estate.
A non-Muslim expat who possesses movable or immovable assets is able to file a will with the court that has jurisdiction over each emirate of the United Arab Emirates or with the appropriate authorities in the United Arab Emirates in favor of his or her legal heirs or anyone else they desire to name.
03. GiftingIt is possible to transfer assets and/or property as gifts; however, strict legal procedures must be followed. Although you will need to pay registration fees, the transfer fee will be cheaper. Gifting property is one of the most cost-effective estate planning tools in Dubai for inheritance and succession planning.
In the UAE, giving property often refers to changing a name on a title deed so that ownership of the property is now in the name of the recipient. The purpose of this is to protect the property from regional inheritance laws. Gifts of real estate are given to either offshore firms or to families.
Assets can only be gifted to your spouse or children, and no transfers are allowed between siblings. Property owners may decide to designate a property to specific family members in order to avoid the distribution that would otherwise be required under Sharia law and to make succession difficulties simpler. To prevent siblings from inheriting a property, for instance, a husband can transfer his half to his wife. After a divorce, transfers can also be used to remove a spouse from the title.
04. Placing the property in a holding company or a trustIt is possible to transfer property and assets out of your ownership and into a holding company or a trust.
A trust is established by a settlor and is overseen by trustees on behalf of the beneficiaries. Therefore, you might create a trust to safeguard your assets and property for your spouse, kids, and grandchildren. Since a trust is not a legal body, the public cannot access information about it. For the benefit of the designated individuals, often known as the beneficiaries, the trustee will hold the trust’s assets. A trust structure is a binding contract that transfers ownership of the trust’s assets from the settlor to the trustee.
A holding corporation is a distinct legal entity. You can take over as the company’s largest shareholder, maintaining control over the assets and/or real estate it owns. Setting up a holding company can be a smart method to buy property in the UAE because it makes your life much easier by allowing you to hold assets in a secure and private manner while reducing administration.
It is also possible to obtain a residency visa more easily if you own property through a holding company in Meydan Free Zone.
05. FoundationsAs a civil law jurisdiction, the UAE allows the establishment of foundations. A foundation is a legal entity that holds assets on behalf of beneficiaries. Foundation charters and bylaws govern the foundation’s purpose, assets, and organisation. In addition to being registered as a legal entity and possessing its own legal personality, foundations have characteristics similar to trusts in that they can separate legal and beneficial interests. Foundations do not have shareholders, and through a foundation, the founder can continue to exercise control over the organisation.
A Foundation is an asset structuring option available to UAE residents and investors. DIFC or ADGM Foundations have several advantages, including:
- Corporation tax is not applicable
- A strong governance structure
- Founders and beneficiaries remain anonymous
- Setup costs are low
Why Do You Need to Protect Your Property and Assets in the UAE?
As mentioned previously, if an individual passes away in the United Arab Emirates without leaving a will, the estate will be divided in accordance with Sharia law, where the division of the assets is fixed. They will also not have guardianship over minor children. This means a mother in the UAE does not automatically get guardianship of her children if her husband dies without a will. It is due to such situations that make it is necessary for an expatriate to have a will before they pass away.
If you’re an investor or expat living in the UAE, you can secure your assets by establishing a DIFC Will, gifting assets, or putting them in a holding company or perhaps a trust foundation. A private client solicitor can help you set up the best vehicle to protect your property while you reside in Dubai.