Salaam Experts

INHERITANCE AND ASSET PROTECTION IN UAE

With More expatriates than the local population living in the UAE, the question that keeps popping up all the time is: How do we protect our assets and family's succession in this legal system. Read on to find out more details, as our Founder Karteekka Tyaggi sheds some light on this topic.

UAE has always been the chosen destination for all new businesses ranging from construction, services, trading and so on. Numerous expatriate families have been in UAE since generations and are managing huge family businesses. In such a scenario, the question that most people have on mind is: “How do we protect our assets and our monies in UAE?”

 

There are various ways to protect one’s assets in UAE, which include the following:

 

1)         A Will:

Inheritance in UAE, is governed by Article 17 of the UAE Civil Transactions Code (“Civil Code”), which stipulates that inheritance shall be governed by the Law of the deceased (dead person) at the time of his death.

 

As can be seen the above article clearly stipulates that an individual has been given a choice to will his assets and such a will shall be governed by the law of the state, of which the person making such will is a national at the time of his death. Article 27 of the Civil Code states that: "It shall not be possible to apply the provisions of a law specified by the preceding article if such provisions are contrary to the Islamic Sharia Law, public order, or morals in the State of the United Arab Emirates."
Based on the above two articles, the courts in UAE have ruled that the courts must apply the provisions of the foreign law as per the rules of datum (chain of references or authorities), regardless of the source of such law, so long as it is not in conflict with public order or morality and, therefore, the courts must not rule out the foreign laws while deciding on the question of enforceability of a will made by a foreign national. 

 

Further, in 2014, Dubai International Financial Centre Wills and Probate Registry (“DIFC WPR”) was established and in May 2015, its rules, titled “DIFC WPR Rules” were implemented, which permit all non-Muslim expatriates to draft and register their wills under the Rules, which are based on the common law principles of testamentary freedom. However, the Rules only apply to Dubai and Ras Al Khaimah Estate. 

Another option is a will for non-muslim expatriate registered by the Abu Dhabi Wills Registry. This will covers the entire UAE and is a bilingual will offered at a much cheaper cost(AED 500) than the Dubai will (AED 2,110 approx.) and the DIFC will (AED 10,000 for a single will).   

 

2)        Trusts:

Another way of securing one’s assets is outing them under an offshore trusts. There are a number of offshore jurisdictions that offer flexible trust laws such as the BVI, Seychelles and Mauritius. In order to do so, one must first transfer the ownership of its assets to an underlying offshore company, which can be in the same jurisdiction as that of the trust. 

 

While assets like bank accounts and other monetary assets may be transferred directly to an offshore company, when it comes to immovable real estate assets, they can only be transferred to and be held via a Jebel Ali Offshore company. This Jebel Ali Offshore company may, however, be owned by a foreign offshore company provided the details of the beneficial owners have been disclosed to the authorities, but trusts are not a recognized form of vehicle for such assets. 

 

One must exercise caution with regard to taxation matters related to establishing a trust and it is imperative to seek professional tax advice in this respect.

 

3)         Corporate Ownership:

When it comes to holding shares in a UAE company, the best option that one can exercise here is holding such shares through another corporate structure. Such a corporate structure may either be a UAE free zone company (allowing 100% expatriate ownership) or it can also be a foreign company or a foreign offshore company. A lot of our clients have, in fact, in the recent past, transferred their individual shareholding in a LLC company to a UAE free zone company, which in turn is owned by a foreign offshore company protected by a family trust. It is pertinent to mention that such UAE free zone companies are also allowed to invest in properties and real estate assets and they can also hold the bank accounts and monetary assets. However, while doing such a structure, one must again seek professional advice.

 

Please send in your queries at: saysalaamlife@gmail.com

or

write to Ms. Tyaggi at: karteekka@legumamicuss.com



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  • Oct, 25th 2017

    INHERITANCE AND ASSET PROTECTION IN UAE

    With More expatriates than the local population living in the UAE, the question that keeps popping up all the time is: How do we protect our assets and family's succession in this legal system. Read on to find out more details, as our Founder Karteekka Tyaggi sheds some light on this topic.

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