As anything and everything can change at the stroke of a second, there are some questions you might want to answer to check whether you need serious legal advice: Are you a resident in the UAE? Are you a partner or a shareholder in a business in a free zone or of an LLC? Do you own freehold property either solely or jointly? Do you have a local bank account? Do you have children? If your answer is YES to either one or all of the above, you should consider establishing a trust to protect your assets and secure your family’s future.

A trust, properly structured and utilized, is highly effective for estate planning, tax mitigation and asset protection. Trusts are instrumental in avoiding probate, an important consideration in the Middle East, where local fixed heirship laws can prevail. They are especially helpful in asset preservation and protection in case of political, family or business uncertainty (e.g. unexpected divorce, bankruptcy, litigation); succession planning; consolidation and preservation of family wealth across generations; business continuity; overcoming cost, and delay of obtaining probate; bypassing local laws with your own succession blueprint; professional management of assets for the benefit of beneficiaries; a high degree of privacy and confidentiality, avoiding public disclosure of asset ownership.

To secure yourself and your property, there are a few legal consultancies available which specialize in international wills, trusts and taxes that are experienced and fully qualified to advise and assist clients regarding all aspects of trust formation, management and administration. Your consultant should be able to create a bespoke solution that secures and preserves your assets in a way which is uniquely suited to your personal and business requirements, and that you will be entirely at ease with.

An unexpected death is one of the most devastating things that can happen to any family, anywhere in the world. But imagine if, in its wake, there are troubles and traumas ranging from bank accounts being frozen to family assets being distributed to warring factions and even children being entrusted to strangers.

After a lifetime of planning how to make money and managing the wise spending and saving of all your wealth, death puts a full stop to all these decisions.

For expatriates living in Dubai, or in most places in the Middle East, there is a pressing reason to make a proper will. The Government of Dubai’s official website states that ‘the UAE Courts will adhere to Sharia law in any situation where there is no will in place’. This just means that if you live and work here, and you die without having made a will, the local courts will examine your estate and potentially distribute it according to Sharia law.

Unpaid bills, debts and mortgages do not automatically die with the death of a person. All personal assets, including bank accounts of the deceased, are seized and frozen until such time liabilities have been discharged to the satisfaction of the courts. Application of Sharia law is particularly pertinent in circumstances where the deceased is under the sponsorship of his or her spouse and has a joint bank account or shared assets (cars, rental agreements, and (freehold homes). These may be frozen until the issue of inheritance is determined by the local courts and surviving family members are often left without access to money until the authorities decide how the estate should be distributed, which could take months or even years.

Not only does the absence of a will affect the family financially, but it can also goad the authorities to intervene concerning guardianship of bereaved children. This is especially true in cases where death befalls both parents simultaneously. Unless a will specifies arrangements which members of your family or friends should raise your children, there is a possibility that their care may be entrusted to other parties.

In summary, if you live and die in Dubai and do not have a will, you simply cannot be sure what happens after your death: whether your family will be provided for, who will look after your business and when and how your beneficiaries will actually stand to benefit.

The consequences of not having a will are not restricted to the uncertainty of how an estate is distributed, but also implies hefty legal fees, the length of time for eventual settlements and emotional upheavals.

To avoid all these issues and to give yourself the true peace of mind that comes when your financial affairs are in order, it is strongly recommended that you consult specialist lawyers. They can arrange the drafting of your will in accordance with your home country law, so that Sharia law does not automatically come into effect in the event of dying intestate.

Many expatriate families continue to harbour the notion that living and working in the Middle East is a treat, but they forget that it could easily turn into a tragedy in the event of unplanned death. While the concern of ‘securing’ lives is misguided at most times, secure planning for the future is necessary.

The best way to answer the question is to look at real life situations that can impact adversely on many people who have assets to protect and to pass on to their heirs. In this and a future article we will consider regularly occurring scenarios that we at The Wills Specialists advise and assist clients with. We will start by looking at special needs trusts and asset protection trusts.

I have a child who has special needs and he will require long term care which is currently provided by the government of my home country. After I am gone, how do I benefit my child financially whilst protecting the capital and ensuring that means tested government benefits are not compromised or lost entirely.

Without careful planning it is all too easy to form an estate plan that will result in government benefits being lost by the disabled person, higher taxes being incurred and the state (in the absence of a suitable alternative) managing the financial affairs of the beneficiary. By using a special needs or disability trust, government benefits can be preserved, taxes avoided or mitigated and the capital bequeathed used to provide luxuries and extras such as holidays, additional care or supervision and specialist equipment or treatments not catered for by the government. By setting up a special needs trust the future security of your disabled child is protected.

I am a widow with teenage children and I am now contemplating a second marriage. Both my parents died some years ago and left me a substantial inheritance and my late husband also left me a sizeable estate. I am concerned that if my second marriage fails I may be vulnerable on divorce as my intended future husband has few assets. I also want to make sure that my children are secure if I die.

The requirement here is to strike a balance between having your assets protected whilst at the same time enjoying and having access to your wealth. Marriages can fail and that can be costly for the party holding the majority of the wealth. The solution lies in setting up an asset protection trust before your marriage. If you do this before you are married it affords you much greater protection than a pre-nuptial agreement ever will by ring-fencing those assets so that after the marriage they are not considered to be matrimonial or community property. The trust can be structured to ensure that in the event of your death the assets are passed to your children at a time of their life when it is prudent for them to inherit.

According to Sharia law, each member of your family will get a share of your fortune, but your own plans may not see fruition and your personal desires may not necessarily be fulfilled. In the period immediately after a sudden death, your beneficiaries may not be able to draw money from a bank account, transfer assets, or use any part of your frozen estate. Legal proceedings can also signify great stress and distress.

If you are an expatriate with a business, bank balance, property or other assets, you can help your loved ones avoid long legal processes, by preparing properly for their future. Making adequate arrangements will not only let them know that you care enough, but will also save them considerable trouble. More importantly, it will ensure that you are in full control of what happens to your family even after you are not with them.

• If you are a parent, you can use your will to leave clear instructions on who must look after your young children and how they must be provided for.

• If you are married, it is wrong to assume that your spouse will automatically get everything you own. However, you can ensure this by leaving specific instructions in your will.

• If you are single, you can choose exactly how you want your estate to be disbursed among friends, family, relatives, and/or charities – instead of leaving it to chance.

• If you are in a second marriage, your will can make provisions for non-traditional relationships like children from previous relationships. You can also add exclusion clauses for ex-partners.

• If you own a company, we can make it easy to plan proper succession, divide shared property, segregate your investments from those of your partners’, and lawfully ensure that the inheritors of your choice take over the reins from you.

• If you are retired and made a will a long time ago, you must update it to include grandchildren, or, to omit people you no longer wish to leave anything to.

A will brings security, reassurance and peace of mind – not just for you, but for all those you love, and everyone who depends on you. Get started on your future today, and ensure that it is sound.

Yes, in some cases but not in others. Basic estate planning involves creating a plan for what happens if you become mentally disabled and a plan for what happens after you die. Advanced estate planning goes further in a number of respects:

• Inheritance tax planning. Finding ways to reduce or eliminate inheritance taxes.
• Asset protection. Reviewing your assets and determining which are exempt and non-exempt from the claims of creditors or disappointed beneciaries.
• Business succession planning. Addressing what will happen to you and your business if you or a key employee becomes disabled or dies.
• Planning for disabled or problem beneciaries. Discussing all of the needs of your beneciaries and then planning accordingly.
• Creating a family or charitable legacy. Working to establish a generational trust or charitable trust or foundation.

Do I need advanced estate planning?

Usually, you would need to consider advanced estate planning if some of the following factors are likely to aect your estate:

• You are domiciled in a country that has its own inheritance tax and your net worth exceeds the tax exemption.
• You own a business or a share in a business.
• You have assets, especially real estate, in more than one jurisdiction.
• You want to create a trust fund for your children or grandchildren.
• You want your business or primary residence to stay in your family after your death.
• You want to insure that your hard earned wealth stays in your family and is not lost in litigation or divorce.
• Your ultimate goal is to create a long term legacy for your children and grandchildren.
• You wish to protect vulnerable beneficiaries or ensure that your wealth is utilised responsibly by your children.

We are from Australia and are resident in Dubai. If both my husband and I suddenly demise in UAE who will look after my children ?

If you have prepared a Will specifying guardianship provisions then this will provide certainty of care for your minor children to avoid the risk of local authorities intervention. The worst case scenario is where you both have not prepared a Will – local authorities will have no choice but to

intervene and safeguard them. Ultimately children must be protected . If there is no Will in place and there is uncertainty over guardianship then there is risk of intervention. If you want to ensure your children are secure, drawing up a Will should be a priority.

We are have been in Dubai for 12 years. We jointly own various properties in Dubai which are mortgaged and do not have wills in place. If one of us dies will the surviving spouse inherit them?

In the UAE, inheritance for Muslim nationals is guided by Sharia laws, while the law of the deceased’s home country is applied for non – Muslim expatriates. However, there are many uncertainties regarding real estate inheritance issues. Expatriate property owners are recommended to make wills to overcome. Unlike other jurisdictions, the UAE does not practice ‘right of survivorship’ (property passing on to surviving joint owner upon death of the other), and the local courts will make final decisions. To ensure absolute peace of mind on these issues there are alternative offshore solutions we can advise upon.

We have been living and working in Dubai for nine years and do not own property here. The only assets we have here are our bank accounts. We are contemplating whether to prepare a Will or not. Can you advise us?

You may not own property here but have you ever considered that you may have more disposable income here than back in your home country. In addition to the cash you have in your bank accounts you may have a car, a boat, jewellery, art pieces, end of service gratuity etc and when you calculate the value of your total assets it really comes to significant figures. If you have a Will in place, your spouse will inherit your estate as per your wishes.

My husband and I jointly own a freehold apartment in Dubai. If one of us dies, will the other or our children automatically inherit it? (MJ, Australian, 31)

Nita: In the UAE, inheritance for Muslim nationals is guided by Sharia laws, while the law of the deceased’s home country is applied for non-Muslim expatriates. However, there are many uncertainties regarding real estate inheritance issues, and expatriate property owners are recommended to make wills to overcome these. Unlike other jurisdictions, the UAE does not practice ‘right of survivorship’ (property passing on to surviving joint owner upon death of the other), and the local courts will make final decisions. To ensure absolute peace of mind on these issues there are alternative offshore solutions we can advise upon.

I have heard some horror stories of financial troubles after a sudden death. Is it true that if my husband dies, our joint bank account will get frozen, and what must we do to avoid this? (SS, British, 44)

Nita: In principle, the bank accounts of a deceased will be frozen until all liabilities such as car, property and personal loans, credit cards, and business debts are cleared. Sometimes, an account gets frozen within hours of a fatality but the procedures for reactivating it are lengthy and complex. These can be avoided or expedited by planning your estate.

My husband runs a company and sponsors me and our children. What effect will his death have on our resident visas, staying in the UAE, and managing his company? (PRT, South African, 28)

Nita: It is a grim reality that upon a sponsor’s death, the family’s visas will be cancelled within 30 days and they will have to leave the country. In the absence of a will, the future of the company also remains uncertain. We offer various contingency plans for those wishing to stay in the UAE and/or ensure smooth business transition.

My cousin and I are business partners and equal shareholders in a small business in Dubai. Should I worry about the future, if one of us dies? ( JJ, Indian, 39)

Nita: In the event of a shareholder’s death, local probate laws are applied to a business, but the results may be unpredictable as shares do not pass automatically by survivorship, nor can another family member take over in lieu. However, we can secure arrangements to avoid lengthy local probate and guarantee business continuity.

Nita Maru (LLB Hons.) is a British qualified lawyer and founding director of The Wills Specialists, a legal consultancy firm in Dubai. She can be contacted for personal appointments on
Tel: (+ 971) 4 448 4284, by
Email: nita@willsuae.com,
or by visiting
www.willsuae.com

Throughout history, trusts have been used to avoid or address problems in two main areas: taxation and domestic matters but trusts are also widely used for commercial purposes. They remain as relevant today as ever, especially in a context where families increasingly have to deal with issues raised by divorce and second marriages. The growing frequency of marriage breakdowns may explain the huge increase in the popularity of trusts as a means of protecting and preserving assets for future generations.

What is a trust?

A trust is a legal arrangement where the ownership of a person’s assets (which might include real estate, shares or cash) is transferred to someone else for the protection of those assets and for their use and benefit by a third person or group of people.

The person transferring the assets is a “settlor” in the UK or a “grantor” in the US. The people holding the assets are called the “trustees” and the person who benefits from the trust is called the “beneficiary”. The legal arrangement is laid out in a “trust deed” and the assets transferred to the trustees are the “trust fund”.

A trust, unlike a company, does not have a separate legal entity and cannot own assets; hence, the trustees are the legal owners of the assets. A trust brings about the separation of legal ownership and beneficial ownership of the assets in the trust fund. Although the trustees are the legal owners of the assets, they have a legal obligation to put the interest of the beneficiaries above their own, at all times. Thus, the settlor of a trust can also be a trustee, but must still act in the interests of the beneficiary, not himself.

Trusts can be created during the lifetime of the settlor or on the death of the settlor (in which case they are called a “will trust”). There are different types of trust depending, for example, on how and when and to whom the assets in the trust fund are to be distributed. However, all forms of trust follow the basic principle that a trust contains assets owned by someone for the benefit of someone else.

Use and benefits of trusts

In common law jurisdictions such as the UK and the US trusts are very common. Most company pension schemes are structured as trusts and many life insurance policies are “written in trust” and trusts are commonly used for charitable funding. On a personal level, trusts are used for structuring and managing wealth.

In the context of estate or financial planning, trusts are attractive because they give the settlor the ability to plan ahead and control how assets will be used and applied to best use in the future. A trust provides a way of holding and managing assets for people who may not be ready or able to manage it for themselves. A trust can be formed to benefit people who are not yet born, such as future grandchildren

Typical family situations where trusts are used to good effect (often in conjunction with a will) are:

• To provide for a spouse after death while protecting the interests of any children

• To protect the inheritance of minors until they are old enough to take personal responsibility

• To provide financial security for vulnerable relatives who are unable to look after their own affairs

• To avoid taxes

• For succession planning in family businesses.

• For the avoidance of probate and fixed heirship requirements

• For asset protection

• For privacy and confidentiality

Creating a Trust

For every family problem or situation, there is a trust that can be tailored to meet the need. Creating the right trust to meet your particular family situation requires specialist help.

Whether creating the trust by Will, or in your lifetime, selecting the trust type and its terms are very important. A trust which might last for 80 years or even 800 years needs careful planning, but the benefits can last just as long if you take specialist advice beforehand.

The writer of this article is Mark Nierada a solicitor, trust and estate practitioner (TEP) specialising in estate and succession planning for individuals and companies and Director of Legal Consultancy firm, The Wills Specialists, Licensed by Dubai Legal Affairs Department and The Rulers Court, Government of Dubai.

The Wills Specialists

Office 1305, Saba 1 Tower,

Jumeirah Lakes Towers,

Dubai, UAE

T: 04 448 4284

E: info@willsuae.com

W: www.willsuae.com

Ask yourself a few questions. What would happen to your business if death or serious disability should suddenly happen to you or a co-owner or a key employee? Who would run the business?Would revenues decrease? Would clients take their business elsewhere?Do you think your business could survive?Without adequate planning, your business may be negatively impacted or forced to close in a relatively short period of time. Why? Not because you did something wrong, but because you did nothing.

Consider this: less than 30% of family owned businesses survive to the 2nd generation and less than 12% to the 3rd generation with only a 3% survival rate to the 4th generation. Why?

There are two common reasons why a family does not retain their business. The first reason is straightforward – there is no qualified successor. However, even though these businesses will not be passed down to the next generation, you can still take steps to ensure that the value of your business survives.

The second major reason for unsuccessful business transitions is more unfortunate. In many cases, businesses fail or are sold off due to a lack of planning. Although most of us are careful to safeguard our personal assets, for example by insuring our homes, many business people do not plan ahead to safeguard the value of their business. At first glance, this lack of planning seems incomprehensible. But, when you look at the personal and family issues that are involved, it is easier to understand why many people avoid dealing with the issue of business succession.

Running a business is hard work. The daily work needed to make a business successful leaves little or no time to plan for the ownership and management changes that will inevitably occur. None of us likes to think about or discuss our own mortality, but the process of succession planning, like good financial or estate planning, is all about what will happen after we are retired or gone for good. The longer owners wait to design and implement a succession plan, the greater the risk that the plan will not meet their goals. The risks also increase that the business will fail along with the health of the owner. When a business owner does not implement a succession plan before he or she is disabled or dies, the value of the business often drops rapidly. In fact, it is not uncommon that both the business and the business owner die on the same day. This means that the owner’s intended beneficiaries will not receive the full value of the business. Planning five years in advance is good but planning ten years ahead is even better.

All successful businesses, whether sole establishments, partnerships, LLC’s or free zone corporations, should plan for the eventual transfer, succession or sale of the business. Good business succession planning addresses the death, disability or retirement of a business owner as well as the sale of a business owner’s interest. A sound business succession plan will ensure that the business owner’s objectives will be accomplished, that the most effective business transfer is realised, that funds will be available to provide maximum financial flexibility and reduces the possibility of conflict among the remaining principals, employees and heirs thus lessening the prospect of costly and time consuming probate and succession procedures or damaging litigation.

Planning for your succession will, by necessity, be a process rather than an event, as it will take time to address these issues. Also, given that most of the major decisions to be made are of a personal nature, the process used to manage each family’s business succession will vary depending on the nature of the family issues involved. For example, there may be a Sharia element that requires careful planning.Consequently, there is no one approach that will work for all business owners.

In order to put a plan in place for the succession of your business, you may choose to use one of several methods such as a buy-sell agreement, an offshore trust or foundation, a private annuity, self-cancelling installment notes, a family limited partnership, management buy-out or a direct gift or sale.  This is a complex area and a major decision involving, for many, their most valuable asset. The use of professional advisers is essential as they can provide knowledge and expertise in areas where you may have little experience. When seeking out professional help, choose carefully. Find someone with whom you feel you can establish a good working relationship. For first time meetings, be prepared to explain your situation and what you are looking for. Ask what services the firm provides and how it can assist you and do not forget to ask how much the firm charges for its services.

The writer of this article is Mark Nierada a solicitor, trust and estate practitioner (TEP) specialising in estate and succession planning for individuals and companies and Director of Legal Consultancy firm, The Wills Specialists, Licensed by Dubai Legal Affairs Department and The Rulers Court, Government of Dubai.

The Wills Specialists

Office 1305, Saba 1 Tower,

Jumeirah Lakes Towers,

Dubai, UAE

T: 04 448 4284

E: info@willsuae.com

W: www.willsuae.com

When you are living and earning in the UAE, you need to meticulously plan your assets and their distribution rights after you are no more. Not having a legally documented will for your assets here can have undesirable consequences. Shariah Law is very different to the laws of your home country and affects the distribution of your assets and the guardianship of your children. Taking professional advice from Wills Specialists lawyer, Nita Maru will mean peace of mind for you and your partner.

Q Mr Daswani and Mr Chaudry are business partners and equal shareholders in a LLC company in Dubai, in the fashion / clothing trade. Their business is growing rapidly and they are extremely successful. Mr Daswani is concerned that in the event of death of either one of them what the implications are.

A in the event of death of either shareholder, local probate laws apply and this may not meet the succession requirements of either as the shares do not pass automatically by survivorship in this jurisdiction. There are sophisticated ways in which local probate can be avoided which we can advise on.

Q Mr and Mrs Sharma buy a villa in Dubai in joint names. Suddenly Mr Sharma dies in car crash. He has no will in place.

A As there is no will in place, the property will be distributed as per Shariah law meaning that Mrs Sharma could receive only 1/8th of her husband’s estate despite the property being in joint names.

Q Mrs Roberta, a mother of three, has recently become a widow and she understandably assumes that she will automatically be the legal guardian of her children. A court hearing has been set.

A The guardianship of Mrs Roberta’s children will be decided by a Dubai court under Sharia law and in many cases the guardianship will often be appointed to the father-in-law, of the family. If a will had been in place then the wishes of the father would not have been questioned.

Q Mr and Mrs Shah are expecting their first child. They move to Dubai and open joint accounts and they start trying to save for their new arrival and for a family villa. Suddenly Mr Shah dies leaving no will in place.

A The joint account of Mr and Mrs Shah will be frozen meaning that Mrs Shah has no access to money and she has to call on family for financial support. The process of unblocking the account could be a long and complicated process at a time when Mrs Shah will already be emotionally distraught. Had there been a will in place this financial minefield could have been avoided.

These circumstances surely necessitate the need for a Will especially for those expats that are deepening their roots day by day in the UAE. If you want proper disbursement of your wealth after your death, it is necessary to have a will more so, if you are an expat residing in the UAE. In the most countries there are statutory laws or intestacy rules to guide the distribution of property, in the event of death. In the UAE, your assets may be disbursed according to the Shariah law.

Your will needs a specialist

The Wills Specialists understand the enormous implications and importance of making a Will as an expat in the UAE. Can you afford not to talk to them?

In fact, we are approved and licensed by the RULERS COURT, Government of Dubai, making us the first and most authentic choice.

The writer of this article is Nita Maru LLB (Hons) UK, Founding Lawyer and Director of Legal Consultancy firm, The Wills Specialists, Licensed by Dubai Legal Affairs Department and The Rulers Court, Government of Dubai.

The Wills Specialists

Office 1305, Saba 1 Tower,

Jumeirah Lakes Towers,

Dubai, UAE

T: 04 448 4284

E: info@willsuae.com

W: www.willsuae.com