Q:How different is the UAE inheritance system with that of other countries?
In the UAE, inheritance for Muslim nationals is guided by Sharia laws(a system of Islamic law based on the Quran), while the law of the deceased’s home country can be applied for non-Muslim expatriates. Sharia is not a codified law and is capable of adaption, development and further interpretation.
Matters of inheritance coming before the Dubai courts are heard by one or more judges. Juries are not used. Furthermore, unlike in some Western jurisdictions, there is no system of binding precedent in Dubai or the UAE.
Q:What is the most common instrument that is used for passing assets upon death and what are its main characteristics?
A: A will is the most common instrument used for passing on assets to inheritors chosen by the deceased, and it details how you wish your estate to be distributed after your death. Apart from dictating who should inherit your assets, a will can also be used to specify other wishes such as long-term guardians for your children; executors and specific gifts. Apart from wills, one can also take recourse in setting up more strategic plans like establishing a trust or more sophisticated offshore solutions.
Q:Why is it important for expats living in the UAE to have a will, and what are the consequences of not having a will in place?
A: For expats living in the UAE, there is a very simple reason to make a 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 means that if you die without a will or a succession plan, the local courts will examine your estate and distribute it according to Sharia law. For example, a wife who has children will qualify for only one-eighth of her deceased husband’s estate, and without a will or estate planning in place, this distribution will be applied automatically. All personal assets of the deceased, including bank accounts, will be frozen until liabilities have been discharged Even shared assets will be frozen until the issue of inheritance is determined by the local courts. There is also no automatic transfer of shares where businesses are concerned.
Q:What are the most frequent inheritance concerns of clients who own property here?
A:The most common concerns are from expatriates who have bought property here either in their sole name or jointly with their spouse. They are confused as to which inheritance laws apply to their assets upon their demise, and usually assume that the laws of their native country automatically prevail over local Sharia laws. Inheritance laws in Dubai are not as straightforward nor the same as those in some Western countries. If an expatriate owns property in Dubai and passes away, the laws of their home country may not apply to their assets held within the UAE, especially those that are fixed and immovable.
Matters of inheritance in the UAE are governed by Federal Law No. 5 of 1985 regarding the law of Civil Transactions in the UAE (the “Civil Code”), and by Federal Law No. 28 of 2005 regarding the UAE Personal Affairs Law (the “Personal Affairs Law”).
As a general rule, inheritance issues for Muslims are dealt with in accordance with Sharia, whereas for non-Muslims, the law of the deceased’s home country can apply. Succession under Sharia law principally operates by a system of forced heir ship or reserved shares.
Whereas the Civil Code states, in one part, that the law of the home country applies to matters of inheritance, in another part it states that where a will made by a non-Muslim involves the disposal of real estate in the UAE, then UAE law applies. This is consistent with the fact that in general, in the UAE, the law of the state where property is located applies to real property rights. This conflict has caused confusion amongst non-Muslims as to the inheritance of their property upon their demise. To clarify the position The Personal Status Law 2005, was passed to add clarity to the terms of the Civil Code.The Personal Status Law is widely thought to proceed on the footing that an expatriate non-Muslim with an estate in the UAE, is entitled to elect by will for the application of his or her national law to govern succession to their UAE estate instead of the normal Sharia-based rules. However, the Personal Status Law does not make specific reference to immovable property (or real estate) in foreign ownership, whereas the Civil Code clearly does. Hence there is a potential conflict between the two laws.
While the current legislation requires clarification, one thing remains clear, as an investor or property owner, one must always, ALWAYS take care of the legalities surrounding your assets and not leave your heirs befuddled when you go.
Q: What happens to a jointly owned real property between a husband and wife in the event of the death of one of them? Will the other or the children automatically inherit the property?
A: As mentioned, there are many uncertainties regarding real estate inheritance issues, and expatriate property owners are recommended to make wills or seek professional legal advice on alternative solutions 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 as would be the case in Commonwealth jurisdictions), and the local courts will make final decisions.