Expat homeowners in the UAE: Secure your property with these essential legal steps
Safeguarding assets help avoid unnecessary complications and secure your family’s future
Dubai: You have achieved a major milestone – purchasing your dream apartment or villa for your family in the UAE, likely solidifying your long-term plans to settle here. But there is one essential step left – securing your property.
In the unfortunate event of your death, the absence of a will can lead to added stress during an already difficult time. According to lawyers who spoke with Gulf News, while expatriates are keen on buying property in the UAE, many remain unaware of the importance of asset protection and inheritance planning.
Why property and asset protection is essential
Many expatriates mistakenly believe their assets will naturally transfer to their family members according to their wishes or the laws of their home country. Nita Maru, managing partner and solicitor of TWS Legal, specialises in wills and estate inheritance in the UAE. She explained that inheritance laws in the UAE operate under a specific legal framework, especially when there is no locally registered will in place. Another benefit of having a will, according to Maru, was that you would have the option to apply the laws of your home country as well.
It is highly advisable for expatriates to draft a will upon acquiring property, especially in jurisdictions with inheritance laws that differ from those of their home country. In places like the UAE, where UAE/Sharia law may apply to estates by default, having a legally valid and registered DIFC or ADJD will in place ensures that an expatriate’s wishes regarding the distribution of their property are honoured.
What happens without proper protection?
If you own property in the UAE but have not arranged for protections, like a will or created an inheritance plan, you may face several challenges. The first issue is the complexity of managing assets across borders.
“Many expatriates own properties or have investments both within and outside the UAE, which requires careful coordination to ensure all assets are protected under applicable laws. Without an integrated legacy plan or will, they risk fragmentation, where their assets may be treated differently across jurisdictions, leading to delays and potential conflicts in distribution,” Maru said.
Delays and complications
Without a will, family members may also experience delays and unforeseen complications. “Without a clearly outlined will, loved ones might face lengthy legal procedures to access the deceased’s assets. In cases involving jointly owned property, the surviving spouse may encounter barriers to retaining full ownership without a will in place,” she added.
Joint property ownership does not guarantee transfer to your spouse
“A common misconception I encounter [among home owners] is the belief that joint ownership or simple property registration is sufficient for asset protection. Many believe that, because they co-own a property with their spouse, it will seamlessly transfer to the surviving partner. However, there is no rule of survivorship within the UAE and in reality, without a proper will in place, UAE law or Sharia principles may apply by default. The asset may enter into local court probate, potentially leading to delays and unanticipated outcomes. This can impact the distribution of assets in a way that may not align with the expatriate’s personal wishes,” she said.
A common misconception I encounter is the belief that joint ownership or simple property registration is sufficient for asset protection. Many believe that, because they co-own property with a spouse, it will seamlessly transfer to the surviving partner. However there is no rule of survivorship within the UAE and in reality, without a proper Will in place, UAE law/Sharia principles may apply by default. In turn this can impact the distribution of assets in a way that may not align with the expatriate’s personal wishes.
Property/asset protection options - Wills, trusts, and foundations
Diana Hamade is the founder and managing partner of Diana Hamade Attorneys at Law and is a registered Wills draftsman in Dubai International Financial Courts and Abu Dhabi Judicial Department (ADJD). She broke down the laws that come into effect in such situations.
“Expatriates in the UAE are subject to two laws of the UAE, which are demographically focused on religious basis, one for Muslims and one for Non-Muslims. Non-Muslim expatriates are subject to Federal Decree-Law No. 41 of 2022 on the Civil Personal Status and in Abu Dhabi, Law No. 14 of 2021 on ‘Personal Status for Non-Muslim Foreigners’, which also applies to expatriates who may be Muslims but hold citizenship of countries where Sharia Law does not apply,” she said.
In the absence of a will, the property will be subject to these laws, as applicable, and Hamade stressed that both laws uphold equal inheritance rights for men and women and ensure a will can be enacted upon the death of the testator.
But Hamade also highlighted two additional options apart from wills that expatriates can consider – trusts and foundations.
“These are structures which are regulated by rules and laws of certain offshore jurisdictions such as Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM) and the Ras Al Khaimah International Corporate Centre (RAK ICC),” Hamade said. Here is what each option entails:
1. Wills
“Muslim expatriates can execute wills within the third of their inheritance to their own heirs, provided that all of the heirs agree, following the latest amendment of Federal Personal Status law No. 28 of 2005. Other options include DIFC Wills, which is exclusively for non-Muslims, but Abu Dhabi Judicial Department is for both non-Muslims and Muslims who hold passports of a country that does not apply Sharia law,” she said.
Key considerations when drafting a will:
According to Hamade, here are key aspects to consider when drafting a will:
• Select a qualified, registered wills draftsman in a regulated jurisdiction
• Decide on the type of will needed (mirror, single, property-specific, guardianship, etc.)
• List your assets in the will or leave it open if you anticipate future wealth.
• Determine who should inherit your assets.
• Appoint an executor for your will.
• Designate guardians for minor children.
• Include any charitable gifts.
• Have witnesses present when signing your will.
Muslim expatriates can execute wills within the third of their inheritance to their own heirs, provided that all of the heirs agree, following the latest amendment of Federal Personal Status law No. 28 of 2005. Other options include DIFC Wills, which is exclusively for non-Muslims, but Abu Dhabi Judicial Department is for both non-Muslims and Muslims who hold passports of a country that does not apply Sharia law.
2. Trusts
For people with a higher net worth, trusts can be a helpful tool for estate planning.
“A trust is a common law structure, which is not a person like an individual or a corporation, but a relationship between three entities, generally referred to as the settlor, the trustee and the beneficiary. At the outset, the settlor will contribute assets to the trust, which are managed by the trustee. Although the trustee holds legal title to the assets, they are held for the benefit of the beneficiary. Trusts are set up for massive wealth, which can be diversified and complex and for beneficiaries when they are minors,” Hamade said.
“It is of course recommended to seek advice of a legal consultant on what you need to achieve in order to make sure that a foundation is what can serve the purpose of succession planning,” she said.
At the outset, the settlor will contribute assets to the trust, which are managed by the trustee. Although the trustee holds legal title to the assets, they are held for the benefit of the beneficiary. Trusts are set up for massive wealth, which can be diversified and complex and for beneficiaries when they are minors.
3. Foundations
Foundations are particularly suited to family businesses and those holding extensive property or asset portfolios.
“DIFC and ADGM foundation are both available to expats and UAE nationals and provide a local solution to manage their wealth, protect their assets and make succession planning arrangements. UAE's foundation regimes have proven to be a popular offering for families within the Gulf Cooperation Council (GCC), enabling the preservation of family legacy and ensuring the smooth transition of successful businesses from the founding generation to the next,” she said.
By proactively putting these protections in place, expatriates can ensure their assets are passed down to their family according to their wishes, reducing potential legal complications and providing peace of mind for themselves and their families.