Most of us indulge in the fairy-tale illusion that our lives will last for a long time and think it best not to dwell on the last chapter. We pretend our deaths will be decades, or some indefinable time away. While most concepts of afterlife sound quite cheery — with harps, angels, gardens and the like — life itself can be merry, and so it goes on.
So it may be tacky to discuss death and it could be tedious to deliberate its effects. But it is not, and it should not be. Apart from the metaphysical awareness that inevitable death is what gives life meaning, there is a more tangible and physical awareness associated with the people left behind to live.
“In my line of business, I often use the words of American author and academician John M. Richardson Jr, to emphasise a point to my clients,” says specialist lawyer Nita Maru. “And it is as simple to practise as it is to preach.” Richardson’s memorable quote is “When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened.”
Frozen assets
As a hard-working expatriate in the UAE, you may be concerned about creating wealth and using it wisely during your life here. But Maru says it is more important to protect it and your family by deciding now what to do in the event of your death.
“In principle, the bank accounts of a deceased person will be frozen until all liabilities such as car, property and personal loans, credit cards, and business debts are cleared,” she says. “Sometimes, a bank account can be ‘frozen’ within mere hours of a fatality, but the procedures for reactivating it are both lengthy and complex. Likewise, when a shareholder dies, local probate laws are applied to a business. The results may be unpleasant — shares do not pass automatically by survivorship, nor can another family member take over in lieu.”
As founder and director of The Wills Specialists in Dubai, Maru draws upon her vast experience in dealing with expatriates, urging them to make arrangements for the future and safeguard their assets, properties, business interests, and most importantly, their children. In a conversation with GN Focus, she highlights some of the most important aspects.
Safeguarding your children
If you are parents, a simple will can be used to specify who must look after your young children after your deaths. The absence of a will may goad authorities to intervene in guardianship matters, especially when both parents die simultaneously, and there is a possibility that their care may be entrusted to others if they are under 21 years of age.
If you are married, it is wrong to assume that your spouse will get everything you own. Sharia is based on a fixed share allocation system for the disbursement of assets, and a wife is entitled to receive only one-eighth of her deceased husband’s total estate.
If you are in a second marriage, a will can make provisions for non-traditional relationships such as children from the first marriage and exclusion clauses for ex-spouses. If you are retired and made a will a long time ago, it must be regularly updated to include grandchildren or to omit people you no longer wish to leave anything to.
Protecting your assets
The Government of Dubai’s official website emphasises 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 having planned your family’s future, local authorities will examine your estate and distribute it according to Sharia law, which may differ greatly from what you intend.
Meanwhile, personal assets including bank accounts, vehicles and properties will be seized, until liabilities have been discharged.
Shared assets will also be frozen until the issues of inheritance are determined, and family members are often left without access to money during this period.
Dying intestate could also leave debts unpaid until the management of the estate is finally dealt with by the courts and the surviving family’s financial requirements are met.
Preserving your business
Global statistics state that less than 30 per cent of family-owned businesses survive to the second generation and less than 12 per cent to the third. The survival rate for the fourth generation is a meagre 3 per cent. For expatriates living in the UAE, these figures may be even lower.
As a business owner, a significant portion of your wealth — and your family’s main source of future income — will be tied up in your business. The success of your estate planning is dependent upon this business being transferred smoothly or sold to a third party. Either way, it takes considerable planning and preparation and should be ranked high on a priority task list.
If you do not have a proper business succession plan or estate planning in place, you simply cannot be sure of what will happen after your death: whether your family will be provided for, who will look after your business, and when and how your beneficiaries will stand to gain from the investments you have made.
There are many uncertainties regarding real estate inheritance issues under Sharia, especially regarding offices, showrooms, and manufacturing or warehouse facilities that are owned or co-owned by an individual but used by a business.
Unlike other jurisdictions, the UAE does not practise right of survivorship (where property passes automatically to a surviving joint owner upon death of the other), and again, the local courts will have a final say in the matter.
All businesses — whether sole proprietor firms, partnerships, joint ventures, limited liability companies or free zone corporations — should plan for the transfer, succession, and/or sale of the business when faced with the death of the owner or a partner.
First steps
In many countries, there are statutory laws to guide the distribution of your assets after your demise. But here, all inheritance is guided by Sharia law, and making a will is one of the best measures to ensure that your personal wishes are fulfilled.
Another option is setting up an offshore company, which as a legal entity, can own various assets on your behalf — bank accounts, stocks and shares, land and property — and pass it on rightfully to the heirs of your choice.
Planning your business succession is a process, not a single step, and reflects specific circumstances. Ensuring seamless continuity and ongoing success may be a complex process, but professional lawyers not only offer advice but also provide physical assistance in setting up bespoke solutions such as trusts, private annuities and offshore structures. Professionals will also weave in clauses that minimise the possibility of conflict among co-owners, partners and heirs, thereby lowering the odds of litigation and the costs and time involved in probate.
Making proper arrangements will let your loved ones know that you care enough and will save them considerable trouble. But more importantly, it ensures that you are in full control of what happens to your family, even when you are not with them.
