Fixed deposits in the UAE are a popular low-risk savings option preferred by many. While the country is expat-friendly and treats all residents equally, it is important to know what happens to your savings and assets in the country in the event of an untimely death, especially if there is no valid will in place.
Maha Bin Hendi, Associate at legal firm Hadef & Partners, says that as soon as the bank is notified about the death of a customer, generally, all accounts and fixed deposits of the deceased are frozen.
“If the fixed deposit is jointly owned, then the Commercial Transactions Law provides that one of [its holders] must inform the bank about their partner’s demise within ten working days from the date of death,” she explains. “Accordingly, the bank halts withdrawals from this account. The legal rights of the deceased account holder will be passed on to his or her heirs through procedures in the court,” she explains.
Unlike other jurisdictions, the UAE does not practice right of survivorship (property transferred to surviving heirs automatically). The account will be handed over to the deceased’s legal heirs only upon submission of proof of their entitlement, which is a succession certificate issued by the court, says Sallie Bowtell, Partner at Trowers & Hamlins.
“The succession certificate is required even if the deceased had a will that nominated who was to benefit from the fixed deposit account,” she adds.
If the account holder died outside the UAE, the family members must first obtain a legalised death certificate and have it attested at the UAE embassy of that country. This is not required for death certificates issued in the UAE. Once the death certificate has been legalised, it can be submitted at Dubai Courts to apply for a succession certificate.
“When the succession certificate is issued, the court will hear the full details of the deceased’s estate and at this point the court will issue a distribution order, and the process for passing the fixed deposit account to the beneficiary commences.
“In the case of joint accounts, the court contacts the involved parties and reviews the percentage of shares of the deceased in the account before making a decision to unfreeze the account. The legal rights rest with the surviving joint account holder and the legal heirs of the deceased account holder,” adds Bowtell.
Bowtell says, in the UAE courts, Sharia law is automatically applicable for the settlement of estates of Muslims. However, in other cases, by default, the UAE laws on inheritance are applied for the settlement of assets in the UAE.
However, if a non-Muslim wants to distribute his or her estate according to their personal wish, Bowtell advises the account holder to consider registering a will at the Dubai International Financial Centre (DIFC) Wills and Probate Registry. “For the application of foreign laws in probate procedures (i.e. for non-Muslim holders of assets in the UAE), the courts tend to implement the terms of the foreign will, provided it is valid under the laws of the deceased’s country.
“Hence, DIFC has formulated a will registry. Non-Muslim expats owning property within the emirate of Dubai — not the UAE as a whole — can now register a will to adopt the succession laws of their country for their Dubai assets,” she says.
“The registry works with DIFC Courts for the production of grants and orders the distribution of assets after it has received confirmation of someone’s death, thereby reducing the requirement for a succession certificate and legal processes involved.”