Dubai: If you have a significant amount of savings in the UAE, it may make sense to set up a joint account, where your spouse or children are all account holders. Similarly, you may open a joint account with partners with whom you share business interests. However, what happens to a joint account in the event of the passing away of one of the account holders?
Gulf News spoke with Shishira Johny, Corporate and Commercial associate at The Legal Group Advocates and Legal Consultants (TLG), who said that a joint bank account may be opened at a bank by more than two or more people, regardless of the relationship between these persons.
Shishira Johny, Corporate and Commercial associate at The Legal Group Advocates and Legal Consultants (TLG)
Article 379 of Federal Law No. 18 of 1993 as amended by Federal Law No. 14 of 2020, also referred to as the Commercial Transactions Law, governs the opening and managing of joint bank accounts. According to the law, the bank may decide the type of joint account offered to its clients. According to the law, the joint account can be opened by all the owners or by a single person, holding the power of attorney of other owners. The account is usually opened on an equal basis, unless the owners have decided otherwise.
What happens in case an account holder dies?
“Article 379 Clause 4 of the Commercial Transactions Law, as amended, states the processes that occur upon the death of one of the owners of a joint bank account. According to the law, upon the death or legal incapacity of one of the owners to the joint account, the remaining account holders or the legal heir of the deceased must notify the bank of the same within 10 days of the death or incapacitation. When the bank receives such a notice, the bank will undertake the process to freeze withdrawals from the joint bank account to the limit of the person’s share in the joint account until the successors are appointed by the Courts. In certain instances, any form of withdrawal or transfer of money from the account would be limited in case of death or incapacitation of one of the joint account holders until the Court appoints a successor and until all debts of the deceased in UAE are paid,” Johny said.
So, while the joint account holders have to inform the bank of the account holder’s death within 10 days, if the bank receives the death notice and certificate from any other authority as well, like the hospital or police, they can proceed to freeze any activity on the account, until a succession certificate is issued by the court.
“The court would then issue the inheritance declaration and also provide instructions on how the estate of the deceased – including joint accounts – would have to be distributed amongst the heirs. For Muslims, the deceased’s share in the joint account would be distributed according to the principles of Shariah law. For non-Muslims, the deceased’s share of the joint account could be distributed according to a Will authorised by the UAE courts. In case a Will does not exist, the deceased’s share of the joint account could be distributed according to Shariah law, unless the legal heir specifically requests that the law of the state in which the deceased is a national be applied. Even in the latter situation, it is at the Court’s discretion, whether the Shariah law of inheritance or the law of the state of which the deceased is a national, is to be applied. This process could take weeks or months,” Shishira said.
How can I protect my share and access to the joint account?
The first advice Johny gave readers who are considering opening a joint account was to have a Will prepared, notarised, translated into Arabic and, most importantly, registered with the Judicial Department.
Also, while setting up the account, Johny advised readers to record their pre-determined shares in the application.
“However, if no express mention is made regarding the shares, as per Article 379, Clause 4 of the Commercial Transactions Law, the joint account shares are divided equally amongst all the joint account holders,” Johny said.
“It is advised to ensure that not all your money is deposited in a joint bank account and instead to also have in place separate personal bank accounts," she added.
