Matters of inheritance in Dubai continue to be governed by the 1985 Civil Code and the 2005 Personal Affairs Law. As a general rule, inheritance issues for non- Muslim ex-pats in Dubai are dealt with by the law of the deceased's home country. However, due to an anomaly in the local law, real estate located in Dubai and vehicles registered in Dubai ("immovables") can fall under local Shariah inheritance laws instead - this is very often at odds with the client's wishes. The position is further complicated by the fact that there is no system of precedent in the local Dubai Courts. As such, there is not only unclear legislation, there is also a lack of uniformity in its application. In the light of this, it is not currently possible to give our non-Muslim UK ex-pat clients a guaranteed succession planning solution for onshore immoveables.

Mitigating Risk

What we are able to do is to help our clients to reduce the risk of Shariah Law applying on death by using the following techniques:

  • Changing the nature of assets from immoveable to moveable.
  • Putting appropriate Wills in place.
  • Reducing the size of the UAE estate.

Taking each of these points in turn...

Changing the Nature of Assets

If Dubai real estate is held by a Dubai offshore company (such as JAFZA offshore holding company), it is the shares in the company that pass on death as opposed to the underlying real estate. As such, we are able to convert immoveable real estate into moveable shares and those moveable shares pass by the law of domicile.

This can be an expensive step where clients already own significant local real estate as transfer tax applies when ownership passes from the client to the JAFZA company. As such, it is important to undertake a cost/ benefit analysis with the client before proceeding and, wherever possible, to have the JAFZA company in place prior to purchase.

UAE Wills

In addition, it is also possible to put a separate Will in place for a client's UAE-based assets. With careful drafting, the UAE Will can coexist with a client's English Will (and any other foreign Wills).

Charges can apply locally where specific property is gifted in the UAE Will so it is preferable to draft a simple generic "sweep up" Will for UAE-based assets.

To speed up the administration of the UAE estate on death, the UAE Will can be translated into Arabic and attested by the local Notary Public during the client's lifetime.

Again, a UAE Will cannot guarantee that Shariah law will not be applied by the local Courts, particularly where the estate contains local immoveables, but it can reduce the risk of Shariah law being applied and it will speed up the administration of the estate locally in any event.

Reducing the Size of the UAE Estate

Given the risk of Shariah law applying, particularly where ex-pat clients have onshore immoveables, wherever possible, clients should limit onshore assets and move or structure the bulk of the estate offshore in a jurisdiction with robust anti forced heirship laws such as Guernsey.

It is wrong to try to simplify the uncertainties in the local inheritance laws and it is wrong to seek to offer guaranteed solutions where, currently, none exist. The best approach is to plan early, to take advantage of whatever tools are currently available to mitigate the risk of Shariah law applying and, given that the UAE is an emerging market, to review existing Wills and estate planning measures regularly where clients reside or have assets there.

Collas Crill is a Channel Islands law firm specialising in Jersey and Guernsey law but with the ability to coordinate specialist advice in other jurisdictions (such as the UAE) for internationally mobile clients.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.