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Inheritance planning is a crucial aspect of managing one’s assets, particularly for expatriates living in the United Arab Emirates (UAE). The UAE’s inheritance laws are based on the principles of Sharia law, which can lead to complications for expats who are unaware of the legal intricacies involved. In this comprehensive guide, we will discuss how expats in the UAE can ensure the efficient transfer of their inheritance to their beneficiaries, taking into account local laws, taxes, and other considerations.


Understanding UAE Inheritance Laws

Before delving into inheritance planning, it is essential to understand the UAE’s inheritance laws. The country’s legal system is primarily based on Islamic Sharia law, which governs the distribution of assets among heirs. In the absence of a legally recognised will, UAE courts would previously apply Sharia law principles, to expatriate non-Muslims to distribute the deceased’s assets, regardless of the individual’s nationality or religion, however, this has now changed as a consequence of Chapter 5 of Federal Decree Law 41 2022 which came into force on 1st February 2023.

Sharia Law Principles: Under Sharia law, fixed shares of an individual’s estate are allocated to specific heirs, including the spouse, children, parents, and siblings. The distribution of assets is predetermined, with male heirs generally receiving a larger portion than female heirs. Previously non-Muslim expats would also be subjected to these rules if they did not have a legally recognised will in place. Again, this has changed as a consequence of Federal Decree Law 41 2022.

Federal Decree Law 41 2022.

The new law, effective from February 1, 2023, will modify the traditional implementation of Sharia Law to automatically include spouses, children, parents, and siblings in inheritance distribution as follows:

Article 11 outlines the following provisions: In instances where an individual dies without a valid will, 50% of the estate will be inherited by the surviving spouse. If the deceased has surviving children, the remaining estate will be divided equally among them, regardless of gender. This is a significant step towards promoting gender equality in inheritance matters.

If the deceased leaves no children, the estate will be equally distributed to surviving parents. If only one parent survives, the estate will be shared equally between the parent and the deceased’s surviving siblings.

In cases where both parents have passed away, the estate will be divided equally among surviving siblings without discrimination.

Article 12 indicates that guidance will be provided to facilitate the process.

Article 13 pertains to the Registration of Foreigner Wills. It states that both spouses may complete a will registration form at the time of their marriage contract to specify the distribution method.

Article 13 applies to individuals who plan to marry within the UAE, and not to those already married, unless further information is provided after this article’s date.

Additional clarification on the law will be provided as it approaches, and we will continue to update you on any changes that may directly affect your lives. Until further notice, the current procedure for wills and inheritance remains unchanged.

This information serves as a general overview and should not be considered specific legal advice.

Preparing a Legally Recognised Will

To ensure that their inheritance is distributed according to their wishes, expats in the UAE must have a legally recognised will in place. There are two primary options available for preparing a will:

  1. DIFC Wills and Probate Registry (WPR): The Dubai International Financial Centre (DIFC) Wills and Probate Registry allows non-Muslim expats to register a will in English, which will be recognised by the local courts. This registry enables expats to bypass the application of Sharia law and have their assets distributed according to their wishes. The DIFC WPR also covers Ras Al Khaimah for properties situated in that emirate.

  2. Local Court Will (Notarised and Attested): Expats can also opt to prepare a will through the local courts. This process involves drafting the will in the testator’s native language and having it notarised and attested by the local court. It is crucial to ensure that the will is correctly translated into Arabic and meets all local requirements.

Inheritance Tax Considerations

While the UAE does not impose inheritance tax on its residents, expats must be aware of potential tax implications in their home countries. Many countries have inheritance tax laws that apply to their citizens, regardless of their residency status. To minimise potential tax liabilities, expats should consult with tax experts in their home country to develop tax-efficient strategies for transferring their assets.

Transferring Property

Property ownership is a significant aspect of inheritance planning for expats in the UAE. To ensure the efficient transfer of property to their beneficiaries, expats should consider the following steps:

  1. Property Registration: Ensure that the property is registered in the name of the owner, and all relevant documents are up-to-date.

  2. Joint Ownership: Expats may consider holding the property in joint ownership with their spouse or other beneficiaries. This can help facilitate a smoother transfer of the property upon the owner’s death.

  3. Incorporating a Company: For larger property holdings, expats can consider incorporating a company to hold the properties. This can provide additional protection and tax benefits, depending on the jurisdiction in which the company is incorporated.

Transferring Bank Accounts and Investments

When planning for the transfer of bank accounts and investments to beneficiaries, expats in the UAE should consider the following:

  1. Joint Bank Accounts: Establishing joint bank accounts with beneficiaries can facilitate easier access to funds upon the account holder’s death.
  2. Nomination of Beneficiaries: Most banks and financial institutions in the UAE allow account holders to nominate beneficiaries who will receive the funds in the event of the account holder’s death. This can help bypass the lengthy probate process and ensure a more efficient transfer of assets.
  3. Offshore Bank Accounts and Investments: Depending on the expat’s home country’s tax regulations, it may be beneficial to hold bank accounts and investments in an offshore jurisdiction. This can provide additional tax benefits and asset protection, as well as ensure the efficient transfer of assets to the beneficiaries.

Establishing Trusts

Establishing a trust can be a useful tool for expats looking to efficiently transfer their assets to their beneficiaries. Trusts can provide a range of benefits, including tax efficiency, asset protection, and control over how assets are managed and distributed. There are several types of trusts available, and expats should consult with a qualified legal professional to determine which trust structure is most suitable for their needs.

Life Insurance Policies

Life insurance policies can be an effective way to provide financial security for beneficiaries in the event of the policyholder’s death. Expats in the UAE should consider the following when selecting a life insurance policy:

  1. Coverage Amount: Ensure that the coverage amount is sufficient to meet the financial needs of the beneficiaries.

  2. Policy Term: Choose a policy term that aligns with the policyholder’s financial goals and needs.

  3. Beneficiary Designations: Clearly designate beneficiaries to avoid any disputes or delays in the distribution of the policy proceeds.

  4. Policy Jurisdiction: Consider purchasing a life insurance policy from an international provider, as this can provide additional flexibility and tax benefits.

Inheritance Planning for Business Owners

Expats who own businesses in the UAE must also consider succession planning for their companies. The smooth transfer of business ownership and control is crucial to ensure the ongoing success of the enterprise and to protect the financial interests of the beneficiaries. Business owners should take the following steps to develop a comprehensive succession plan:

  1. Identify Successors: Determine who will take over the business upon the owner’s death or incapacitation. This may include family members, trusted employees, or third-party buyers.

  2. Develop a Management Transition Plan: Establish a clear plan for the transfer of management responsibilities to the successor(s), including any necessary training or mentorship.

  3. Legal and Financial Planning: Work with legal and financial advisors to structure the business in a manner that facilitates the efficient transfer of ownership and control. This may include establishing a holding company, implementing shareholder agreements, or creating buy-sell arrangements.

  4. Estate Equalisation: If the business forms a significant portion of the owner’s estate, consider strategies to equalise the inheritance among all beneficiaries. This can be achieved through life insurance policies, trusts, or other financial arrangements.

Estate Administration and Probate Process

In the event of an expat’s death, their estate will need to be administered according to UAE laws and regulations. This process can be complex and time-consuming, particularly for expats who have not taken the necessary steps to prepare a legally recognised will. The probate process typically involves the following steps:

  1. Obtaining a Death Certificate: The first step in administering an estate is to obtain a death certificate from the local authorities.

  2. Freezing of Assets: Upon the individual’s death, their UAE-based assets will be frozen, including bank accounts and property. This freeze will remain in place until the probate process is completed and the assets are distributed to the beneficiaries.

  3. Appointment of an Executor: The executor is responsible for managing the deceased’s estate and ensuring that their assets are distributed according to their will or applicable laws. If the deceased has not appointed an executor in their will, the local courts will appoint one.

  4. Asset Valuation and Debts: The executor is responsible for determining the value of the deceased’s assets and settling any outstanding debts.

  5. Distribution of Assets: Once all debts have been settled, the executor will distribute the remaining assets to the beneficiaries according to the deceased’s will or applicable laws.

By engaging professional advisors and taking the necessary steps to prepare a legally recognised will, expats can help streamline the estate administration process and ensure that their assets are efficiently transferred to their beneficiaries.

Regular Review and Updates

Inheritance planning is an ongoing process that requires regular review and updates. Expats should revisit their inheritance plans periodically, particularly in response to significant life events such as marriage, divorce, the birth of a child, or the acquisition of new assets. By keeping their plans current and aligned with their personal and financial goals, expats can ensure that their assets will be efficiently distributed to their beneficiaries upon their death.

Cross-Border Estate Planning

For expats with assets in multiple jurisdictions, cross-border estate planning is an essential aspect of ensuring the efficient transfer of their inheritance to their beneficiaries. This requires a comprehensive understanding of the legal, tax, and regulatory frameworks in each jurisdiction, and the development of tailored strategies to minimise potential risks and complications.

  1. International Wills: Expats should consider preparing separate wills for each jurisdiction in which they hold assets. This can help ensure that their wishes are respected in each country, and that the probate process is streamlined.

  2. Tax Planning: Expats should consult with tax experts in each jurisdiction to understand the potential tax implications of their inheritance planning strategies, and to develop tax-efficient solutions for transferring their assets.

  3. Asset Protection: Holding assets in multiple jurisdictions can provide additional protection against risks such as political instability, economic turmoil, or legal disputes. Expats should work with legal and financial advisors to develop asset protection strategies that suit their individual circumstances and objectives.

  4. Coordinating Professional Advisors: To ensure a seamless cross-border estate planning process, expats should engage professional advisors in each jurisdiction and coordinate their efforts. This can help ensure that all aspects of the inheritance planning process are aligned and complementary.

Final Thoughts

Inheritance planning for expats in the UAE can be a complex and challenging process, given the unique legal and cultural environment of the country. By understanding the local inheritance laws, preparing a legally recognised will, considering tax implications, and developing strategies for the efficient transfer of property, bank accounts, investments, businesses, and other assets, expats can help ensure that their inheritance is efficiently distributed to their beneficiaries. By engaging professional advisors and regularly reviewing and updating their plans, expats can protect their assets, provide for their loved ones, and achieve peace of mind.

Get Professional Advice

Complete our contact form today in order to discuss your particular situation with a highly qualified, experienced, and fully regulated adviser

  • We promise to NEVER share your data with any third party
  • We operate no email lists
  • All data is managed securely in accordance with the General Data Protection Regulation (GDPR)