Importance of having a “Will” in the UAE

A question or concern that arises to every person who owns a property or an asset, whether tangible or intangible relates to the matter of succession. In other words, one has to think, to whom such property/s will devolve or succeed at their demise. This is where a ‘will’ comes into play.

A ‘Will’ or testament is a legal document by which a person, the testator (the person making the will), expresses their wishes as to how their property is to be distributed at the time of their death, and it give authority to the executor, to manage the estate until its final distribution. The person who makes the Will is called as the “testator”, and the person to whom it is made the “executor”, and the person to whose benefit the ‘Will’ is made is called as the “beneficiary”.

Law Relating to Wills in the UAE

As we are aware, the Shares belonging to a person in a company may be covered in the instruments of a company such as the Memorandum of Association or other binding agreements. Whereas, In the absence of an explicit agreement or covenant, as per the UAE Laws (Sharia), at the event of the demise of a shareholder, the shares are passed on to their heirs.

The UAE Law of Inheritance would be applied in the case of lack of a Will, and it could affect the rights and guardianship of the deceased’s children if they are minors. Therefore, it is always better to have a Will to avoid any future inconveniences.

In the case of Muslims, the Inheritance is governed by the principles of Sharia, whereas in the case of non-Muslims, the law of deceased’s nation would apply by virtue of Article 17 of Federal Law Number 5 of 1985 (UAE Civil Code).

Assets that may be Included in Wills:

All tangible and intangible assets owned by the testator can be included in the Will. Assets including but not limited to Shares/Investments in Companies, Cash/ Amount in Bank Accounts, Real Estate, Vehicles/Boats, Jewellery, Trademarks/Patent Royalties, Art Collections; and any other kind of tangible and intangible properties.

Types of Wills in the UAE

The UAE courts adhere to Sharia Law in respect of the distribution of assets of a Non-Muslim UAE expat where the person dies without a Will in place (Intestate).

1. The UAE law allows the non-Muslims to choose the laws of their home country to apply to their inheritance. This can be done through a clearly drafted Will and the same along with the laws of their home state must be legalised and notarized by the appropriate authorities (Wills made through the Notary Public).

•  Apart from the above mentioned, in the UAE, for non-Muslims, the DIFC Wills Service Centre Rules have created a legal regime for the assets in Dubai/Ras Al Khaimah thereby allowing the creation of Wills under the common law principles. (DIFC Wills)

Accordingly, if a non-Muslim registers their Will with the DIFC Wills Service Centre, their assets in Dubai/Ras Al Khaimah will be distributed according to their own wishes based on the Will drafted.

Therefore, depending upon your situation and convenience, a Will may be drafted either through DIFC Wills Service Centre or the UAE Civil Code.

Considering the hardship regarding the enforcement of foreign wills in the UAE, the DIFC Wills provide an excellent alternative for foreign shareholders to bequeath their assets. Withdrawal of a Will can be made at any time during the testator’s lifetime.

Consequences of not having a Will

In the absence of a Will, the UAE Courts would adhere to the Sharia Law.  Not having a Will not only affects your assets/ shares owned by you, but also creates more hassles than one can imagine. If adequate steps are not taken to safeguard your property, your dear ones (the ones whom you wish to distribute the assets to) may not get an opportunity to receive your property (both tangible and intangible).

Further, it may also result in family disputes, and your beneficiaries will have to incur extensive legal costs for the distribution of your assets. There will be a lack of protection of your assets. There is also a possibility that your family will be unaware of all your assets and might have to go through mental stress transferring the property, and may affect the guardianship of your minor children. Lack of a will affects the dependents Visa, and may result in Visa cancellation. A Will is also necessary in order to avoid freezing of Bank accounts.

In conclusion, we suggest that the best way to protect your business/property is to plan ahead and to properly draft a Will with a help of a lawyer to safeguard your Interest and to ensure the allocation of assets as one’s wish.