Protecting Property in Dubai from Local Inheritance Laws

Did you know that the laws of inheritance and succession differ greatly from country to country with rules on who can leave what to whom with or without taxation being based on everything from religious beliefs to a government’s social conscience?  What this means for the likes of you and me is that depending on where in the world we reside, are domiciled and own property, we may or may not be able to will and distribute our assets upon death as we would like.

In Dubai and the United Arab Emirates the law of inheritance is based on Sharia’h Law which differs greatly to laws which many of us are used to and which places exacting restrictions on how we can request our assets be distributed when we die.  So, if you’re thinking of buying real estate in Dubai or if you already own a home in the emirate you need to learn about protecting property in Dubai from local inheritance laws before it’s too late.

When the ruler of Dubai gave the go ahead to allow foreign freehold ownership of real estate in certain parts of the emirate back in 2002 it took a good few years for the laws in Dubai to catch up with the decree; in fact only recently have foreigners started to get the deeds to properties that they bought back in 2002.  As part of the legal catch up process, the laws relating to foreign owners of property in the UAE and inheritance need to be examined closely as well. 

This process is ongoing and as the situation stands, it is interpreted by the majority of lawyers instructing foreign clients buying property in Dubai that as long as a foreign owner of property in Dubai writes a locally compliant will in the UAE simply stating that he or she would like the laws of their own domicile to apply regarding the question of inheritance of their property in Dubai, their assets will not be distributed according to Sharia’h Law.

However, because a recent legal clean up regarding foreign ownership of property in Dubai failed to cover the question of inheritance comprehensively, and because the above solution is only an interpretation of the law and many of us have complicated lives and extended networks of family and friends as well as specific ideas about how we would like our assets distributed when we die, just writing a will like this may not be sufficient…

Take just for example a married couple – both partners have previously been married before and have children from their first marriages - now that they have married each other and bought a property in Dubai in joint names each partner would like to leave their half of the house to the other partner in the event of death, with all assets including their property in Dubai to be divided equally between the children of the previous marriages once both partners are deceased. 

Under Sharia’h Law these wishes are not going to be fulfilled – for example, it’s possible the wife wouldn’t be allowed more than a one sixth share of the property in the event her husband died before her and it’s likely her children from her first marriage would receive nothing from the estate in Dubai once both partners in the marriage are dead.

The international taxation planning and cross border business advisers we have contact with advise that there’s a very simple, cost effective and taxation efficient solution available to the majority of foreign buyers of real estate in Dubai and that’s to register a specific type of offshore company structure in the likes of the British Virgin Islands for example, and use this special structure to hold the property thus avoiding the inheritance laws of Dubai altogether. 

Establishing such a structure is legal and simple - although it does require the benefit of an adviser’s advice, experience and direct assistance to ensure the best interests of the individual property owners in question are met…and if you would like more information about protecting property in Dubai from local inheritance laws or you would like to get a solution in place please complete our offshore advice service form with your details and we will get back to you as soon as possible.

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