Introduction To UAE Inheritance Law

7,026 views

Published on

This is the PowerPoint that goes with the presentation on UAE Inheritance Law for Foreign residents.

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
7,026
On SlideShare
0
From Embeds
0
Number of Embeds
104
Actions
Shares
0
Downloads
101
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Introduction To UAE Inheritance Law

  1. 1. Introduction to UAE Inheritance Law The Cove Rotana 3 March 2009 strohal-International Legal Consultants UAE - Singapore - Vienna
  2. 2. Introduction <ul><li>Important questions need to be answered </li></ul><ul><li>Which Inheritance law should govern movable and immovable estate located in UAE? UAE law and consequently Shari’a or foreign national law? </li></ul><ul><li>If the Shari’a shall apply, can the testator appoint his heirs according to his sole will and desire? </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  3. 3. Introduction <ul><li>Jointly owned properties </li></ul><ul><li>Joint bank accounts – frozen or not? </li></ul><ul><li>If yes, what is the procedure to reactivate it and to be able to dispose of the money again? </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  4. 4. Introduction <ul><li>According to an informal survey by lawyers in Dubai who advise clients on real estate investment, only 5% of buyers are aware of the laws regarding freehold property. </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  5. 5. Introduction <ul><li>For clarifying UAE regulations we will expose: </li></ul><ul><ul><li>1. UAE laws which govern matters of inheritance </li></ul></ul><ul><ul><li>2. Potential difficulties and problems </li></ul></ul><ul><ul><li>3. Proposed Solutions </li></ul></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  6. 6. I- UAE Laws governing inheritance matters <ul><li>Matters of Inheritance are governed by two Federal Laws </li></ul><ul><li>1. Federal Law No.5 of 1985 regarding the law of Civil Transactions in UAE </li></ul><ul><li>2. Federal Law No. 28 of 2005 regarding the UAE Personal Affairs </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  7. 7. UAE Civil Code <ul><li>UAE Civil Code distinguishes between movable and immovable assets for determining the applicable law </li></ul><ul><ul><li>Movable: application of the national law of the deceased </li></ul></ul><ul><ul><li>Immovable: application of UAE law (Shari’a) </li></ul></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  8. 8. UAE Personal Status Law <ul><li>The law applies on non-UAE nationals unless they requested the application of their own national law </li></ul><ul><li>Conclusion: </li></ul><ul><ul><li>Movable: Application of foreign law if non-UAE national requested so. </li></ul></ul><ul><ul><li>Immovable: Uncertainty about the applicable law on immovable located in UAE </li></ul></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  9. 9. Applicable law on foreign owned real estate in UAE <ul><li>Legislation is unclear and uncertain </li></ul><ul><li>Doctrine is divided: </li></ul><ul><ul><ul><li>Some require the application of the law where the immovable is located and consequently Shari’a as it is a matter related to sovereignty and public policy </li></ul></ul></ul><ul><ul><ul><li>Others require the application of foreign law as it is a matter left to the parties’ will </li></ul></ul></ul><ul><ul><ul><li>Jurisprudence: did not clarify firmly this uncertainty </li></ul></ul></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  10. 10. Solution concerning real estate <ul><li>UAE courts will decide on the applicable law on case by case basis in their sole discretion . </li></ul><ul><li>No guarantee can be granted that the Court will apply foreign law and not Shari’a. </li></ul><ul><li>Even if Court ruled the application of foreign law, most foreign jurisdictions refer back to the law where the immovable is located. (lex rei sitae) </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  11. 11. II- Potential Problems and difficulties <ul><li>Problems will be faced in the following domains upon the death of the testator: </li></ul><ul><ul><ul><li>Movable and Immovable inheritance </li></ul></ul></ul><ul><ul><ul><li>Bank accounts </li></ul></ul></ul><ul><ul><ul><li>Residence visa </li></ul></ul></ul><ul><ul><ul><li>Severance pay </li></ul></ul></ul><ul><ul><ul><li>Inheritance Tax </li></ul></ul></ul><ul><ul><ul><li>Funeral organization </li></ul></ul></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  12. 12. 1- Movable and Immovable Inheritance <ul><li>Potential application of Shari’a provisions </li></ul><ul><ul><ul><li>The testator can only freely distribute one third of the estate </li></ul></ul></ul><ul><ul><ul><li>A Will which gives benefits to one of the heirs is null and void unless otherwise accepted by all other adult heirs </li></ul></ul></ul><ul><ul><ul><li>All illegitimate and adopted children are excluded from being heirs </li></ul></ul></ul><ul><ul><ul><li>Respect of reserved portion </li></ul></ul></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  13. 13. Examples of reserved portion <ul><li>If a father leaves a wife, son and a daughter, the wife receives one eight of the estate, the balance shall be distributed between the son (two thirds) and the daughter (one third). </li></ul><ul><li>If a husband dies with a wife and no children, the wife will receive one quarter of the estate and the balance will be distributed among the surviving heirs such as mother, brothers </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  14. 14. 2- Bank Accounts <ul><li>Both personal and joint bank accounts will be frozen upon the death of its holder. </li></ul><ul><li>Procedure for reactivating the account is complex and takes some time. </li></ul><ul><li>If the bank accounts are in personal names, it can take up to 18 months before a Shari’a Court order would properly name the beneficiaries. </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  15. 15. 3- Residence visa <ul><li>A residence visa is cancelled upon the death of the husband whenever he sponsored his family </li></ul><ul><li>Wife and children have just 30 days within which they should leave the country. </li></ul><ul><li>They may be able to stay longer if either found a job or established a company under which they would be sponsored </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  16. 16. 3- Residence visa <ul><li>A new Federal law is currently under preparation for granting renewable six-month residence visas to owners of freehold properties </li></ul><ul><li>The Ministry of Interior is also studying the possibility of granting residence visas to families of property owners </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  17. 17. 4- Severance Pay <ul><li>Severance pay is due to the heirs upon the proof of their legal status being heirs of the deceased either by a valid Will or by a Court decision. </li></ul><ul><li>Application of this rule is flexible and depends on the flexibility of the employer </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  18. 18. 5- Inheritance tax <ul><li>There is no Inheritance Tax in UAE </li></ul><ul><li>However, transfer of ownership fees are imposed when re-registering the property in the name of the beneficiary </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  19. 19. 6- Funeral organization <ul><li>Corpse can be repatriated (very expensive) or buried in the Emirate where the deceased has been resident </li></ul><ul><li>burying the corpse in UAE is free of charge </li></ul><ul><li>Cremation is uncommon in Islamic countries but Dubai offers cremation for its non Muslim residents </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  20. 20. III- Proposed Solutions 1- Drafting a Will <ul><li>It is strongly recommended that non- UAE nationals draft a Will according to the laws of their own nationality. </li></ul><ul><li>The wording of such Will shall be drafted under supervision of a legal consultant. </li></ul><ul><li>Severe mistakes in the Will will make it invalid so Shari’a Law would apply on all assets of the foreigner. </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  21. 21. 1- Drafting a Will <ul><li>If the Will is made in the home country of the foreigner it must be ratified by UAE Embassy. </li></ul><ul><li>If the Will is done in the UAE, its notarization is not required but preferred. </li></ul><ul><li>A non-hand written Will needs the signature of 3 witnesses who preferably should live in the UAE </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  22. 22. 1- Drafting a Will <ul><li>Provisions of the Will shall apply on all movable assets held in UAE </li></ul><ul><li>Immovable assets in UAE can be mentioned in the Will but it is uncertain if the courts will rule according to the Will. Most probably Shari’a Law will apply. </li></ul><ul><li>In this case one third of the estate will be distributed in terms of the Will; the balance according to Shari’a </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  23. 23. 2- Establishing an Offshore (or Free Zone) company <ul><li>The most proper way to circumvent the application of Shari’a on the real estate held in UAE </li></ul><ul><li>Such companies can be used to purchase the real estate in the name of the company and not in the name of individuals. </li></ul><ul><li>All family members or third parties can be shareholders in the company according to the Memorandum of Association </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  24. 24. 2- Establishing an offshore company <ul><li>Advantages: </li></ul><ul><ul><li>Ownership of the property can be transferred by transferring shares in the company </li></ul></ul><ul><ul><li>Shares in a legal entity are qualified as movable assets. So the provisions of the Will drafted under foreign law applies. If the Will stipulated that the shares shall be inherited by a specific heir (e.g.the wife) this heir will become the sole owner of the company, holding the UAE property. </li></ul></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  25. 25. 3- Bank Account <ul><li>It is recommended to open a bank account for an offshore company and to keep the funds in this account </li></ul><ul><li>In the event one of the shareholders or directors die, the account will not be frozen by the bank. </li></ul><ul><li>The remaining signatories still can operate the account </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  26. 26. Offshore Companies <ul><li>RAK Offshore is an internationally recognized offshore hub </li></ul><ul><li>Foundation within 1 hour </li></ul><ul><li>No minimum capital </li></ul><ul><li>No presence of shareholders or directors required </li></ul><ul><li>Our firm is certified agent with RAK Offshore </li></ul><ul><li>Almost all activities </li></ul><ul><li>Purchase and management of real estates in the UAE (free hold) </li></ul><ul><li>Offshore companies can hold bank accounts </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  27. 27. Documents required for Offshore Companies <ul><li>Passport copies of individual shareholders </li></ul><ul><li>Company documents for corporate shareholders </li></ul><ul><li>Bank recommendation letter </li></ul><ul><li>Proof of residence </li></ul><ul><li>Setup fees AED 15.000 incl. 1st year agent fees </li></ul><ul><li>Annual costs AED 7.000 (legal consultancy to be charged separately) </li></ul>strohal-International Legal Consultants UAE - Singapore - Vienna
  28. 28. Thank you for listening! Our team in RAK strohal-International Legal Consultants UAE - Singapore - Vienna
  29. 29. Contacts email: tstrohal@advocates.cc strohal-International Legal Consultants UAE - Singapore - Vienna Vienna Franz Josefs Kai 3; A-1010 Wien, Austria Tel: (43 1) 513 19 11 Fax: (43 1) 513 19 11 24 Singapore 20, Upper Circular Road #02-10 The Riverwalk; Singapore 058416 Tel: (65)6 56330212 , Fax: (65)6 56330313 United Arab Emirates Ras al Khaimah City a) Villa 2, 26b Street; behind Ittihad University b) RAKEEN Bldg, 4 th floor P.O.Box 31484 RAK Tel:(971)(7)2364530 Fax:(971)(7)2364531

×