Gulf News, January 30, 2009
31 January 2010
Gulf News: "A Question of Ownership After Death"
We are Australians who have a house in Dubai, but the house is in the name of my husband. If my husband dies, who will take ownership of the property? Do you think it is better to make changes in the ownership and have my name added as co-owner?
Your question raises important issues for many expatriates who have accumulated property and other assets in the UAE. None of us like to think about our death or the death of loved ones, but failing to look ahead and plan means you run the risk that your intended beneficiaries may not receive what you would want them to receive.
By planning ahead you can ensure that your property and assets will go to the people you want them to go to, in the way you want, when you want, ensuring that your loved ones will have financial security.
Since the UAE is a Muslim country, all courts adhere to Sharia law with regard to inheritance issues. However, a non- Muslim expatriate who is resident in the UAE can opt for the law of their domicile or home country to be applied to the distribution of their UAE estate, provided they have made a valid, UAE compliant, Will.
The short answer to your question should be simple: your husband could execute a Will that bequeaths the property to you. However, there are three problems with this potential solution.
The first is a lack of legal clarity in the UAE over real estate, which is seen as an ‘immovable’ asset, and so could be subject to Sharia law – and so your husband’s Will could leave a partial intestacy. Or, there is a chance, for some as yet unforeseen reason, that your husband could revoke his Will, without your knowledge. Furthermore, all Wills must be the subject of a probate application, which is a lengthy and costly legal process.
Adding you as a co-owner and placing the property in joint names will provide only a partial solution, as there is no legal doctrine in the UAE of survivorship, where a surviving co-owner automatically inherits the deceased co-owner's share. You would at least have partial ownership of the property, and only the share owned by the deceased would have to be dealt with on death. But, the problems of whether Sharia law will apply, and the cost and delay of probate, will remain issues.
The preferred route, in my view, is for the property to be transferred to an offshore company with suitable arrangements put in place with respect of the shareholding. This provides complete certainty in terms of who inherits the property, and also avoids UAE probate.
A Will is perfectly adequate for movable assets, such as goods and chattels, stocks and shares, cash etc. But, you need to consider that other assets such as bank accounts – even joint bank accounts – will be frozen on your husband’s death until probate has been granted.
It is very important that your estate plan anticipates, and deals with, this potential lack of liquidity at a very difficult emotional time, in the wake if your husband’s death. An independent financial advisor will be able to assist you in ensuring that this is the case. For example, a life insurance policy written in trust for a named beneficiary can provide a quick release of funds when most needed. Where there are minor children, provision should be made for guardianship and trusts, if the children are to inherit valuable asset. While, for those of us from high tax jurisdictions, such as the UK, proper planning can avoid substantial taxes that may arise on death.
Mark Nierada
Solicitor and Senior Estate Planning Consultant with Nexus Insurance Brokers LLC, www.nexusadvice.com