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Protecting your assets in the UAE : Introducing the DIFC Will

11 September 2018
Succession planning in United Arab Emirates (“UAE”) for non-Muslim resident and foreign investors: how to protect your assets located in Dubai and in Ras Al-Khaimah?
 
In an effort to enhance Dubai’s competitiveness as a destination for foreign investments, the government established in 2015 the DIFC Wills Service Centre to provide a system whereby a non-Muslim resident or foreign investor holding assets in Dubai and in Ras-Al Khaimah can register a Will at the DIFC Courts Wills Registry for Non-Muslims (the ‘Registry’), in order to opt out of Sharia laws. The DIFC is the first jurisdiction in the MENA region where non-Muslims can register a Will under internationally-recognized common law principles and confirm the attractiveness of Dubai in the Middle East for foreign investments.
 
Why should a non-Muslim resident or foreign investor be interested in registering a Will in DIFC for his assets located in Dubai or in Ras Al-Khaimah?
 
Many expatriates who are residents or have assets located in an Islamic country such as UAE are unaware that Sharia laws could be applicable to their estate, although their home countries may have a different set of laws. Under Sharia laws, assets are usually distributed to relatives based on blood ties. Such laws may be disconcerting for some expatriates who are not familiar with Sharia principles. For instance, Sharia principles do not recognize the right of survivorship in case of death of a joint owner. It means that the property does not automatically pass to the survivor owner. Moreover, if a husband or father passes away, only one eighth of the estate may be distributed to the wife and a son may receive the double of the estate than a daughter.
 
In that context, both non-Muslim residents and foreign investors had to be presented with an alternative securing a smooth transmission of their estate to their chosen heirs.
 
Who is eligible to make a Will?
 
To be eligible to register a Will at the Registry in DIFC, the following requirements should be fulfilled:
  1. 1) The testator must be a non-Muslim;
  2. 2) The testator must be 21 years old;
  3. 3) The Will must only cover (movable or non-movable) assets in Dubai and/or in Ras Al-Khaimah;
  4. 4) The Will must be witnessed by the Probate Registrar or an authorized officer and an additional witness (non-beneficiary);
  5. 5) The Will must be registered at the Registry in DIFC. Upon certain conditions it may be registered from abroad.

 
What assets can be covered?
 
Eligible individuals have the option to register different types of Wills according to nature of the assets (i.e. real estate, cash in a bank account, company, etc.) to be covered. There are currently five types of ‘DIFC Will’ that can be registered:
  1. 1) Guardianship Will: This Will covers the appointment of a guardian for children below 21 years old with residence in Dubai or in Ras Al-Khaimah.
  2. 2) Property Will: This Will covers any real estate properties located in Dubai and/or Ras Al-Khaimah. (limited to five properties).
  3. 3) Business Owner Will: This Will covers shares held in companies incorporated in Dubai or in Ras Al-Khaimah (limited to 5 separate shareholdings).
  4. 4) Financial Assets Will: This Will covers any bank account or brokerage account (limited to 10 separate accounts).
  5. 5) Full Will: This Will covers any and unlimited number of asset, including real estate, company shares, bank or brokerage accounts, without the need to identify them at time of registration (future assets may be covered as well) and the guardianship appointment in case of children below 21 years old with residence in Dubai or in Ras Al-Khaimah.

 
How can you register a Will in DIFC?
 
If you have assets that may be subject to the Sharia laws in UAE and are eligible to an opting-out, then you may want to review your own personal situation.
 
This must be done with a legal consultant who is also authorized as Will Draftsmen by the Registry in DIFC, in order:
 
  1. 1) To understand which assets could be covered by a DIFC Will, and
  2. 2) To choose the most suitable type of DIFC Will according to your needs.

 
Afterwards, based on your instructions, the legal consultant will establish a draft for your review and validation. Once the draft is finalized, the DIFC Will shall be submitted to the Registry for registration. The costs of a DIFC Will depends on the complexity of each case and are usually quoted between USD 2’300 and USD 6’000.-, including legal consultant’s fees and Government’s fees.
 
How SFM can help?
 
SFM is an UAE’s leading organization helping people like you set up their businesses in Dubai. But once your business is up and running, it’s high time you think of opting-out from Sharia Laws. In that context, SFM developed a partnership with an international law firm, DIFC accredited, with an office dedicated to private clients based in Dubai to give you access to affordable tailored solutions ensuring the protection of your assets located in Dubai and in Ras Al-Khaimah. Please contact us for more information.

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