The New Year is often a time when many try to get their finances in order, but if there is one thing that should perhaps come before any bigger financial decisions it should be that of drafting a will.
A Will is quite simply: ‘A document in which a person specifies the method to be applied in the management and distribution of his estate after his death.’
It is a legal instrument that permits a person, the testator, to make decisions on how his estate will be managed and distributed after his death. At English: Common Law, An instrument disposing of Personal Property was called a “testament,” whereas a will disposed of real property. Over time the distinction has disappeared so that a will, sometimes called a “last will and testament,” disposes of both real and personal property.
Now, you may already have a Will that has been drafted in your country of domicile but if you are a permanent resident of the UAE it is of huge importance to consider having a new legal document drawn up or the old original document attested so that it reflects your wishes.
But why is it so important? Well, Sharia Law is applied to anyone who dies without a Will in the UAE, regardless of his or her religion. This can cause a whole raft of problems if you hold any assets here including money in bank accounts. You may well intend for any money and possessions to be left to a particular person, such as your spouse but without a Will this is often not executed.
In essence Sharia principles dictate that all assets belonging to the deceased are frozen if you die in UAE. This will include but is not exhaustive of any property you own, any investment funds, all bank accounts including ATM cards and any other financial holdings. It is equally important to note that having your spouse as a joint account holder won’t help, as the bank account will be frozen irrespective of this.
Furthermore if there is a life insurance policy or perhaps a gratuity payment involved it may be the case that the payout will get held up by the courts and it may not even be the specified beneficiary that ultimately receives it.
What many people don’t know is that if the husband dies in the UAE, despite being domiciled from another jurisdiction, preference will be given to the closest male relative on the husband’s side of the family. So that often widow’s will find themselves in tremendously difficult situations with no access to any money and the likelihood that even once the process has gone through the courts they are still unlikely to be entitled to anything.
What’s worse and often not understood is that this also has implications on child guardianship. Not having a Will can have all sorts of implications if there are children involved. Because preference is given to the closest male relative on the husband’s side of the family, in the event of a man’s death, the mother of his children may not get automatic custody.
So what should you do? You need to seek proper advice. Any questions related to your estate planning should be routed through a Lawyer or Financial advisor. These professionals will be able to tell you the right cause of action for your circumstances.
In the meantime, as a precaution it is advisable to move most of your money offshore. Of course you will need to keep some capital here in the UAE but it is often recommended that you just keep a working balance for day to-day requirements, moving any long- term savings or large amounts of capital. Moving your capital offshore means it will be governed by that jurisdiction and will no longer fall under the rules of Sharia law.
If you have children, own any property, financial instruments or hold cash in the UAE it is strongly advisable to seek advice in this area in order to make sure that your family is sufficiently protected.
How to Use Life Insurance to Mitigate Inheritance Tax
If your total combined assets including your life insurance exceed the inheritance tax threshold, your beneficiaries will have to pay the inheritance tax due before they are able to gain access to your estate. The life insurance, alongside other assets, will also need to go through probate, which can take months, if not longer to complete. Luckily, there are ways to mitigate this.
Published On: March 11, 2018|3.5 min read|
6 reasons why all expats need life insurance
Life insurance for expats in Dubai and the UAEOf course no amount of money can ever replace a person.But life insurance polices can provide cash when it’s needed the most. [...]
Published On: March 11, 2018|6.3 min read|
Thinking about setting up a trust? Which trust is right for you?
Absolute/Bare TrustsA bare trust is one where the person who benefits from it (referred to as the beneficiary) has an immediate and absolute right to the assets that are transferred [...]
Get our latest financial blogs and articles straight to you inbox.
In partnership with
AES Financial Services Ltd which is Authorised and Regulated by the Financial Conduct Authority under registration number 464494. You can check this on the Financial Services Register at http://register.fca.org.uk. AES Financial Services Ltd (“AESFSL”), trading as AES International, is registered in England no. 06063185, its registered office being at 7 Bell Yard, London, WC2A 2JR