Asset protection and inheritance through the UAE offshore zone

In the offshore zone of the UAE, it is possible to protect assets

This article discusses issues related to inheritance and the Protection of Assets offered by the UAE offshore zone.

The UAE is a federation of seven emirates – Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Umm Al Quwain, Ajman, and Fujairah. In the UAE, there is the possibility of registering offshore companies, as well as registering wills based on General Law in the offshore zone.

How is the legal system in the offshore zone of the UAE?

The United Arab Emirates is a civil law jurisdiction whose main source of law is a law-based code. This system was influenced by the Egyptian legal system, whose roots come from French and Roman law.

Islamic law, known as Shari’a Law, is applied in family courts, however, it is much less obvious in the commercial sphere.

The UAE Constitution allows each emirate to have its own: legislation, judges, and courts. However, all the Emirates except Dubai and Ras Al Khaimah preferred their courts to work in accordance with a single federal model, so they are Federal Courts.

While the rules and procedures of the Dubai and Ras Al Khaimah courts are somewhat different, all courts in the UAE fall within the hierarchy of civil law of the Court of First Instance, the Court of Appeal and the Court of Cassation (Supreme Court).

All courts have a civil, criminal and family (Sharia) unit. Lawyers authorized to practice in the Federal Courts must have separate licenses to practice in the Local Courts.

How do legally significant actions occur in the UAE and in the offshore zone of the UAE?

When resolving disputes in the UAE, if the mediation procedure is used, it is possible to come to an agreement between family members, or else find a solution between business partners. If the decision is not reached, or if the mediation procedure was not used, the application is registered in the court of the first instance. Then the court of the first instance examines the case and makes a decision. If everyone agrees with the decision, then it is enforced. Or the decision may be appealed to the Court of Appeal after which, if everyone agrees with the decision, it is enforced. Or the decision may be appealed to the Court of Cassation and after that, it is enforced.

Choice of law in the UAE and in the offshore zone of the UAE

Relevant provisions under the Civil Transactions Act – Federal Law of the United Arab Emirates number 5 of 1985:

Article 17 (1) states that inheritance issues are governed by the laws of the country of the deceased at the time of his death.

Article 17 (5) states that the UAE law should apply to wills made by foreigners who own their property located in the UAE.

Article 12 (1) states that the law of each spouse at the time of marriage is applicable to the essential conditions necessary for its operation.

Article 13 (1) states that the law of the country in which the husband had citizenship at the conclusion of marriage applies to all the consequences of such a marriage, his personal status and property acquired as a result of the marriage.

Article 13 (1) states that the law of the person’s country of protection applies to all substantive matters relating to guardianship, mentoring, guardianship, etc.

UAE Offshore Personal Status Law

Federal law number 28 of 2005:

Article 1 (2) states that the provisions of this law should apply to all citizens of the UAE, except when non-Muslims among them have special provisions that apply to their community. Provisions must equally apply to non-citizens unless one of them requests the application of the law of their country

In the offshore zone of the UAE, it is possible to inherit by will and without a testament

  • Succession or inheritance is possible, both by will and without a testament.
  • If something happens to you after you develop a plan for an inheritance, which includes a will, you will be considered dead with a will and inheritance of a property that remains after you will be determined according to the inheritance plan that you applied.
  • If something happens to you without a succession plan, which includes a will, then you will be considered dead without a will and the state in which you lived, that is, for example, the UAE will determine who will receive your assets.

Succession planning in the UAE offshore zone

Inheritance planning includes the following points to consider:

  • Avoid confusion when it comes to your last wish.
  • Ensuring that your children have a legal guardian of your choice.
  • Protect loved ones, by ensuring that they receive your assets.
  • Ensuring the reduction or avoidance of conflicts between family members.
  • Minimize taxes and legal expenses related to your property.
  • Preserving welfare for your intended recipients.
  • Flexibility for life.

Who needs inheritance planning?

No matter how much money or assets you have, you have to think about what happens to your assets and who should get what you have after you leave.

How to implement inheritance planning and how easy is it?

The inheritance plan can be simple – just a will with the names of the recipients and may be complex, for example, creating several trusts for different purposes.

How does the inheritance plan in the UAE?

When an expat being a resident of the UAE leaves this world, the following steps are realized:

  • Resident visas of all dependents of the deceased are canceled.
  • The passport of the deceased is canceled after the completion of the formalities.
  • Leftovers must be repatriated after completing all formalities.
  • Local bank account, investments and assets are frozen, no further transactions take place.
  • Minor children may be taken under state custody if there is no particular guardianship.

What can happen with inheritance in the UAE, in your home country, or anywhere in the world without planning for an inheritance?

  • Regional or religious laws will be applied. 
  • Beneficiaries will be appointed by the law of this territory.
  • In some countries, up to 50% tax will be imposed on your property.
  • The local court will determine the performer and guardian of your children.

Pros of succession planning in the UAE offshore zone

  • Ability to quickly unfreeze assets.
  • Choosing the necessary distribution of property.
  • Getting emergency money for the family.
  • Avoiding legal difficulties and disputes.
  • The appointment of guardians of your choice.

Important points to use when planning inheritance in the offshore zone of the UAE

  • Open individual bank accounts where possible.
  • If possible, make a separate visa for your spouse.
  • Store money in an offshore bank account or in a fund.
  • Make offshore life insurance to protect your assets.
  • Do offshore life insurance to cover your liability.
  • Create an offshore fund for the education of your children.
  • Reduce taxes on your retirement savings.
  • Make your inheritance plan with professionals, document it, and keep it in a safe place.

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