How can I secure my family financially?
If you are an expatriate in the UAE or an overseas investor and have properties or assets, you must have a legacy plan to protect them.
There are five primary vehicles for protecting assets and property in the UAE:
- A DIFC Will
- An Abu Dhabi Will
- DIFC/ RAK ICC Foundations
- Gifting of Property
- Transferring the assets to a holding company or trust
All five of these vehicles require an investment in legal advice to ensure they are set up correctly.
However, once they are in place, you can relax knowing your UAE property and assets are well protected.
Let us look briefly at the five vehicles for protecting your property and assets in the UAE.
A DIFC Will
The DIFC Wills Service Centre allows non-Muslim expatriates to create Wills under similar laws to the jurisdiction of England and Wales and provides for testamentary freedom rather than the forced heirship regime under Sharia law.
As long as you are over 21 years, are not a Muslim, and have assets in the UAE, you can register a DIFC Will.
You will need a DIFC registered Wills drafter to create your Will. Not only will registering a DIFC Will allow you to transfer your assets as you wish, but the probate process is also simpler and effective than that which applies to non-DIFC Wills.
Abu Dhabi Wills
The Abu Dhabi Courts Judicial Department has created the Abu Dhabi Wills Registry to provide an option for non-Muslims with assets in Abu Dhabi/UAE and/or children to opt-out of Sharia law and register their alternative wishes.
The Abu Dhabi Wills Registry is important for non-Muslim expatriates to ensure their wishes are correctly documented and registered.
Foundations in UAE
DIFC Foundations have become increasingly popular for wealth structuring and legacy planning purposes in the UAE. Investors or residents can structure their property, assets or business through a Foundation. There are several advantages of a DIFC/RAK ICC Foundation, including:
- No corporation tax
- Solid governance structure
- Establishes a legacy
- Protects assets from creditors or divorce
- Holds real estate/shares in business/assets
- Avoids local probate process giving greater continuity
- Low set up costs
Foundations must have a council to administer the property and assets and action the objectives stated in the Foundation documents.
You can transfer assets and/or property as a gift; however, you must follow strict legal procedures.
A gift can only be made to your spouse or children. Although you will need to pay registration fees, you will save money on the transfer fee.
Placing the property in a holding company or a trust
Property and assets can be transferred into a holding company or a trust which removes them from your ownership.
A holding company is a separate legal entity. However, you can become the main shareholder in the company, meaning you still have control over the property and/or assets it holds.
Trust is better described as a relationship. For example, a settlor creates a trust managed by trustees for the benefit of the beneficiaries. Therefore, a trust could be set up to protect your property and assets for your spouse, children, and grandchildren.
By having a DIFC Will and/or gifting assets or placing them in a holding company or a trust foundation, you will ensure that your wealth is protected as an expatriate living in the UAE or an investor. An experienced private client lawyer can assist you in setting up the best vehicle to safeguard your property and business in the UAE. Author: Nita Maru, Managing Partner of TWS Legal Consultants