Our Corporate Structuring lawyers at Al Tamimi & Company discuss Real Estate Wills in Dubai and provide updates on the latest news.
Nima Moshggoo Associate, Corporate Structuring
The UAE Government’s latest endeavour in providing an even better living environment has resulted in the introduction of a number of crucial amendments to several laws: most notably, amendments to Federal laws specifically relating to issues of divorce, separation and inheritance.
In principle, under UAE law, if a non-Muslim individual has provided for a specific inheritance of their UAE assets under a will registered in the UAE, that will is going to prevail.
The purpose of this article is to outline some key characteristics of a Dubai International Financial Centre (“DIFC”) Will in the context of inheritance of real estate assets that are located in the UAE.
As you will learn, wills registered in the UAE, particularly DIFC wills, could serve as a very helpful instrument in relation to inheritance of one’s assets – including real estate - located in the UAE.
A will is a legal document in which a person (the testator) declares their intentions as to what should happen to their estate and the care of any minor children, after their death, and which is executed in accordance with certain legal formalities. It is an instrument available to individuals in a number of jurisdictions around the world. In most jurisdictions, a will must be executed in accordance with the local laws and regulation. Some jurisdictions, like the DIFC, require that the will to be signed by the testator in the presence of two witnesses.
In order to secure inheritance of UAE-based real estate assets owned by non-Muslim parties a will seems to be well-suited.
By registering a DIFC Will, an individual can direct and influence who and in what proportion will be entitled to inherit their UAE-based real estate assets. While our primary focus under this article remains with the UAE property, the DIFC will can address non-UAE real estate, as well.
As one of the most reputable jurisdictions within the UAE, the DIFC, and in particular the DIFC Wills Service Centre, has a set of rules relating to succession and inheritance matters for non-Muslims holding assets in the UAE.
The DIFC has its Wills Service Centre that provides a simple and efficient mechanism for non-Muslims to pass on their estates according to their own wishes.
It follows, a registered DIFC Wills Draftsman could draft a will and assist you in registering it with the DIFC. The will could specifically provide how you wish that your UAE real estate assets be inherited.
Currently, there are five different types of Wills that one can register at the DIFC. The most used and prominent type, the Full Will, which covers the distribution of all assets in the UAE, and the appointment of guardians of minor children, if any, costs AED 10,000 in government fees.
The DIFC also has a ‘property’ specific Will which is called the Property Will that covers up to five (5) real estate properties only. The DIFC registration fees for this Will is AED 5,000.
Once you have registered the will with the DIFC Wills Registry, you can keep it as is or change it, if you so require. The DIFC Wills Service Centre are flexible in this regard.
Once the testator passes away, the will enters the stage of execution, called: “probate”. Probate, which refers to the process of administration of a deceased's estate, is dealt with by the DIFC Courts (common law jurisdiction). It is quite a straight-forward one, whereby a Grant of Probate is normally issued within a couple of months of when the DIFC Court essentially reviews the Will. Assuming a successful grant of probate, the DIFC Courts would then issue a Grant of Probate or Guardianship Order to the Dubai Courts for 'conversion' to a Dubai Courts' judgement. The Execution Department of the Dubai Courts, in return would then instruct the authorities relevant to the deceased's assets, such as banks, the Dubai Land Department, and other authorities, to distribute the estate assets in accordance with the wishes of the deceased.
The UAE is a very attractive real estate investment jurisdiction. Not only is there an immense offering of different types of real estate assets but also assets that are rented generate revenue, may increase in value and, unlike in many other parts of the world, are not subject to inheritance tax on property inheritance or income tax if the landlord rents the asset out and makes profit.
The ability to pass those assets on, however, in line with one’s last will is of importance. This is where DIFC Wills come in, and provide a solid platform to non-Muslim individuals. We have assisted numerous non-Muslim clients in preparing and registering their wills at the DIFC.
Based on that extensive experience, we believe it is essential that non-Muslim real estate owners in the UAE secure a will, as part of their succession plan.
Otherwise, the real estate of the deceased will be subject to inheritance in line with Shariah principles. While those consider our family members, a DIFC will allows for more flexibility as to whom and in what proportion will be entitled to inherit.
For further information, please contact Nima Moshggoo.
Published in September 2022
