x Abu Dhabi, UAE Thursday 20 July 2017

Willingness to confront the worst

Nobody enjoys planning for death. But from frozen accounts and inheritance laws, there are many factors to consider.

Trench recommends an offshore account.
Trench recommends an offshore account.

John Harris, 52, has lived as an expat in the UAE for more than 15 years. Last year, a serious medical condition forced him to take emergency precautions in order to ensure his financial assets would be safe in the event of his death. "I got very sick and found out I was to have a life-saving operation in January 2008," says Mr Harris. "Until then I had never had the need to understand local inheritance laws, but I had to find out fast."

Unfortunately, the seriousness of Mr Harris' medical condition meant he had to go into surgery earlier than expected, without a legal will in place. "I had a will in the UK but it was out of date, as I had since remarried," says Mr Harris. "I went into surgery knowing that all my savings and assets were potentially subjected to the law of the country and there was nothing I could do about it. Looking back, I should have been more informed and taken steps to have my existing will and its beneficiaries confirmed at the UAE embassy in my home country."

Mr Harris luckily made a full recovery, and his family did not have to face any legal problems regarding his will. His experience demonstrates how easy it is to do too little too late. "I strongly recommend that anyone living outside of their home country take steps to ensure that their will is applicable to their chosen country of residence," says Mr Harris. "The added pressure of running the risk of not having my will distributed according to my wishes is not something I want to ever endure again."

The best way to avoid repeating Mr. Harris' experience is to seek legal advice. Cynthia Trench, who works at Trench & Associates, a Dubai-based legal firm, explains. "Do not fall for those firms advertising that there is something called the "UAE" wills; there is no such thing and the persons so advertising are neither lawyers nor do they have a license to draft wills." A will is valid in accordance with the law of domicile (country of origin) of the expatriate.

"Attestation and authentication is a myth," Ms Trench adds. A will written in your home country still applies in the UAE, according to Article 17(1) of the Civil Transactions Code, and the Court of Cassation Cases endorse this view. "The law of domicile of an expatriate applies to distribution of his or her assets upon death," says Ms Trench. "With two exceptions - bank accounts and real estate - the Central Bank and Lands Department respectively requires Sharia Law Order."

Generally speaking, regardless of the deceased's nationality or the laws regarding inheritance in their home country, when it comes to inheritance of a foreigner's UAE property, Sharia, a system of Islamic law based on the Quran, is the law of the land. Complex guidelines dictate how the shares in an estate are calculated according to Sharia law and depend on whether the heir is male or female. As such, the law does not allow consideration of any wishes the deceased may have had, even if those wishes appeared obvious and were written down other than in a properly executed will.

"An expatriate can also opt not to apply [the rules of] his own country of domicile and appeal to the Sharia Court to apply the Sharia law of forced heirship provisions," Ms Trench explains. In the event that you should die without a will, intestacy laws, referring to the body of law that determines who is entitled to the property from the estate under the rules of inheritance, would apply. However, if you do not have a will in place you need to make sure you have a Grant of Probate (GOP), an official document that the executors may need to administer your estate, legalised in the country of origin.

Ms Trench recommends that you not delay putting things in order. "The whole of the above process could take from 12 to 18 months," says Ms Trench. "If the executor and lawyers are aware of what they need to do, then the whole process can be shortened." One of the main reasons for a will, of course, if not the main reason, is to make sure your survivors get to keep the property and assets for which you worked.

The best way to do this is to keep your monies in either an account owned by an offshore company with spouses as directors or directly placed offshore. In the event of their demise, the shares of company pass to the surviving spouse and beneficiaries. Although the spouse has died the offshore company has not, and the internal transfer circumvents Sharia law. There are many places that allow you to set up offshore companies but each country has its own guidelines and procedures, so where you choose can have an impact on the ease and efficiency in setting up the company. By doing this, you can ensure that the inheritance is governed by the law of the country in which the company is based and your assets can be automatically transferred to other owners of your company.

There are also a few practical matters that need consideration. Upon death in the UAE, bank accounts, including joint accounts, are frozen. The funds are used to settle unpaid dues and clear debts, which can range from loans to parking fines. "If the bank accounts are in personal names, it can take up to 18 months to more than two years before a Sharia Court order would properly name the beneficiaries in accordance with your will (executed in accordance with your law of domicile)," Ms Trench explains.

You should also remember that once a death is made official the visas of sponsored dependents can be cancelled. This poses serious problems, of course, as expatriates are required to have a valid residence visa to remain in the UAE. Even if you have a will in place to safeguard your assets in the UAE, it is important to remember that there are some events that will require changes to your final will. These can include marriage or divorce, the birth or adoption of children, a significant change in financial status, the death of a beneficiary and the change in personal contact details, to name a few - alters the validity of your existing will. Update your will as these things happen, and you can save your loved ones much stress and angst.

If you don't have a will, get one drawn up by a professional, who will spend time understanding your detailed wishes, and who understands the tax and inheritance laws of your home country. Keep a copy of your will with you locally, plus a copy with your executor (the person who will be responsible for ensuring your wishes expressed within the will are adhered to) in a safe place. An internet-based will-writing service can be less expensive, but working with a professional will be more complete and can help you examine all eventualities so you don't miss anything. Choose your executor with care. Your spouse is an obvious choice, but what happens if you're both in the same fatal car accident? There are professionals who act as executors for a fee, and they are very efficient concerning the process. You may wish to assign someone who knows your family, so remember to talk it through with them first. If you have children, think carefully about who could take over their long-term care if you and your spouse were no longer alive. To avoid family disagreements this needs to be stated in your will. Your will must clearly name the executor, your children and any guardians. If you wish to leave money from your estate to charity, be exact about which organisations and precisely how much you want to give. Think about where you would like your funeral to be held, and discuss this with appropriate family members so that they are not surprised. Don't forget the cost of repatriating your remains to the desired location. If you wish to leave specific gifts, then be clear about them in your will so that no one is confused. If necessary, describe the items in detail. You may wish to list your chosen beneficiaries in an order of succession, just in case one of them should die before you. Providing alternatives and clearly stating this is good practice. Do not forget that your will must cover all of your assets, no matter where they are deposited.