The UAE remains a magnet for professionals, business persons, and high-net-worth individuals from around the world. Many expatriates residing here build multifaceted portfolios comprising residential property in Dubai, offshore assets, overseas investments, and family property held in their home jurisdictions. But very few are aware that their cross-border wealth may be trapped in complex legal battles at the time of their demise.
Unlike most common law nations, the UAE has a mixed legal system based on civil law and imbued with elements of Sharia law. This has the consequence that, in the absence of an intelligently constructed estate plan, an expatriate’s assets might be given away subject to local inheritance principles rather than individual preference. Banks can freeze accounts, property transfers are stalled, and relatives must deal with unfamiliar processes.
Cross-border estate planning fills those gaps. It ensures that assets are passed on efficiently, families are safeguarded, and succession is in line with international guidelines accepted both within and outside the UAE.
The Legal Framework Controlling Inheritance in the UAE
The UAE inheritance law is, for the most part, regulated by the Federal Law No. 5 of 1985 (the Civil Transactions Law) and the Personal Status Law (Federal Law No. 28 of 2005). According to the said legislations, Muslim estates adhere to Sharia principles whereby particular shares are designated to heirs.
For non-Muslims, however, recent reforms have brought greater flexibility. Federal Decree Law No. 41 of 2022, the Civil Personal Status for Non-Muslims, provides that the law of nationality may be applied to inheritance. By this, it is possible for a non Muslim expatriate to choose to have property left behind distributed according to the laws of his or her country of origin, as long as he or she makes a valid will and has it registered in the UAE.
The UAE also offers accepted common law alternatives through the DIFC Wills and Probate Registry (DIFC Wills Service Centre) and the Abu Dhabi Judicial Department (ADJD) Non-Muslim Wills Office. Both entities enable expatriates to register wills that promote clarity, enforceability, and conformity with their individual wishes. These structures hold special significance for international households with property or dependents in more than one location.
Why Multiple Jurisdictions Create Legal Uncertainty
The greatest challenge arises when one has property or investments in more than one country. Each jurisdiction has its own inheritance laws, which are not necessarily compatible with one another. Some use the law of domicile, and others use the lex situs rule, the law of the place of each asset.
For instance, a Canadian citizen living in Dubai could have a villa in the UAE, a trust in Jersey, and shares in North America. Each would, on death, be subject to a separate legal system, with the possibility of severed probate procedures, conflicting orders, and delay in inheritance.
Without harmonisation of an estate plan, assets can be frozen pending resolution by competing legal systems. The expense and administrative burden imposed on surviving kin can be substantial. Estate plans must therefore be drafted with great care in order to harmonise them with both UAE inheritance law and the laws of each applicable jurisdiction.
Organising Separate but Harmonised Wills
To minimise cross-border issues, expatriates are advised to make independent wills: one for UAE-based assets and the others for foreign jurisdictions. Every will shall be prepared in accordance with the governing law of the jurisdiction and registered with the relevant authority.
Within the UAE, non-Muslim wills can be registered through the DIFC Wills Service Centre or the ADJD Wills Office. These structures respect testamentary freedom and guarantee that property, bank accounts, and shares in companies are transferred to their intended beneficiaries.
Every document must include a non-revocation clause to prevent the inadvertent cancellation of another will and must clearly set out the extent of the assets it covers. Executives who operate under both common and civil law regimes should be nominated to guarantee an efficient probate process. Legal exactness is paramount; slight discrepancies in wills across jurisdictions can render them invalid.
Tax and Compliance: Double Liability Avoidance
While the UAE does not have inheritance or estate taxes, expatriates remain subject to foreign taxation by virtue of their citizenship or domicile.
For example:
- The UK Inheritance Tax Act 1984 applies to UK-domiciled persons and taxes worldwide estates irrespective of the person’s residence in the UAE.
- The United States Internal Revenue Code imposes a federal estate tax on U.S. citizens, regardless of domicile.
In order to avoid double taxation, the UAE has entered into Double Taxation Agreements (DTAs) with more than 130 jurisdictions, including the UK, France, and India. Again, every treaty has specific provisions, so tax and legal planning need to be coordinated. Appropriate structuring of wills, trusts, and foundations can effectively minimise exposure while ensuring compliance across borders.
Guardianship and Family Protection for Expatriates
Perhaps the most underappreciated area of estate planning is guardianship. When both parents of a child die without a will, the UAE Personal Status Law gives guardianship determination back to the Personal Status Court, which tends to adhere to Sharia principles.
For non-Muslims, the DIFC and ADJD models enable parents to appoint temporary and permanent guardians in their wills. This guarantees that children are put in charge immediately upon death without process delays. Families with assets, real estate or property in several countries should have guardianship provisions harmonised in all applicable legal documents to prevent conflicting claims.
Accounting for Modern Assets and Offshore Holdings
Modern-day estate planning goes beyond physical assets and bank accounts. Most expats now have digital assets like cryptocurrencies, online investments, or virtual businesses, which are not yet necessarily recognized under UAE succession law.
Having precise instructions, access credentials, and clear executor powers in the will guarantees these assets are not lost or inaccessible.
Furthermore, sophisticated expatriates often use DIFC Foundations (under DIFC Law No. 3 of 2018) or offshore trusts to hold family wealth, corporate shares, or real estate. These structures create a legal separation between ownership and control, offering long term asset protection, confidentiality, and smooth intergenerational transfer.
How to Build a Legally Sound Cross Border Estate Plan
Creating an enforceable and compliant estate plan involves:
- Identifying all assets worldwide, including real estate, business interests, financial and digital holdings.
- Determining laws that govern each asset.
- Preparing wills in each applicable jurisdiction, making them consistent and non-revocable throughout all documents.
- Utilizing qualified UAE attorneys in conjunction with foreign legal consultants.
- Reviewing the plan periodically, especially after acquiring assets, moving residences, or legislative changes such as Decree Law No. 41 of 2022.
This comprehensive solution ensures that your wishes are legally valid across all jurisdictions, safeguarding your family’s interests and facilitating a smooth succession.
Conclusion:
The international nature of expatriate wealth requires a similarly international legal strategy. Cross border estate planning in the UAE is more than simply preparing a will; it is about reconciling legal systems, safeguarding dependents, and maintaining control over the manner in which one’s assets are handled and distributed.
With decades of experience in private client, corporate, and cross jurisdictional advisory, Davidson & Co provides strategic guidance on the preparation and registration of wills, establishment of DIFC foundations, and comprehensive cross border estate planning. The firm’s approach combines technical legal precision with practical understanding of international asset structures, helping expatriates protect their global legacy with complete legal certainty.
