The United Arab Emirates has earned a well-deserved position as a competitive investment environment and an excellent place to buy or start a business. As a foreigner, real estate investment in the UAE is a bit challenging. The buying and selling of real estate properties are governed by rules and regulations in each Emirate. Furthermore, each Emirate has complete autonomy over the formulation of its own laws and regulations. It’s also worth noting that the UAE has two legal systems – one at the federal level and one at the Emirate level.
Property investment is a terrific way to make money and increase your income, but there are some pitfalls that you must be aware of if you are a first-time investor in Dubai. Some regulations may safeguard your property from double taxation, and if you have any worries about the legalities, it is advisable to seek a legal opinion.
In the event of the death of a property owner in the UAE, their assets are frozen from a movability standpoint and divided according to a pre-determined model based on an understanding of Sharia law through the probate process. However, this may not be in accordance with the owner’s wishes. You must have a lifelong plan to safeguard your property and/or assets if you are an expat in the UAE. There are five key methods to protect assets and property as mentioned below:
Abu Dhabi Wills
Expatriates are frequently uninformed that if a family member dies without a certified non-Muslim Will, Shariah law would then apply to the deceased’s estate legally. This will most likely result in your assets being allocated in a way you did not want or expect.
The Abu Dhabi Wills Registry was established by the Abu Dhabi Courts Judicial Department to give non-Muslims with property in Abu Dhabi or UAE and/or children living there the choice to opt-out of Sharia law and declare their own preferences.
The Abu Dhabi Wills Registry is a significant milestone for non-Muslim expats who want reassurance that their desires are fully recorded and registered.
DIFC Wills
Expatriates account for over 80% of the UAE’s population, with the majority of them residing in Dubai and Abu Dhabi. DIFC Courts is an autonomous legal and judicial system based on English common law. The introduction of the DIFC (Dubai International Financial Centre) Courts Wills Service allows non-Muslims who invest or live in the UAE to transfer their assets according to their will’s provisions.
The DIFC Wills Service Centre permits non-Muslim expats to make wills under English and Wales law, which allows for testamentary liberty rather than the coercive heirship regime imposed by Sharia law. You can form a DIFC Will if you are 21 years or older, are not a Muslim, and hold assets in the UAE.
You must hire a DIFC authorized wills draftsman to write your will. A DIFC Will not only helps you to divide your possessions as you see appropriate, but the probate process is also easier than that of non-DIFC Wills.
Transfer the property to a trust or a holding company
Property and assets can be entrusted to a holding corporation or a trust, which frees them from your personal control.
A holding corporation is a legal entity in its own right. You could become the company’s major shareholder, which means you retain control over the company’s property and/or assets. You can also keep your anonymity, avoid liabilities, and save money on taxes.
A trust is established by a settlor for the interest of the beneficiaries, which is governed by trustees. As a result, a trust could be formed to safeguard your property and assets for your family members.
DIFC Foundations
The UAE is a civil law country and it allows foundations to be established. Foundations are legal entities that can hold assets and property for the benefit of their benefactors. A foundation can be used by investors or citizens of the UAE to arrange their assets. A council is required for foundations to govern the property and assets and to carry out the objectives established in the foundation documents. A DIFC or ADGM (Abu Dhabi Global Market) Foundation has various advantages, including:
- There is no corporate tax.
- Setup expenditures are minimal.
- A well-organized governance framework.
- Succession and legacy planning.
- The identities of the founders and beneficiaries are kept confidential.
- Asset preservation and private wealth management.
A DIFC Foundation is the most progressive approach to manage your assets in the future. As an expatriate residing in the UAE or as an overseas investor, establishing a DIFC Foundation will assure that your property is safeguarded for coming generations.
Transfer within the family
A gift, often known as a ‘grant’, is a voluntary transfer from one person to another. To be eligible, the property must be passed down through first-degree relatives, such as your parents or children. When it comes to who will take over your property, you will have your own choices.
A spouse, for example, may give his stake of a property to his wife to prevent his siblings from acquiring it in the event of his death. A spouse may also be excluded from any inheritance as a result of a divorce settlement.
You can give assets and/or property as a gift, but you must adhere to rigorous legal guidelines and the inheritance law in the UAE. To advance with a gift, you must first pay off all unpaid charges on the property and get certain documents such as the original title deed, identification documents, proof of kinship, a value estimation certificate, a declaration of the grant, etc. Before the new name certificate is issued, applicants must go to the appropriate registration office to submit the paperwork and pay the transfer fees.
Why choose Bin Eid and Advocates?
In Dubai, Bin Eid and Advocates has put together a multidisciplinary and talented team of property lawyers to assist clients with all real estate laws and regulations. Our expertise includes commercial and residential real estate sale, purchase, lease or management, project development, and all types of property disputes.
We provide a world-class comprehensive pool of knowledge to our clients due to our close links with governmental agencies, substantial engagement in the real estate sector, and extensive experience in conflict settlement. Our competent lawyers will walk you through the process to ensure that you understand all of your options and eliminate costly mistakes.
To know more about the transfer of property and options available, contact us. Our team of professionals will be glad to assist you and answer your questions and concerns.
Bottom Line
For foreign investors, the UAE has a lot to offer. It is the core of a region witnessing tremendous population growth and infrastructure investment, yet it remains mostly tax-free. Any firm can recruit and employ individuals from all over the world. The UAE offers an excellent physical infrastructure that is critical to the industry. Its residents live an idyllic lifestyle, with all the conveniences that expatriates desire.
It’s critical to take steps to preserve your assets if you own property in the UAE and want to control who inherits it. As an expatriate residing in the UAE or an investor, you can safeguard your property by various means like creating a will, gifting, transferring them to a trust, etc. A professional lawyer can help you choose the safest option to protect your property in the UAE.