Many international investors who invest in Dubai property eventually ask what will happen to their assets when they pass away. Who will be the rightful heirs? And how can you ensure your Dubai property is transferred to your family or other beneficiaries without any issues?
This article clearly explains how inheritance law works in Dubai, what international investors should be aware of, and which pitfalls to absolutely avoid.
Inheritance and Succession Law in Dubai: Different from Other Jurisdictions
Dubai, like the rest of the United Arab Emirates, operates under a completely different inheritance law system. Here, Islamic inheritance law, better known as Sharia law, applies.
This means in practice:
- The government automatically determines who your heirs are.
- Male heirs are often entitled to a larger share than female heirs.
- Without a proper arrangement, your next of kin cannot simply inherit your Dubai property.
This can have significant consequences, especially if you do not reside in Dubai and hold your property purely as an investment.
Example:
If you pass away without an arrangement, your property may be distributed according to the standard rules of Sharia, where your spouse and children could receive less than expected. The outcome can be very different from what you had in mind.
Therefore, it is crucial to arrange everything properly in advance.
The Solution: Drafting a Legally Recognised Will in Dubai
The best way to prevent this issue is to have an official will drafted in Dubai. This allows you to decide who inherits your property and bypasses the standard Sharia rules.
What do you need for such a will?
- You do not need to be a resident of Dubai.
- You must have the will prepared through a registered notary in Dubai.
- The will must be officially registered with the Dubai Courts or via the DIFC Wills Service Centre.
- You decide which heirs receive which share.
Costs
The cost for such a will typically ranges from €2,500 to €4,000, depending on its complexity and the chosen route.
How does the process work?
- You have a will drafted via a specialist in Dubai.
- The will is officially registered with the local court or the DIFC.
- Upon death, the will is immediately recognised and executed without the intervention of Sharia rules.
This is the safest way to transfer your Dubai property to your heirs.
What Happens Without a Will?
If you do not have a will in Dubai, your property automatically falls under local inheritance law. The consequences are:
- The Dubai court determines how your property is distributed.
- Male heirs often receive a larger share.
- Your spouse may only inherit a small portion, or even nothing.
- The process often takes months and can be costly and arduous for your next of kin.
In short, if you do not make arrangements, your heirs will have little control over the situation.
Important Considerations for International Investors
No Inheritance Tax in Dubai
In Dubai, there is no inheritance tax or succession duties. Your heirs will therefore receive the property without any local inheritance tax.
Taxation in Your Home Country
Different rules may apply in your country of tax residence:
- If you are still a tax resident of your home country at the time of death, your worldwide estate, including property in Dubai, may be subject to its inheritance tax laws.
- If you have formally emigrated and have lived outside your home country for an extended period, you may no longer be liable for its inheritance tax.
Practical Advice:
- If you reside in your home country, seek professional advice on its inheritance tax implications.
- Consider a long-term plan if you are contemplating emigration.
Transferring Dubai Property via a Company or LLC
If you own property in Dubai via an LLC (local company), the transfer process works differently:
- You do not inherit the property directly, but rather the shares of the LLC.
- These shares can be transferred to heirs more easily.
- The LLC remains the owner of the property, so the asset itself remains outside of Sharia rules.
- This requires a sound corporate structure and a notarised share transfer agreement.
Advantage:
This route offers more flexibility and can be tax-efficient for larger portfolios.
Disadvantage:
It is often not cost-effective for smaller investors due to the high annual maintenance costs of a Dubai LLC.
Checklist: Safely Bequeathing Property in Dubai
Below is a handy checklist for properly transferring your Dubai property:
1. Always Draft a Will in Dubai
Without a will, the government decides, with all the associated risks.
2. Have Your Will Registered with an Approved Office
Ensure it is legally valid with the Dubai Courts or DIFC.
3. Consider Inheritance Tax in Your Home Country
If you reside there, have a specialist analyse your tax position.
4. Do You Own Property via a Company? Review the Structure
Ensure there are clear agreements for the transfer of your LLC shares.
5. Review Your Situation Periodically
Your family situation, assets, and tax residency can change. Adjust your plans accordingly.
Conclusion: Arrange This in Time, Before It Is Too Late
Dubai property is an attractive investment, but its inheritance laws can lead to unpleasant surprises if left unaddressed. The standard Sharia rules differ significantly from what many international investors expect.
The solution is simple:
- Have a legally correct will drafted in Dubai.
- Give careful thought to your tax situation in your home country.
- Consider an LLC structure if you have a large property portfolio.
It is advisable to seek advice beforehand. We can put you in touch with registered real estate agents and specialised legal advisors in Dubai who can assist you with this process step by step.