UAE Inheritance Law For Expats – Business Succession Post Death

UAE Inheritance Law for Expats can significantly impact how assets and businesses are handled after death. Unlike some countries where personal wills automatically apply, the UAE follows Sharia law by default, which may lead to unexpected outcomes for expatriates. To ensure a smooth transition of wealth and business ownership, expats must proactively structure succession plans and legal documentation in line with local regulations. This guide explores key considerations for protecting assets and planning business succession under UAE law.

This guide provides a comprehensive overview for successors residing in the UAE on how to manage the inheritance of assets, including business ownership, from their expatriate father who passed away outside the UAE. It delves into the intricacies of UAE inheritance laws for non-Muslims, outlines essential procedural steps for recognizing foreign death and wills, details the processes for transferring various types of assets, and addresses critical financial and cross-border tax considerations. The guide emphasizes the paramount importance of proactive estate planning and professional legal counsel to ensure a smooth and compliant succession.

Introduction: Cross-Border Inheritance in the UAE

The passing of a loved one is an inherently challenging time, further complicated when it involves cross-border assets and differing legal jurisdictions. For expatriates and their families in the UAE, understanding the nuances of inheritance and business succession laws is crucial to ensure that the deceased’s wishes are honored and their legacy is protected. This guide aims to demystify the legal landscape, providing a structured roadmap for children in the UAE to navigate the process of taking over their expatriate father’s assets and business interests following his death outside the UAE. The discussion will explore the applicable laws, necessary procedures, and key considerations to facilitate a seamless transition.

Section 1: Understanding UAE Inheritance Law for Expatriates

Default Application of UAE Law vs. Foreign Law/Will

Historically, the default position under UAE law for inheritance matters, even for non-Muslim expatriates, often involved the application of Islamic Sharia law principles. This framework could lead to asset distribution contrary to the deceased’s personal wishes, particularly concerning shares for spouses and children. For instance, under traditional Sharia principles, sons might receive double the share of daughters, and a widow’s share could be limited to one-eighth if there are children.

However, significant legal reforms, notably Federal Decree-Law No. 41 of 2022 and subsequent updates like Federal Law No. 41 of 2024, have introduced greater flexibility for non-Muslim expatriates. These laws explicitly allow non-Muslims to choose the application of their home country’s inheritance laws or to have a valid, registered will dictate asset distribution. This evolution in the legal framework indicates a strategic effort by the UAE to provide legal certainty and comfort, thereby attracting and retaining foreign talent and investment. The shift reflects a modernization of personal status laws to better accommodate the diverse expatriate population, enhancing the UAE’s appeal as a global hub.

In the absence of a registered will and if the home country’s law is not specifically requested or applied, the new civil inheritance rules for non-Muslims under Federal Decree-Law No. 41 of 2022 would apply. These rules stipulate that half of the inheritance devolves to the surviving spouse, and the other half is distributed equally among the children, without differentiation between male and female.

If there are no children, the legacy would devolve to the parents equally. If only one parent is alive, that parent receives half, with the other half going to siblings. In the complete absence of a spouse, children, or siblings, the sole surviving parent receives the entire legacy, or if both parents are absent, the siblings divide the entire legacy equally.

Foreign wills can, in principle, be recognized and enforced in the UAE, provided they meet specific conditions. This involves the will being properly notarized in the home country, attested by the UAE embassy in that country, and further attested by the UAE Ministry of Foreign Affairs and International Cooperation (MOFAIC) upon arrival in the UAE. Additionally, the will must be translated into Arabic by a certified legal translator, as Arabic is the official language of the UAE judiciary.

Despite this possibility, legal experts often recommend creating a separate, local will specifically for UAE assets due to the practical challenges and potential delays associated with enforcing foreign wills. The complexities of cross-border recognition and the need for multiple layers of attestation can prolong the process, making a local will a more streamlined option.

Importance of a Registered Will in the UAE

Registering a will in the UAE is highly advisable for non-Muslim expatriates to ensure their assets are distributed according to their wishes, rather than by default UAE laws. The absence of a registered will can lead to significant complications, including the freezing of assets, distribution contrary to the deceased’s intentions, and lengthy court proceedings. This highlights that without a clear testamentary document, the estate’s disposition may not align with the family’s expectations, causing additional distress during an already difficult time.  

Key benefits of a registered will include:

• Customized Asset Distribution: A will allows the testator to precisely specify beneficiaries and their respective shares, thereby preventing the default application of Sharia-based distribution or the new civil law provisions, which might not reflect personal desires. This provides the testator with full control over their legacy.
• Expedited Probate Process: A clear, properly registered will significantly speeds up the legal process for asset release and distribution. While probate without a will can take 6 to 18 months or longer, a registered will can reduce this timeframe to approximately 1 to 4 weeks, assuming the process is uncontested and all documents are in order. This reduction in processing time minimizes the period of financial uncertainty for the surviving family.
• Guardianship for Minors: For expatriate parents with minor children residing in the UAE, appointing legal guardians in a will is a critical consideration. Without a registered will specifying guardianship arrangements, UAE courts may intervene and appoint guardians based on Sharia principles, which might not align with the family’s preferences or cultural background. This can lead to complex, time-consuming, and emotionally distressing legal processes for the children and surviving family members. A properly drafted will allows parents to nominate both temporary guardians (for immediate care in an emergency, especially if permanent guardians are overseas) and permanent guardians, providing clear instructions for the children’s upbringing, education, and welfare. This ensures that the children’s best interests are met in accordance with parental values.
• Prevention of Account Freezing: While bank accounts and other assets are automatically frozen upon notification of death, a registered will helps expedite their release by providing clear instructions to the court and appointed executor.
• Cross-Border Certainty: For expatriates with international assets, a UAE-registered will can clarify the management of both local and international assets. This helps avoid potential conflicts or inconsistencies across multiple jurisdictions, especially if properties or bank accounts are held in various countries. This proactive measure provides a cohesive estate plan that is legally recognized in the UAE.

There are several recognized options for non-Muslims to register a will in the UAE, each with its own jurisdiction and benefits:

• Dubai International Financial Centre (DIFC) Wills Service Centre: This center offers a common law-based framework, allowing registration of English-language wills. It can cover assets located in Dubai and Ras Al Khaimah, and potentially worldwide assets, making it a popular choice for those familiar with common law systems. The DIFC Wills Service Centre offers various will types, including Full Will (covering all assets and guardianship), Property Will (for up to five real estate properties), Guardianship Will (for minor children), Financial Assets Will (for up to ten bank/brokerage accounts), and Business Owner Will (for up to five shareholdings).
• Abu Dhabi Judicial Department (ADJD): The ADJD allows non-Muslims to register bilingual wills (Arabic and English) and can cover assets in all Emirates of the UAE. It also provides a digital registration system, streamlining the notarization process through video calls.
• Dubai Courts: Non-Muslims can notarize a bilingual will before a Notary Public in Dubai, which applies to assets specifically within Dubai.

While it is technically possible for a foreign will to cover UAE assets, the process of legalizing and enforcing it can be complex and time-consuming, often making a locally registered UAE will a more efficient and certain option. The administrative burden of attestation and translation for foreign documents can lead to significant delays, reinforcing the practical advantages of a local will.  

To provide a clear overview of these options, the following table compares the key features of each will registration pathway:

Table 1: Comparison of UAE Will Registration Options

Section 2: Initial Steps Following an Expatriate’s Death Outside the UAE

Obtaining and Attesting the Foreign Death Certificate

The first and most fundamental step following the passing of an expatriate father outside the UAE is to obtain the official death certificate from the country where the death occurred. This document serves as the primary legal proof of death and is indispensable for all subsequent proceedings in the UAE.

This foreign death certificate must undergo a multi-stage attestation process to be legally recognized and accepted in the UAE. The rigorous authentication ensures that the document is valid for official use in legal, financial, and governmental matters within the Emirates. The process typically involves:  

1. Notarization: The document is first notarized in the country of origin to confirm its authenticity.
2. Attestation by the Ministry of Foreign Affairs (MOFA) in the home country: This step verifies the notary’s signature and seal.
3. Attestation by the UAE Embassy or Consulate in the issuing country: The UAE diplomatic mission validates the document for use in the UAE.
4. Final Attestation by the UAE Ministry of Foreign Affairs and International Cooperation (MOFAIC) upon arrival in the UAE: This is the final step in the UAE to legalize the document for local use.

Beyond attestation, all documents, including the death certificate, must be translated into Arabic by a certified legal translator, as Arabic is the official language of the UAE judiciary. This meticulous process of attestation and translation is a foundational and mandatory first step that directly impacts the entire inheritance and business succession process in the UAE. Any delays or errors in this initial stage will inevitably cascade and prolong all subsequent legal proceedings, including accessing frozen assets and transferring business ownership. The inability to present a properly attested and translated death certificate can bring the entire succession process to a standstill, highlighting the critical importance of accuracy and timely execution at this juncture.  

Freezing of Assets and Debt Settlement

Upon official notification of a death, all assets of the deceased located in the UAE are automatically frozen. This includes bank accounts (even joint accounts), real estate, vehicles, and business shares. This is a standard procedure designed to protect the interests of all potential heirs and creditors. These frozen assets can only be released and distributed by a court order, typically a succession certificate or probate order, issued by the relevant UAE court.

Before any assets can be distributed to the legal heirs, all outstanding debts and liabilities of the deceased’s estate must be settled. This includes funeral expenses, personal loans, mortgages, and any business debts. The general rule dictates that the estate itself is liable for these debts, not individual heirs, unless an heir had personally guaranteed a loan or is a joint owner of a mortgaged asset. For instance, if real estate is jointly owned and subject to a mortgage, the surviving joint owner would typically become liable for the outstanding debt.

The immediate freezing of all assets upon death, coupled with the legal priority of debt settlement, poses a significant liquidity risk for surviving families, especially if the deceased had substantial liabilities or if the probate process is lengthy. This situation can leave families without immediate access to funds for daily living expenses, funeral costs, or urgent business operational needs.

This underscores the need for proactive financial planning, such as maintaining emergency funds or having adequate life insurance policies, to provide liquidity and mitigate the financial strain during the period when assets are inaccessible. Creditors have the right to file claims against the estate, and in some cases, an estate trustee may be appointed by the court to manage the liquidation of properties and settlement of debts under judicial supervision.

Obtaining a Succession Certificate/Probate Order in the UAE

A succession certificate, also known as a legal heir certificate or probate order, is a crucial legal document issued by the UAE Personal Status Court (often referred to as the Sharia Court for inheritance matters). This document formally establishes the legal heirs of the deceased and authorizes them to inherit and manage the deceased’s assets in the UAE, including movable and immovable properties, bank accounts, and business interests. It is the gateway to unlocking the frozen assets and initiating the transfer of ownership.

The process for obtaining a Succession Certificate involves several key steps:

1. File an Application: An application must be submitted to the Personal Status Court in the emirate where the deceased resided or where the majority of their assets are located. This application should include comprehensive details about the deceased and their assets.
2. Submit Required Documents: A comprehensive set of documents must accompany the application. This includes the attested foreign death certificate, copies of the heirs’ passports and Emirates IDs, and proof of their relationship to the deceased (e.g., birth certificates, marriage certificates). A detailed list of the deceased’s assets within the UAE is also required. As with the death certificate, all these documents must be translated into Arabic by a certified legal translator for judicial proceedings.
3. Court Proceedings: The court will review the application and may require the presence of two male Muslim witnesses to confirm the family members and their relationships to the deceased. The judge may also conduct administrative investigations to verify the information provided.
4. Issuance of Certificate: Once the court is satisfied with the submitted evidence and verification, it will issue the succession certificate, detailing the legal heirs and their respective shares in the estate.

If the deceased had a will (either a foreign will or a UAE-registered will), it should be submitted to the Sharia Court for validation and execution. For foreign wills or court orders (such as Letters of Probate or Letters of Administration from the home country), they must undergo the necessary legalization process (attestation and translation) before being submitted to the UAE Sharia Court. This is done to obtain a local UAE succession certificate or an order for the distribution of UAE assets in accordance with the foreign testamentary document.  

The processing time for obtaining a succession certificate varies significantly depending on the circumstances. A properly registered will significantly streamlines the probate process, reducing the time from potentially 6 to 18 months (without a will) to approximately 1 to 4 weeks (with a will), assuming the process is uncontested and all documents are in order. This direct correlation between having a will and the speed of probate underscores the practical value of proactive estate planning in minimizing administrative burden and financial limbo for heirs. Delays often occur due to missing documentation, disputes between heirs, complex ownership structures, or the need to translate and attest unregistered or foreign wills.  

Section 3: Business Succession Planning and Transfer of Ownership

Impact of Owner’s Death on Business Continuity and Liabilities

The legal structure of the deceased father’s business is paramount in determining the implications of his death on business continuity and the liability for debts. This structural difference profoundly influences the subsequent steps for heirs.

• Sole Proprietorship:
  • In a sole proprietorship, there is no legal distinction between the owner and the business; they are considered one and the same entity. This fundamental lack of separation means the owner has   unlimited personal liability for all business debts and obligations. Consequently, the owner’s personal assets (such as savings, property, and investments) are directly at risk to cover any business liabilities.
  • Generally, a sole proprietorship ceases to exist upon the owner’s death unless specific arrangements for transfer or dissolution have been made. This inherent vulnerability leads to immediate challenges for business continuity, as the legal entity effectively dissolves.
  • Any outstanding business debts become part of the deceased’s personal estate and must be settled from it before any inheritance distribution can occur. The heirs are not personally liable for these debts unless they were guarantors, but the value of the inheritance will be reduced by these liabilities.
• Limited Liability Company (LLC):
  • An LLC is a separate legal entity from its shareholders, offering the crucial benefit of limited liability. This means that shareholders are typically only liable for the company’s debts up to the extent of their capital contribution or investment in the company, thereby protecting their personal assets from business liabilities. This legal separation provides a significant shield against personal financial exposure.
  • However, there are important exceptions to this limited liability. Shareholders can be held personally liable if they signed personal guarantees for company loans, engaged in fraudulent acts, or committed gross misconduct that harmed the company or its creditors. Directors or managers, even if heirs, could also face personal liability if negligence or unlawful actions are involved in the company’s financial distress.
  • The death of a shareholder in an LLC does not automatically extinguish the company, allowing for greater business continuity compared to a sole proprietorship. The company’s operations can, in principle, continue while the share transfer process is underway.

In both business structures, all business assets, including company shares and bank accounts, are frozen upon the owner’s death until a court order authorizes their release and transfer, similar to personal assets. This universal freezing mechanism applies regardless of the business’s legal form. The stark contrast in liability and continuity between sole proprietorships and LLCs underscores that the choice of business structure is a critical succession planning decision, directly influencing the financial risks and operational stability for heirs.  

Specific Procedures for Transferring Business Ownership/Shares

The transfer of business ownership or shares following the owner’s death is a complex process that requires adherence to specific legal and administrative steps. These procedures vary significantly depending on the business’s legal structure (Mainland vs. Free Zone) and the specific Free Zone authority. A court-issued succession certificate or probate order is a prerequisite for any formal transfer, linking the business succession process inextricably to the broader inheritance legal procedures. This foundational court order is the gateway to initiating formal business transfers.  

• Mainland (DED) Companies (LLCs):
  • Key Steps for Share Transfer:
    1. Obtain Succession Certificate/Probate: As detailed in Section 2, this court order formally identifying the legal heirs and their shares is essential.
    2. Review Company Documents: The company’s Memorandum of Association (MoA) or Articles of Association must be reviewed for any specific provisions regarding share transfers upon death, including any pre-emption rights for existing shareholders.
    3. Shareholder Approval: Consent from existing shareholders is typically required, especially if pre-emption rights exist or are stipulated in the MoA.
    4. Draft Share Transfer Agreement (STA): A legal agreement outlining the transfer of shares from the deceased’s estate to the heirs must be drafted. This agreement should include share valuation and must be signed by all parties and notarized to formalize the transaction.
    5. Submit to DED: An application for share transfer, along with all required documents, must be submitted to the Department of Economic Development (DED) in the relevant emirate.
    6. Required Documents: The submission package typically includes the Share Transfer Agreement, an updated MoA reflecting the new ownership structure, copies of passports and Emirates IDs of the legal heir(s), a No Objection Certificate (NOC) from the local sponsor (if applicable), and proof of payment or consideration for the transfer.
    7. Pay Fees: Applicable DED transfer fees must be paid.
    8. Obtain New Trade License: Upon approval, the DED will issue a new trade license reflecting the updated shareholding structure.
  • Foreign Ownership Impact: Recent amendments to the Commercial Companies Law (Federal Decree Law No. 32 of 2021) permit 100% foreign ownership in certain mainland activities, removing the previous 51% UAE national ownership requirement. This legislative change simplifies transfers to foreign heirs in eligible sectors, as the need for a local partner is eliminated, providing greater autonomy for international businesses.
• Free Zone Companies (e.g., DMCC, JAFZA, DDA):
  • Key Steps for Share Transfer: Procedures vary significantly by Free Zone Authority, necessitating a tailored approach. However, common steps generally involve:
    1. Obtain Succession Certificate/Probate: This essential court order is required to prove legal heirship.
    2. Notify Free Zone Authority: The relevant Free Zone Authority (e.g., DMCC, JAFZA, Dubai Development Authority – DDA) must be informed about the intended share transfer.
    3. Submit Documents: Required documents are similar to mainland requirements (passport copies of heirs, death certificate, succession certificate), along with specific Free Zone forms and resolutions. For DDA Free Zones, a Registry Identification Code (RIC) Form for the legal heir(s) is also required.
    4. Amend MoA/AoA: Company constitutional documents must be updated to reflect the new ownership structure.
    5. Pay Fees: Applicable Free Zone fees for share transfer and amendment of Articles of Association must be paid. For DDA, the fee for Article of Association Amendment is AED 500.
    6. Receive Updated License/Certificates: The Free Zone Authority issues updated licenses and new share certificates reflecting the change.
  • Processing times in Free Zones are generally quicker than mainland, typically ranging from 2 to 4 weeks once all documents have been processed. For DDA, the estimated time to deliver is 5 working days.
  • If the deceased shareholder was also the General Manager or Director, a separate application for the change of General Manager/Director must also be submitted.
• Sole Proprietorships:
  • Since a sole proprietorship is not a separate legal entity, its cessation upon the owner’s death often leads to dissolution rather than a direct transfer of the business entity itself. The business assets become part of the deceased’s personal estate and are distributed according to the general inheritance laws after all debts are settled.
  • The process involves applying for cancellation of the trade license through the DED and obtaining clearances from various government bodies, including the Ministry of Human Resources and Emiratisation (MOHRE), Directorate of Residency and Foreigners Affairs, and utility providers. Unlike companies with shares, a legal liquidator is typically not required for sole proprietorships.
  • Required documents for cancellation include the license form, death certificate, and a no objection letter from MOHRE, along with residence cancellation proof for non-Gulf nationals.

The transfer of business ownership upon death is highly dependent on the business’s legal structure and the specific Free Zone authority. This necessitates a tailored approach, as a one-size-fits-all solution is insufficient. The inherent complexities and variations across jurisdictions emphasize the importance of seeking specialized legal advice.

The following table summarizes the key documents generally required for business ownership transfer, categorized by business type:

Table 2: Key Documents for Business Ownership Transfer (by Business Type)

Federal Decree Law No. 37 of 2022 on Family Businesses

Enacted in 2022, Federal Decree Law No. 37 of 2022 concerning family businesses provides a specialized legal framework aimed at ensuring the continuity, asset protection, and formal governance of family businesses across generations in the UAE. This law is a direct response to the significant generational wealth transfer underway in the UAE, with nearly $1 trillion in family-owned assets expected to pass to younger generations by 2030. Without proper planning, family businesses face substantial risks of fragmentation, internal conflict, and operational breakdown.  

The law offers several key provisions that directly facilitate business transfer upon death for family businesses:

• Director’s Role as Trustee: In the event of a partner’s death, the company’s Director (unless the Articles of Association state otherwise) assumes the role of Trustee over the deceased partner’s shares. The Director is then responsible for supervising the transfer of ownership to the heirs, each according to their legal share, and for amending the Articles of Association after settling any related rights or debts. This provision streamlines the immediate aftermath of a partner’s death by assigning a clear oversight role.
• Continuity of Family Business: The law ensures that the character of the Family Business is not extinguished by the death, interdiction, bankruptcy, or insolvency of one of the partners, unless otherwise agreed upon in the Articles of Association. This provision grants the business a period of six months (extendable) to amend its status, promoting operational stability during a transition.
• Heir’s Right to Remain or Dispose: An heir has the right to remain in the Family Business as a partner to the extent of their inherited share. Alternatively, the heir can dispose of their share, provided this adheres to the law’s conditions for share disposal, which typically involve offering shares to other family partners first. This provides flexibility for heirs regarding their involvement in the business.
• Validation of Prior Actions: The law clarifies that pre-death arrangements made by family members for the ownership and transfer of shares or assets (e.g., through sale, donation) are not considered a violation of the Personal Status Law, provided they are accomplished during the acting partner’s lifetime. This provision validates proactive succession planning measures.

The Federal Decree Law No. 37 of 2022 encourages families to establish formal succession plans, which are critical for the long-term stability of family-owned businesses, a sector that constitutes 80% of the private economy in the UAE. The law allows for the creation of family constitutions to define governance rules, and facilitates asset protection through structures like holding companies, foundations, or trusts. These structures, particularly those offered by the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), provide modern legal frameworks aligned with common law, offering enforceable mechanisms for wealth management and succession. Registering a family business under this law with the Ministry of Economy provides legal recognition and a structured approach to generational transfer.  

Section 4: Cross-Border Tax and Financial Considerations

UAE Tax Implications for Inherited Assets

The UAE offers a highly tax-efficient environment, particularly concerning inheritance. There is no direct inheritance tax imposed on assets inherited from a deceased individual in the UAE. This means beneficiaries do not incur a specific levy on the value of the inheritance received. Similarly, there is no capital gains tax on death, and no estate tax. This absence of direct inheritance-related taxes facilitates a seamless intergenerational transfer of assets, making the UAE a strategic choice for estate planning.  

However, while there is no direct inheritance tax, other taxes or fees may apply indirectly or upon subsequent transactions involving inherited property:

• Transfer Tax: If the heir later decides to sell inherited real estate, a transfer tax will apply. This tax is typically paid by the seller (the heir) to the relevant authorities, and its exact rules and regulations can vary by municipality. For example, a 4% registration fee may apply when re-registering property rights.
• Capital Gains Tax on Sale: While there is no capital gains tax on death, if inherited property is sold after three years of inheritance, capital gains tax may apply to the profit.
• Property Tax and Rental Income Tax: Inherited properties may be subject to annual property tax based on their rental value (varying by municipality) and rental income tax (5% for residents; 20% for non-residents) if they generate rental income.
• Court and Notary Fees: Heirs will incur court fees and potential notary costs during the probate and asset transfer processes.

For expatriates, the flexibility introduced by recent laws allowing the application of their home country’s laws for asset distribution (unless a will specifies otherwise) simplifies succession planning, especially for those with assets across multiple jurisdictions.  

Home Country (Expatriate’s Nationality) Tax Implications

For children residing in the UAE inheriting assets from their expatriate father who passed away outside the UAE, it is crucial to consider the tax implications in the father’s home country (country of nationality), as well as any other countries where assets are located. This is particularly important because different countries have varying inheritance tax laws, estate duties, and forced heirship rules.  

• Inheritance Tax/Estate Duty: Unlike the UAE, many countries impose inheritance tax or estate duty on the value of wealth bequeathed at death. The applicability and rates often depend on the deceased’s residency or domicile status, the value of the estate, and the relationship between the deceased and the beneficiary. For instance, the UK imposes inheritance tax on worldwide assets if the deceased was UK domiciled, even if residing in Dubai. Rates can be substantial, with some countries imposing rates as high as 55%.
• Double Taxation: Expatriates often face unique challenges, including the risk of double taxation if two countries claim the right to tax the same inherited property. This can significantly reduce the value of the inherited estate. Many countries have signed Double Taxation Agreements (DTAs) to prevent this, clarifying which jurisdiction has the primary taxing rights. It is imperative to consult these treaties to understand potential relief.
• Residency and Domicile: The deceased’s residency and domicile status at the time of death are critical factors. Domicile, which can be distinct from residency, determines which country’s inheritance tax laws apply to worldwide assets. This can be a complex determination for expatriates with ties to multiple countries.
• Tax on Income/Capital Gains from Inherited Foreign Assets: While India, for example, does not impose inheritance tax on property received by Non-Resident Indians (NRIs), any income generated from such inherited assets (e.g., rental income) or capital gains upon their sale would be subject to tax in India. NRIs selling inherited property in India would be subject to capital gains tax, and the buyer might be required to deduct Tax Deducted at Source (TDS). Repatriation of sale proceeds from India is allowed up to a certain limit (e.g., $1 million per financial year for NRIs) without prior RBI approval, subject to certain conditions and tax payments.

Given these complexities, it is highly advisable for heirs to seek assistance from knowledgeable tax consultants specializing in cross-border inheritance. Such professionals can help navigate differing tax laws, identify potential tax reliefs and exemptions, and ensure compliance with regulations in all relevant jurisdictions, thereby minimizing the overall tax burden and administrative complications. Utilizing wealth preservation structures like trusts and foundations, often established in jurisdictions like the DIFC or ADGM, can also offer tax efficiency and asset protection for cross-border holdings.  

Conclusion and Recommendations

Navigating the legal landscape of inheritance and business succession in the UAE for expatriates, especially when the death occurs abroad, is a multifaceted and intricate process. The analysis reveals a dynamic legal environment in the UAE, which has significantly evolved to provide greater flexibility and protection for non-Muslim expatriates, moving away from a strict default to Sharia law. This shift allows for the application of home country laws or the clear directives of a registered will.

However, the process remains complex due to the interplay of multiple jurisdictions, the mandatory freezing of assets upon death, and the distinct procedural requirements for different types of assets and business structures. The critical importance of proactive estate planning cannot be overstated. Without a properly executed and registered will, families risk prolonged legal battles, asset distribution contrary to the deceased’s wishes, and significant financial and emotional strain.

The efficiency of the probate process is directly correlated with the existence of a clear, legally recognized will, dramatically reducing processing times from many months to mere weeks. Furthermore, the legal structure of a business profoundly impacts its continuity and the personal liability of heirs, highlighting that a sole proprietorship is inherently more vulnerable than a limited liability company.

Based on this comprehensive review, the following recommendations are provided for children in the UAE seeking to take over their expatriate father’s assets and business interests:

1. Prioritize Will Registration: If a will does not exist or is not registered in the UAE, initiate the process of obtaining a succession certificate or probate order immediately. If a foreign will exists, ensure it is properly legalized (attested and translated) for recognition in the UAE. For future planning, strongly advise family members with assets in the UAE to register a local will (preferably with the DIFC Wills Service Centre or ADJD) to ensure their wishes are honored and to streamline the succession process.
2. Secure Emergency Liquidity: Be prepared for the immediate freezing of all UAE-based assets upon notification of death. Ensure access to sufficient emergency funds or life insurance proceeds to cover immediate expenses, funeral costs, and ongoing family needs during the probate period.
3. Understand Business Structure Implications: Recognize that the process of taking over a business varies significantly based on its legal form. For sole proprietorships, prepare for dissolution and asset distribution through the personal estate. For LLCs and Free Zone companies, understand the specific share transfer procedures of the relevant authority.
4. Leverage Family Business Law (if applicable): If the deceased’s business qualifies as a family business under Federal Decree Law No. 37 of 2022, explore the provisions that facilitate continuity and structured ownership transfer, including the Director’s role as Trustee over shares.
5. Seek Expert Legal and Tax Counsel: Due to the intricate nature of cross-border inheritance, coupled with UAE-specific laws and potential tax implications in the home country, engaging specialized legal and tax advisors is paramount. Their expertise will ensure compliance, mitigate risks, and optimize the transfer process, providing invaluable guidance through this challenging period.