Presentation Transcript

1. ASSET PROTECTION Symposium: the impact of laws on inheritance

   THE LEGAL LANDSCAPE OF THE LAW OF INHERITANCE APPLYING TO EXPATRIATES: An Overview and Practical Aspects Prepared and Presented by Adv. Samir A. Salloum 28th February 2011 Abu Dhabi Chamber of Commerce & Industry
2. CHAPTER I INHERITANCE
3. Law Governing Inheritance Question: Does the UAE have a law regulating the inheritance or the will of a resident expatriate? Answer: Yes. Two laws do so: Civil Transactions Law, UAE Federal Law No. 5 of 1985; and Personal Status Law, UAE Federal Law No. 28 of 2005
4. There is no inheritance without death. Therefore it is essential to prove that death has occurred. No proof of death No estate No inheritance Proof of death Death Certificate
5. Death Certificate Proof of death depends on the jurisdiction in which the death occurs. UAE Abroad Issued by competent authority in each Emirate. Issued by competent authority in the jurisdiction where the death occurs. Becomes a proof of death acceptable in UAE after attestation and legalisation by: Ministry of Foreign Affairs in foreign jurisdiction U.A.E Embassy in foreign jurisdiction Ministry of Foreign Affairs in U.A.E Translation into Arabic Death Certificate Contents: Name Surname Nationality Date & time of Death Cause of Death
6. Death Certificate (ctd) It is very important to establish both: the authenticity of a death certificate; and the authority of the relevant competent authority to issue it. This is to avoid disputes (for example, where the person named in such document is not actually dead, but instead missing or absent).
7. Collection of Estate in UAE No Assets Assets No estate Therefore no inheritance Salaries and end of service benefits Insurance benefits (if applicable) Ownership in companies/sole proprietorships/partnerships Bank accounts (including joint accounts – to be discussed later) Vehicles Real Estate Income from investments Diya/Blood Money (if applicable) etc…
8. Question: Who has the right to claim the Estate? Answer: The heirs; The beneficiaries of a duly constituted will. If neither exist, the state.
9. Question: How do we determine who the heirs are, and the share of each in the Estate? Answer: Depends on the applicable law.
10. Applicable Law Civil Transactions Law, UAE Federal law No. 5 of 1985 Art. 17 stipules that inheritance shall be subject to the law of the deceased at the time of death. Example: An Argentinean national passes away. Argentinean law applies to determine the heirs and their share in the Estate. This principle also applies to wills.
11. Applicable Law (ctd) Personal Status Law, UAE Federal law No. 28 of 2005 Article 1(2) of its general provisions stipulates that: Provisions of the Personal Status Law shall apply to the citizens of the UAE unless the non-Muslims of them are subject to special provisions applicable to their sect and denomination. The Personal Status Law shall apply also to non-UAE nationals, unless one of them insists on the application of their national law. Article 1(2) of the Personal Status Law may be seen as a limitation on the general principle in Art. 17 of Civil Transactions Law.
12. Question: What will happen if none of the heirs insists on the application of the law of the deceased? Answer: UAE law shall apply to the estate. The heirs and their respective share of the estate shall be determined accordingly.
13. Question: How and when should the heirs choose to apply the law of the deceased? Answer: At the first appearance before the court in the UAE, the heirs, or one of them must expressly request the application of the national law of the deceased. This is well established by court precedents both in Dubai and in Abu Dhabi. It should be noted that it may not be sufficient to simply submit a judgment from the country of the deceased.
14. Choice of UAE Law Further to Art. 276 of the Personal Status Law, the person requesting declaration of death and inheritance should submit an application to the court mentioning the: Date of death. Last domicile of the deceased. Names of the heirs and the domicile of each. Names of any beneficiaries of a will and the domicile of each. A list of assets of the deceased. The application should be supported by the testimony of two (Muslim) witnesses. The Court shall issue a judgment determining the heirs and the share of each. Such judgment shall serve as evidence with determinative effect unless a ruling to the contrary is issued.
15. Choice of the National Law of the Deceased Where there is a Judgment of Inheritance The heirs should obtain a judgment of inheritance from a competent court of law in the jurisdiction of the deceased. Such judgment of inheritance should be legalised and attested (by the Ministry of Foreign Affairs and UAE Embassy in the foreign jurisdiction, followed by the Ministry of Foreign Affairs in the UAE) and translated into Arabic. The judgment may then be submitted to the courts in the UAE for execution. N.B.: UAE courts should apply the law of the deceased if expressly requested by any one of the heirs at the first hearing.
16. Choice of the National Law of the Deceased (ctd) Where there is no Judgment of Inheritance If the system in the foreign jurisdiction does not provide for issuance of a judgment of inheritance from a competent court (e.g.: England & Wales, Japan), then the heirs must prove to the courts in the UAE how under such jurisdiction: the heirs are determined; and the estate is distributed. All documents submitted to the court should be legalised and attested (by the Ministry of Foreign Affairs and UAE Embassy in the foreign jurisdiction, followed by the Ministry of Foreign Affairs in the UAE) and translated into Arabic.
17. Proving a Foreign Law Heirs seeking to apply provisions of a foreign law before a court in the UAE must prove such provisions. The procedure for proving a foreign law will be governed by: the Civil Procedure Law, UAE Federal Law No. 11 of 1992 (as amended); and the Law of Evidence in Civil and Commercial Transactions, UAE Federal Law No. 10 of 1993 The provisions of the foreign law as well as guides to its interpretation (e.g.: court precedent, scholarly articles, etc…) should be provided to the courts in the UAE in order to prove its application. All documents submitted to the court should be legalised and attested (by the Ministry of Foreign Affairs and UAE Embassy in the foreign jurisdiction, followed by the Ministry of Foreign Affairs in the UAE) and translated into Arabic.
18. Question: When is the application of UAE law compulsory? Answer: Where there is no express choice of the national law of the deceased Where the deceased has no nationality When the national law of the deceased has not been proved When there is conflict of foreign laws (for example where a deceased person has multiple nationalities and has wills/judgments of inheritance from each jurisdiction) On immoveable property (real estate) in the UAE(what constitutes immoveable property will be decided by the UAE courts in accordance with UAE law) Where there is a violation of Islamic Sharia, or public order or morals in the UAE (will be discussed in more detail later)
19. CHAPTER II WILLS
20. Key Aspects of a Will Form: i.e.: The requirements for creation of a will: Identity of testator; Age of majority of testator; Soundness of mind of testator; Express statement that a will is being made; Identity of beneficiaries; Witnesses; and Other requirements (e.g.: signature before Notary Public) Contents: i.e. The provisions of the will, namely: Naming the person/persons who will manage the estate of the testator after their death; A description of the estate of the testator; and Setting out how the estate is to be divided among the beneficiaries.
21. Applicable Law to the Form of a Will Either: The national law of the deceased at the time the will was made (the beneficiaries (or any one of them) must prove that the form is in conformity with the provisions of the national law of the deceased); OR The law of the state where the will was made. Therefore, if the will is made in the UAE then UAE law may be applicable. It is therefore advisable for an expatriate making a will in the UAE, to specify that: the will is being made in accordance to the national law of the testator; and the testator requires that their national law be applied, both as to the form and content of the will.
22. Applicable Law to the Contents of a Will The national law of the deceased. The beneficiaries (or any one of them) must insist on the application of the will at the first hearing before the courts in the UAE when executing it. The beneficiaries (or any one of them) must prove that the provisions of the will are in conformity with the national law of the deceased.
23. Exceptions to the Application of Expatriate’s National Law UAE law will apply regardless of the provisions of a will: In respect of real estate in the UAE; or Where the provisions violate: Islamic Sharia public order or morals in the UAE
24. Violation of Public Order or Morals There is no definition in the Civil Transactions Law of what constitutes a violation of Islamic Sharia, or of public order or morals in respect of expatriates. Therefore we must look to the Islamic Sharia for answers. It is a well known and established principle both under Islamic Sharia as well as court precedents in the UAE that a Muslim expatriate should obey: the Quran the Islamic Sharia the rules of Islamic public order or morals Therefore, as regards a Muslim expatriate, both inheritance and will shall be subject to UAE law.
25. Violation of Public Order or Morals (ctd) As regards a non-Muslim expatriate, there is no unified jurisprudence as to what constitutes a violation of Islamic Sharia, or public order or morals in the UAE. There have been cases in Dubai where the Court of Cassation has decided that provisions of foreign law which conflict with UAE inheritance law as set out in the Civil Transactions Law and the Personal Status Law may apply as long as the deceased and their heirs are not UAE citizens or Muslims.
26. Verbal Disposal Further to Art. 1259 of the Civil Transactions Law, both: an oral disposal of assets after death; or an oral revocation of a written and duly executed will; shall not be heard by a court of law if denied by a party having an interest.
27. CHAPTER III JOINT ACCOUNTS
28. Common Misconception A common misconception in respect of joint accounts is that on death of a co-signatory the surviving co-signatory become the sole account holder and may alone withdraw or otherwise dispose of the proceeds of the joint account. However, the law in the UAE provides otherwise.
29. Joint Accounts under UAE Law Art. 379 (1) of the Commercial Transactions Law, UAE Federal Law No. 18 of 1993, defines a joint account as an account owned in equal proportion by the co-signatories unless they agree a different proportion between them. Further to Art. 379 (4), in the event of death of a cosignatory the other has the obligation to notify the bank within 10 days of such death. The bank is obliged to freeze the account from such notification until the successors of the deceased are nominated. It should be noted that the bank may not be held responsible for the consequences of the freezing of such account. The courts in the UAE will distribute the proceeds of the joint account to the heirs of the deceased in conformity with the proportion the account holders have specified. If no such proportion was specified, the court shall distribute half to the heirs.
30. Joint Accounts under UAE Law (ctd) Some banks provides in their joint account opening forms for the proceeds of the joint account to go to the surviving co-signatory(ies) in the event of the death of one of them. In a recent judgment of the Abu Dhabi Court of Appeal in 2010, it was decided that this condition was contrary to Art 379 of the Commercial Transactions Law and was therefore null. Further the court said that such clause was not a will and that even if it was considered as a will it would require the agreement of all the heirs.
31. Joint Accounts under UAE Law (ctd) If the intention of the joint account holders is for the surviving co-signatory(ies) to claim the proceeds of the account then it may be possible to provide for this through the signature of an addendum to the joint account opening form being signed before the bank, which would take the form of a mirror will. In my opinion, such a mirror will should be valid where: the deceased co-signatory is not Muslim; and none of the heirs are Muslim; and such provision is in conformity with the deceased’s national law; and The parties concerned should insist on the application of such national law. It should be noted that this has not been tested before the courts.
32. CHAPTER IV IDEAS TO REGULATE YOUR ASSETS
33. When purchasing real estate in the UAE, do so through a foreign company (jointly owned by you, your spouse and/or your children, for example). As regards cash at a bank, you may also open a non-resident account for such a foreign company. You may provide yourselves and/or your spouse and/or your children with a power of attorney to manage the affairs of such foreign company. Consult an expert in the field of succession planning.
34. CHAPTER V MINOR CHILDREN
35. Appointment of Guardian Parents of minor children should foresee the possibility of the death of both parents and prepare for the temporary or permanent guardianship of such minors resident in the UAE. In this respect it is advisable that such instructions be made before, and lodged at, the embassy of which the parents are nationals. The parents should determine the permanent guardian(s). If such permanent guardian(s) are not resident in the UAE, or may be unable to come to the UAE to collect the children within a period of time, the parents should also appoint a temporary guardian who shall take them to the permanent guardian, or otherwise care for them until such time as the permanent guardian appears to collect them. N.B.: The parents should obtain the approval of the person(s) they wish to nominate as temporary or permanent guardians.
36. THANK YOU FOR YOUR ATTENTION