Overseas assets and Australian wills case study: Dubai
Do you own overseas assets? If the answer is yes, then you need to make sure you have the correct will or the right asset plan in place.
Why? Suppose you are an Australian citizen who owns assets in both Dubai and Australia. You have an Australian will but haven’t made a United Arab Emirates will. If you were to die, your overseas assets may not be distributed in accordance with your Australian will, or your wishes.
Probate may not be granted for overseas assets in an Australian will
Did you know that your Australian will might only deal with your Australian assets?
While the executor can be granted probate in each Australian state where you hold assets, it cannot always be granted or re-sealed overseas.
This means your Australian will may not cover your overseas assets.
If you have assets in Dubai but only an Australian will, how will your estate be distributed?
In Dubai, when there is no United Arab Emirates will, the Sharia court assesses the circumstances of the deceased to determine how their assets will be distributed.
If the deceased has no surviving spouse or heir of the spouse, then the assets will go to the eldest male relative.
While there is an option to attend the United Arab Emirates court to seek an order for the Australian will to be binding, it is, however, very expensive and there is a risk that the application will not be successful.
Assessing who the rightful heirs are under Sharia law
Where a deceased person has assets in Dubai but no applicable will, their solicitor in Dubai will apply for a succession certificate after assessing who is entitled to the assets. If a child was born out of wedlock, it is unlikely they will be entitled to any inheritance, unless they are the only surviving heir.
A Dubai solicitor cannot automatically act for an heir. To do so, they must have a signed Power of Attorney. If the heir resides in Australia, then the Power of Attorney must be notarised by a Notary Public authenticated by the Department of Foreign Affairs and legalised by the United Arab Emirates embassy. This process is slow and expensive.
Transferring overseas assets that are held in Dubai to the appointed heir
Once the Sharia court has determined who the rightful heir is under the Sharia law, the solicitor can apply to the court to have the assets transferred into the heir’s name.
There is a fee for transferring assets and if, for example, the monetary value of a bank account is unknown or small, the fee will often outweigh the value of the asset. If this occurs and the heir chooses not to transfer the asset, it will then likely go to the government.
What happens to the deceased’s Dubai property if it is mortgaged?
Where the deceased owns real property, it is usually worth transferring it into the heir’s name, even if it is mortgaged. This is because all property mortgages must be insured in Dubai and in the event of death, the insurer will pay out the entire value of the mortgage.
Note that in some circumstances, such as where there has been a non-disclosure of a pre-existing medical condition, the insurer will not pay out the mortgage.
If the heir decides to then sell the asset, including real property, the Dubai solicitor must have a new Power of Attorney signed by the heir.
Distribution of assets without a will can take years in Dubai
Dealing with the overseas assets of a deceased person can be a long process in Dubai. It also entails a risk where if a person’s assets are left unattended for a number of years, they could significantly diminish in value, due to lack of maintenance.
It’s important to note that in the case of real property, the deceased’s solicitor in Dubai has no right to obtain keys to the premises until after the court has ordered the transfer of the asset to the heir.
If you think you will be left out of a Sharia succession certificate, it is possible to work around the Sharia law. However, it is very complex and risky.
Due to this, it’s highly advisable to find an experienced Australian lawyer to help you with the entire process.