The Dubai International Financial Centre (DIFC) is a jurisdiction (free zone) within the United Arab Emirates (UAE) that operates under its own legal system, separate from the UAE's civil and commercial laws. The DIFC was established in 2004 to promote and facilitate financial and commercial activity within the region. One of the key features of the DIFC legal system is the DIFC Wills and Probate Registry, which was established in 2015 to allow non-Muslim individuals to register and have their wills recognized and enforced in the UAE.
The DIFC Wills and Probate Registry offers a number of benefits to individuals who have assets in the UAE. One of the most significant benefits is that it allows non-Muslims to avoid the application of Sharia law to their assets. Under Sharia law, the distribution of an individual's assets is determined by a fixed set of rules that are based on Islamic principles. This can result in a distribution of assets that is different from what the individual would have wanted or expected. The DIFC wills system allows individuals to have their assets distributed according to their wishes, rather than being subject to the rules of Sharia law.
Another benefit of the DIFC wills system is that it allows for a more streamlined probate process. In the UAE, the probate process can be complex and time-consuming, particularly for non-Muslims who are subject to the application of Sharia law. The DIFC wills system allows for a simpler and more efficient probate process, which can save time and money for individuals and their families.
While the DIFC wills system offers significant benefits to individuals who have assets in the UAE, one question that arises is whether these wills are recognized in other countries outside the UAE and whether assets located outside the UAE are covered by a DIFC will. This is an important consideration for individuals who have assets in multiple jurisdictions, as they will want to ensure that their wills are recognized and enforced in all relevant jurisdictions.
The recognition of a will in a foreign jurisdiction is generally governed by the laws of that jurisdiction. In many cases, a will that is validly executed in one jurisdiction will be recognized and enforced in another jurisdiction. However, there are some important considerations that individuals should be aware of when it comes to the recognition of DIFC wills in other countries.
Firstly, it is important to note that the recognition of DIFC wills in other countries will depend on the specific laws of those countries. While many countries have laws that recognize foreign wills, there may be some countries where the recognition of DIFC wills is not guaranteed. It is therefore important for individuals to consult with legal experts in each relevant jurisdiction to determine whether their DIFC wills will be recognized and enforced.
Secondly, even in countries where foreign wills are recognized, there may be limitations on the types of assets that can be included in a foreign will. For example, some countries may not recognize foreign wills that include real estate located in that country. Again, it is important for individuals to consult with legal experts in each relevant jurisdiction to determine the limitations on the types of assets that can be included in their DIFC wills.
Thirdly, even if a DIFC will is recognized in a foreign jurisdiction, there may be additional legal requirements that must be met in order for the will to be enforced. For example, some countries may require that the will be translated into the local language or that it be validated by a local court. It is therefore important for individuals to be aware of any additional legal requirements that may apply in each relevant jurisdiction.
Fourthly, a DIFC Will may be challenged by third parties in a foreign country, based on the laws of that country. For example, if a person creates a DIFC Will that disinherits a child, and that child resides in a country that recognizes forced heirship laws, then that child may be able to challenge the Will in that country. Similarly, if a person creates a DIFC Will that distributes assets in a manner that is inconsistent with the laws of the country where those assets are located, then third parties in that country may be able to challenge the Will.
Fifthly, it is also worth noting that even if a DIFC Will is recognized in a foreign country, it may still be subject to challenges by third parties based on allegations of fraud, undue influence, or lack of capacity. These challenges may arise regardless of the legal requirements of the country where the Will is being enforced and may require a court to consider evidence regarding the circumstances surrounding the creation of the Will.
Despite these potential limitations, there are many countries where DIFC wills are likely to be recognized and enforced. This includes many common expat destinations such as the United Kingdom, Australia, and Canada, as well as other countries that have laws that recognize foreign wills.
In the United Kingdom, for example, foreign wills are generally recognized as long as they are validly executed in the country where they were created. This means that a DIFC will that is validly executed in the UAE is likely to be recognized and enforced in the UK, provided that it meets certain requirements. These requirements include being in writing, being signed by the testator and witnesses, and complying with any local legal requirements.
Similarly, in Australia, foreign wills are generally recognized as long as they are validly executed in accordance with the law of the place where they were created. This means that a DIFC will that is validly executed in the UAE is likely to be recognized and enforced in Australia, provided that it meets certain requirements. These requirements include being in writing, being signed by the testator and witnesses, and complying with any local legal requirements.
In Canada, the recognition of foreign wills is governed by the provincial laws of each jurisdiction. In general, however, foreign wills are recognized as long as they are validly executed in accordance with the law of the place where they were created. This means that a DIFC will that is validly executed in the UAE is likely to be recognized and enforced in Canada, provided that it meets certain requirements. These requirements include being in writing, being signed by the testator and witnesses, and complying with any local legal requirements.
It is important to note, however, that the recognition of DIFC wills in other countries is not guaranteed. There may be some jurisdictions where foreign wills are not recognized, or where there are limitations on the types of assets that can be included in a foreign will. It is therefore important for individuals to seek legal advice in each relevant jurisdiction to determine the specific requirements for the recognition of their DIFC wills.
In addition to the recognition of DIFC wills in other countries, it is also important to consider the tax implications of having assets in multiple jurisdictions. In some cases, having assets in multiple jurisdictions can result in complex tax issues that need to be addressed in a will. For example, if an individual has assets in the UAE, the UK, and the US, they may be subject to both UK and US inheritance tax. It is therefore important for individuals to seek professional tax advice in each relevant jurisdiction to ensure that their DIFC wills are structured in a way that minimizes their tax liability.
In conclusion, the recognition of DIFC wills in other countries outside the UAE will depend on the specific laws of those countries. While many countries have laws that recognize foreign wills, there may be some jurisdictions where the recognition of DIFC wills is not guaranteed. It is therefore important for individuals to seek legal advice in each relevant jurisdiction to determine the specific requirements for the recognition of their DIFC wills. In addition, it is important to consider the tax implications of having assets in multiple jurisdictions and to seek professional tax advice in each relevant jurisdiction to ensure that their DIFC wills are structured in a way that minimizes their tax liability. Overall, while the DIFC wills system offers significant benefits to individuals who have assets in the UAE, it is important for individuals to carefully consider the implications of their DIFC wills in other countries and to seek professional advice to ensure that their wishes are properly documented and enforced.
Independent law firms are rarely familiar with the inheritance laws of multiple countries. We here at The Dubai Navigator know the inheritance laws of all major investment countries and have built a network of fully licensed lawyers across the world, allowing us to prepare watertight multi-country wills that are executable and tax-optimized. Check out our multi-country estate planning services here.
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