UAE Law and Practice Contributed by: Ildar Yuvakaev, Ruslan Akhmetov, Olga Serova and Daiana Ubushaeva, Consigliere Group
testing their tax, reporting and controlled-entity treat - ment in every relevant jurisdiction. 2.3 Forced Heirship Laws For estates governed by the Muslim Personal Status Law, testamentary freedom is limited. After funeral expenses and debts, a will generally operates within one third of the estate; a disposition exceeding that limit is dependent on the heirs’ approval, while the balance passes to the prescribed heirs. The law also provides a mandatory will, within the statutory limit, for qualifying descendants of a child who predeceased the testator. There are consensual alternatives. After death, com - petent heirs may document an al - takharuj arrange - ment under which one or more heirs relinquish all or part of their shares for agreed consideration. Genu - ine lifetime gifts and properly constituted ownership structures may also alter what falls into the estate, but they must be completed in substance and should not prejudice creditors or rely on nominal ownership. Non-Muslims may leave their UAE estate to any cho - sen beneficiary. In the absence of a registered will, the federal civil regime generally allocates one half to the surviving spouse and the other half equally among the children. 2.4 Marital Property The UAE does not apply a general community-prop - erty regime. Under the Muslim Personal Status Law, each spouse has an independent financial estate and may deal with property registered solely in their name without the other spouse’s consent. Jointly owned property remains subject to ordinary co-ownership rules. Where one spouse can prove a material contri - bution to developing the other spouse’s property or business, the court may recognise a corresponding entitlement. Prenuptial and postnuptial arrangements are gener - ally treated as contractual arrangements, particularly under the non-Muslim civil marriage regime, which expressly allows spouses to agree financial terms for the marriage and its termination. To improve enforce - ability, the agreement should be clear, voluntary, prop - erly executed, based on adequate disclosure and con -
sistent with mandatory law and UAE public order. It should also be reflected in title records, shareholder documents and foreign planning where relevant; the agreement alone does not transfer legal title or bind third parties. 2.5 Transfer of Property A lifetime gift or transfer on death does not produce an automatic UAE tax-basis step-up to market value. As stated in 1.1 Tax Regime , for private assets outside a business, basis is often not immediately relevant. Where the asset is held in a taxable business or com - pany, its carrying value and tax basis is determined under the applicable accounting and corporate tax rules, and related-party dealings must satisfy the arm’s length principle. Registration, trustee, free zone or corporate-transfer fees may still apply. Clients should retain acquisition documents and obtain a contemporaneous valuation, since a later disposal may be taxed in another jurisdic - tion by reference to historic cost rather than the value at the date of gift or death. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms Transfers of assets to the younger generation do not trigger UAE tax consequences, as the UAE does not impose inheritance tax, gift tax or personal income tax. Therefore, succession planning is primarily focused on ownership continuity, preservation of family wealth and orderly transfer of control. In practice, families use a combination of lifetime gifts, holding companies, foundations, trusts and wills. Holding companies allow consolidation of operating and investment assets and transfer of control at the holding level. UAE free zone holding companies may benefit from the 0% corporate tax rate on qualifying income, subject to applicable conditions. Foundations and trusts, particularly in the ADGM and DIFC, are commonly used to hold family wealth and establish governance frameworks beyond the found - ing generation. Depending on their legal form and activities, they may be treated as tax transparent for UAE corporate tax purposes.
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