Inheritance in the UAE - What Happens to a German Entrepreneur's Assets Without a Will

Federal Decree-Law No. 41/2022 on Civil Personal Status fundamentally restructured inheritance law for non-Muslims in the UAE. Since its entry into force, non-Muslims may dispose of their entire UAE estate by will - without the restrictions of Islamic inheritance law, in particular without the compulsory portions for certain relatives.

If no will exists, the statutory succession under FDL 41/2022 applies: 50 percent of the estate goes to the surviving spouse, 50 percent is distributed equally among the children. Unlike Islamic inheritance law, no distinction is made between sons and daughters. If there is no spouse, the children inherit in equal shares. If there are no children, the spouse inherits alone.

The stricter innovation concerns cases where no identifiable heirs exist. Under the UAE Civil Transactions Law as amended in 2026, financial assets of a foreigner without identifiable heirs in the UAE are treated as a charitable endowment under the supervision of the competent authority. The assets do not pass to the deceased's home state but are treated in the UAE as a form of charitable gift ultimately benefiting certain welfare organisations in the UAE.

Upon the death of an account holder in the UAE, all bank accounts are immediately frozen. The bank releases funds only upon presentation of a certificate of inheritance or a court order. Without a registered will, this process can take months - in complex cases even years. During this time, neither the spouse nor the children have access to the accounts - regardless of any power of attorney, which expires upon the death of the principal.

The DIFC Wills Service Centre has offered the option of registering a will based on common-law principles since 2015. The will is drafted in English and covers all assets in the UAE - including real estate, bank accounts, company shares, vehicles, and insurance policies. The Abu Dhabi Judicial Department offers a comparable registration. Costs are approximately AED 10,000 to AED 15,000 (approx. EUR 2,500 to EUR 3,750) for the initial registration.

A registered will significantly accelerates estate administration. Instead of court proceedings to determine the heirs and their respective shares, the registered will takes direct effect. The release of accounts, the transfer of real estate at the Dubai Land Department (DLD), and the re-registration of company shares are all carried out on the basis of the will - without prior probate proceedings.

The EU Succession Regulation (EU-ErbVO) provides in Article 21(1) that the entire succession upon death is governed by the law of the state in which the deceased had his habitual residence at the time of death. For a German entrepreneur habitually resident in the UAE, this means in principle: UAE inheritance law applies.

This result is, however, modified by two qualifications. First: The UAE is not a member state of the EU Succession Regulation. The Regulation nevertheless applies because it has universal application - it determines the applicable law regardless of whether the designated state is an EU member. Second: For real estate in Germany, the situs principle applies. German real property is subject to German inheritance law - regardless of the habitual residence of the deceased.

In practice, this results in an estate split: UAE assets are governed by UAE inheritance law (FDL 41/2022), while German assets are governed by German inheritance law. For German assets, the compulsory portion right under Sections 2303 et seq. of the German Civil Code (BGB) remains relevant. Descendants and the spouse of the deceased who are excluded from succession by a will are entitled to the compulsory portion - half the value of the statutory share.

Bank accounts are directly affected. They are immediately frozen upon death - across all banks in the UAE simultaneously. Joint account holding does not protect against this - joint accounts are also frozen until entitlement to inherit has been established.

Company shares are particularly at risk. If the deceased is the sole shareholder of a DMCC company, a JAFZA company, or a mainland LLC, management comes to a standstill. Contracts cannot be concluded, invoices cannot be paid, employees cannot be directed. The free zone or the Department of Economic Development (DED) requires the presentation of a certificate of inheritance or a court order before the shares can be transferred.

Real estate falls under the jurisdiction of the Dubai Land Department (DLD) or the respective land registry authority of the emirate. A transfer to the heirs requires the presentation of a certificate of inheritance, a registered will, or a court order. Without these documents, the property remains registered in the name of the deceased. Rental income is credited to the frozen bank account and is inaccessible.

Vehicles, insurance policies, and other assets are subject to comparable freezes. The vehicle registration authority (RTA in Dubai) transfers vehicles only on the basis of a certificate of inheritance or a will. Life insurance policies with a named beneficiary are generally paid out directly - they are not subject to probate proceedings.

The first and most important measure is the registration of a will with the DIFC Wills Service Centre or the Abu Dhabi Judicial Department. The will should cover all UAE assets and include clear provisions for distribution. It should name an executor and include substitute provisions in case the primary heir predeceases the testator. A separate will should also cover the German side, coordinated with the UAE will and, where appropriate, supplemented by a continuing power of attorney and a living will.

The second planning level is the foundation. A DIFC Foundation or ADGM Foundation holds assets as an independent legal entity. The founder transfers assets to the foundation, which then no longer belong to him personally. Upon the death of the founder, nothing changes at the foundation level - the assets remain in the foundation, and the council continues to manage them according to the rules of the charter. There is no probate, no account freeze, no delay.

Trusts offer a comparable function but are less familiar in the German legal system and can give rise to complex tax interactions, particularly with regard to Section 15 of the German Foreign Tax Act (AStG) (attribution of income of foreign family foundations and comparable legal forms).

Joint ownership with a right of survivorship is another option for real estate and bank accounts. Upon the death of one co-owner, the share passes automatically to the surviving co-owner - without probate proceedings. The DLD has offered this form of registration for several years.

Powers of attorney expire upon the death of the principal. They are therefore not an instrument of succession planning. They may, however, be useful in the phase before death if the principal becomes incapacitated.

Every German entrepreneur with assets in the UAE should have a registered will. The costs are manageable; the benefit in an inheritance case is considerable. We also recommend a separate will to regulate succession in Germany, as well as, where appropriate, a continuing power of attorney and a living will. Those who wish to professionalise their succession planning further - family cohesion, business continuity, liability separation, multi-generational asset protection - should consider various foundation or trust structures.

The interaction with German inheritance law and, above all, German inheritance tax law must be considered in every case. The compulsory portion right under Sections 2303 et seq. BGB and the EU Succession Regulation also remain relevant.

Cross-border matters between Europe and the UAE are complex. The right approach must take into account the legal situation in both jurisdictions - corporate, tax, regulatory, and personal considerations.

Eisenberg Europe & Middle East is a German law firm with offices in Abu Dhabi, Dubai, Frankfurt, Hamburg, and Tel Aviv.

We advise individuals, families, and companies on structuring their affairs between the German-speaking region and the UAE - from relocation planning and company formation to real estate transactions, asset protection, and intergenerational succession.

If you would like to learn which options may suit your situation, we would be pleased to offer you a confidential initial consultation.