Sharia Law and Your Money

Whilst most people are aware that Sharia law is the legal framework used in the GCC countries, not all expats have realised that this can affect them and their money.

  • Did you know that on death your account and assets can be frozen?
  • Did you realise that your wife may not get access for many months?

Should anyone die whilst resident in the UAE, Sharia Law will be applied to any assets that are held in the UAE, but a complication is that men and women are treated differently. If a wife dies all of her assets will revert to her husband, but if the husband dies it is an entirely different story. Any bank accounts his name would be frozen, even those in joint names. In addition to bank accounts being frozen in the event of a husband’s death, if any vehicles are in his name, they are likely to be impounded until the courts make a ruling regarding assets.

In due course assets would be distributed by the courts in accordance with Sharia Law and this could take weeks, or even months, although there is no fixed timescale. I have even heard of cases where accounts have been frozen for over a year before being reopened. As dependents’ visas could be cancelled after 30 days, the intended beneficiaries many not even be in the country to deal with these matters.

Traditional rulings dictate that the bulk of assets could be passed to the closest male relative. Whilst a husband will receive a wife’s assets, a wife cannot necessarily expect to receive all of her husband’s assets. That said a properly written will is usually respected by the courts, but local accounts can remain frozen until probate is granted and all of the deceased’s debts, even ones as small as traffic fines, are repaid.

For the reasons mentioned above, it is important that all married women have access to monies if joint accounts are frozen. A wife should maintain her own account in the UAE, or have immediate access to monies offshore or in another country so she is not left without funds. If children need to be provided for the situation can be even more acute.

Historically it was accepted that other family members would provide for the widow and any children, but in today’s world that is not always the case, especially if one is an expat living thousands of miles away from any other family.

A married woman without a salary can still have her own bank account and several banks have accounts set up specifically for women with low opening balance requirements and minimal charges.

Any assets held outside of the GCC countries are not affected, unless of course they are held in another country that applies Sharia law. They could however, be subject to other rules or restrictions regarding access following death, although in most cases a joint account holder will have full access.

Forward planning is essential to ensure that widows are not left financially, as well as emotionally, bereft in the event of the husband’s death.

UPDATE September 2015.  Note that banks are now freezing the accounts of women who die as well as men and these restrictions will also apply to other assets.

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About financialuae

A qualified and experienced Independent Financial Adviser based in Dubai, UAE. Professional and ethical. Freelance writer on personal financial issues & the On Your Side column in The National. Regular radio guest. Senior Partner at Holborn Assets LLC, Dubai, UAE.
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11 Responses to Sharia Law and Your Money

  1. Tarik says:

    Although my wife does have her own account, however we also maintain a joint account for savings. In the event of the death of the husband (who is the second account / joint holder), the account would be frozen?

    • financialuae says:

      Hello.
      Any accounts in joint names will be frozen. For security, you may want to open a new account in your wife’s name only if the monies are to remain in the UAE. Alternatviely you can have a joint account offshore.
      Regards
      Keren

      • Tarik says:

        Hello.
        Thank you for your response.
        Yes, the money is being held in UAE only, thus it would make sense to open it in her name for security purpose.
        However, wanted to know that if say I am required to produce evidence of account balance for any purpose, e.g. when applying for a foreign country’s visa, they ask for account statement, then would my wife’s account statement be acceptable or serve the purpose?

  2. Salar says:

    Hi Karen,
    Great blog! I’ve heard contradictory reports in the press on this matter. I’ve read that the inheritance laws of the deceased person’s country are used as a basis for the division of assets. I’ve also read that Shariah laws are used for for Muslims or nationals from Muslim countries. Do you know what will happen in the event of the death of a British Muslim? Will the courts use Shariah law or the law of the UK?

    Thanks,
    Salar

    • financialuae says:

      Hi Salar
      Thanks for the comment. It all depends on the nationality of the individual and where their assets are held. Assets held in the UAE are dealt with in the UAE courts and the individual’s wishes, per their will (assuming it is properly written) should be followed, although if someone is Muslim there could be more emphasis on distribution under Sharia Law. Assets held outside the UAE/GCC will be subject to UK inheritance rules for UK nationals.
      Please contact me if you would like to discuss your own circumstances in more detail.
      Kind regards
      Keren

      • Lisa Wood says:

        Hi Keren,
        This is a great blog – very helpful. Can I ask you if your spouse lived and worked in Dubai and has assets here but passed away in their home country, Is the Shariah law used for distribution of the assets.

        Thanks,

        Lisa

      • financialuae says:

        Hi Lisa,
        Sharia law will apply to any assets in the UAE, no matter where someone actually is physically. Unless someone has a watertight will to cover UAE assets then Sharia distribution is likely to be followed. This is one of the reasons I encourage expats to keep the majority of their assets outside of the UAE and why offshore bank accounts are of such benefit.
        I hope that clarifies.
        Kind regards
        Keren

  3. samantha says:

    great article! you mention in regards to wills that they be properly written. do you mean simply by a professional vs one writing it up themselves with a will kit? or do you mean that even amongst professional will writers/lawyers it needs to be worded somehow specifically for the uae and sharia? i am a canadian residing in dubai and my husband and i want to draw up wills. do you have recommendations on where to go here in dubai? or should we have the will drawn up in canada then bring a copy here to be translated into arabic? if we do that does it have to be registered somewhere in dubai? thanks in advance!

    • financialuae says:

      Hi Samantha
      By professionally, I mean by an experienced lawyer who understands the implications of living in the Middle East, as well as the law in your home country. I do not reccommend using a kit or someone who has simple been on a will writing course.
      I have an inhouse lawyer who writes wills and also connections at a leading Dubai law firm. Please drop me an email to keren@holbornassets.com and I can advise you further.
      Kind regards
      Keren

  4. Petra Maric says:

    Hi Karen, hope I’m not too late for this post. My question is – will my personal account (opened at the time when I was on company visa) be frozen as well in case of husband death, because I’m on spouse visa NOW?

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