The UAE imposes no inheritance tax, no estate duty, and no capital gains tax on death. The estate planning problem in the Gulf is not tax — it is who receives the assets. For the approximately 88.5% of the UAE population who are non-citizen expatriates, and for Muslim citizens subject to Sharia succession rules, life insurance is one of the most powerful tools available. Getting the structure right requires understanding what Sharia inheritance law actually mandates, and how DIFC, ADGM, and offshore structures interact with it.

GLOBAL ESTATE PLANNING SERIES

Overview — The Global Landscape
Part 2 — EU Civil Law: France, Germany, Spain and Belgium
Part 3 — The UAE and GCC: Succession Without Estate Tax (You are here)
Part 4 — Japan and Asia: The World’s Highest Inheritance Tax Rate
Part 5 — The United States: Estate Tax, the ILIT, and Where PPLI Fits
Part 6 — South Africa: Estate Duty and the Named Beneficiary Rule

THE UAE LEGAL FRAMEWORK

The UAE is primarily a civil law jurisdiction based on Sharia principles, governed by a federal civil code and personal affairs legislation. For Muslims, inheritance is governed by the Sharia succession rules codified in the Personal Affairs Law — a fixed formula allocating specific shares of the estate to defined categories of heirs, with no testamentary freedom for the mandatory two-thirds portion of the estate.

For non-Muslims, the position changed significantly with Federal Decree-Law No. 41 of 2022 on Civil Personal Status, effective from 2023. Under the new law, non-Muslim foreigners who die without a registered will no longer have their UAE assets distributed according to Sharia intestacy rules. Instead, a statutory intestacy regime closer to civil law equivalents applies. However, and this is the critical point: this protection is not automatic. It applies to non-Muslims without a will — it does not protect non-Muslims against Sharia application where there are conflicting claims, and it does not ensure assets reach the intended recipients in the absence of formal planning.

Further, in 2025, Dubai Law No. 2 of 2025 extended the ability for non-Muslims to register wills under their national law within the Dubai courts framework, providing a further layer of certainty for internationally mobile clients.

WHY THE UAE HAS NO ESTATE TAX — AND WHY THAT IS NOT THE FULL STORY

The UAE does not impose inheritance tax, estate duty, or gift tax. There is no capital gains tax on death. For policyholders whose planning concern is purely tax, the UAE presents no life insurance estate tax problem analogous to the UK’s.

But the UAE’s demographic reality creates a different planning challenge at least as significant. The expatriate population — concentrated in Dubai and Abu Dhabi — holds substantial wealth in UAE bank accounts, UAE real estate, and UAE-registered companies. On death, UAE-sited assets are subject to UAE succession law, which means: bank accounts are frozen pending a court succession order; real estate cannot be transferred without court approval; shares in UAE companies require succession proceedings. The process can take months or years. During that period, surviving families may have no access to liquid funds.

Life insurance with a named beneficiary designation bypasses this entirely. The policy pays out directly to the named beneficiary — typically within days of the death certificate being produced — without entering the succession process, without requiring probate, and without being subject to Sharia distribution (for policies written under non-UAE law with non-estate beneficiary designations). This liquidity function is the primary planning role of life insurance in the UAE.

SHARIA SUCCESSION: WHAT THE RULES ACTUALLY REQUIRE

For Muslim residents — UAE nationals and Muslim expatriates — the Sharia inheritance formula distributes assets on a formula that is mandatory for the “reserved” portion of the estate (two-thirds in most cases). The surviving spouse receives a fixed share (one-eighth where there are children; one-quarter without), daughters receive half the share of sons, and certain relatives (including non-Muslim spouses under some interpretations) may inherit nothing at all.

These rules cannot be overridden by a will for the mandatory portion. A wasiyya (Islamic will) can govern the discretionary one-third of the estate — the portion the testator may direct as they choose — but the two-thirds mandatory portion follows the Sharia formula regardless.

The planning consequence is that a Muslim UAE resident wishing to equalise distributions between male and female heirs, or to make provision for a non-heir (such as a step-child or unmarried partner), cannot do so through the estate. Life insurance with a named beneficiary designation sits outside the estate — and therefore, in principle, outside the Sharia distribution formula.

TRUST STRUCTURES IN THE UAE: DIFC, ADGM, AND THE MAINLAND GAP

The mainland position

The UAE mainland (governed by federal law) does not recognise common-law trusts. There is no trust law applicable on the UAE mainland, and a trust established under English or Jersey law would not be recognised as a distinct legal arrangement by UAE mainland courts. Assets purportedly held in trust would risk being treated as belonging to the settlor for succession purposes.

DIFC trusts

The Dubai International Financial Centre (DIFC), operating under its own common-law framework and courts, introduced its own trust law (DIFC Law No. 4 of 2018). DIFC trusts are fully recognised within the DIFC legal framework and are administered by DIFC-licensed trust companies. A life insurance policy held within a DIFC trust would be treated by DIFC courts as trust property — outside the settlor’s personal estate. The DIFC Wills Service Centre also provides a mechanism for non-Muslims to register English-language wills covering UAE-sited assets.

ADGM trusts and foundations

The Abu Dhabi Global Market (ADGM) similarly offers a common-law framework with its own trust law and, crucially, foundations legislation. ADGM foundations are recognised as separate legal entities with perpetual existence — they are the civil law alternative to the trust in the UAE context, functioning similarly to a Liechtenstein or Panama foundation. Assets held by an ADGM foundation are legally owned by the foundation, not the founder. On the founder’s death, the foundation continues — the assets do not pass through the estate at all.

ADGM foundations provide protection against Sharia forced heirship rules within their legal framework. UAE courts (in DIFC/ADGM) will not apply Sharia forced heirship to assets held in a properly constituted foundation. This is particularly valuable for non-Muslim clients and for Muslim clients wishing to make provision for beneficiaries outside the standard Sharia formula.

PLANNING POINT
The most effective UAE succession structure for UHNWI clients combines: (1) a registered will (DIFC Wills Service Centre for non-Muslims, ADJD for Muslims) covering UAE-sited personal assets; (2) life insurance with carefully designated named beneficiaries for immediate liquidity; (3) a DIFC or ADGM trust or foundation for multi-generational wealth and Sharia bypass; and (4) offshore PPLI held within the trust or foundation structure for investment assets. The PPLI policy itself provides the investment wrapper; the trust or foundation provides the succession planning framework.

GCC CONTEXT: SAUDI ARABIA, QATAR, KUWAIT, BAHRAIN

The broader GCC presents a similar but not identical picture. None of the GCC states imposes estate or inheritance tax. All apply Sharia succession rules for Muslim nationals. The planning challenges — account freezing, probate delays, Sharia distribution — are common across the region.

Saudi Arabia has no equivalent of the DIFC or ADGM — there is no special economic zone with a common-law legal framework that recognises trusts or foundations under Saudi law. Offshore trust structures (Jersey, Cayman, DIFC) remain relevant for Saudi residents’ non-Saudi assets, but the treatment of Saudi-sited assets within such structures is legally uncertain and practically contested.

Qatar, Kuwait, and Bahrain similarly lack common-law free zone frameworks with trust recognition. The Qatar Financial Centre (QFC) offers some comparable provisions, but its trust framework is less developed than DIFC or ADGM.

For GCC clients outside the UAE, the working approach for international assets typically involves: an offshore trust (Jersey, Cayman) or foundation (Liechtenstein, Panama) for non-GCC assets; PPLI held within that structure; and local Sharia-compliant planning (waqf, hiba lifetime gifts) for GCC-sited assets.

TAKAFUL: THE SHARIA-COMPLIANT INSURANCE ALTERNATIVE

For Muslim clients for whom conventional life insurance is not permissible under their interpretation of Sharia law — which prohibits gharar (excessive uncertainty) and riba (interest) — takaful (ta’awun, mutual cooperation) is the Islamic insurance alternative. Takaful operates on a mutual contribution model rather than a premium-for-risk transfer basis, distributing contributions among participants rather than transferring risk to an insurer.

Takaful products are available in the UAE and across the GCC from a range of licensed providers. For PPLI-style investment-linked structures, Sharia-compliant investment-linked takaful is available, though the product range and investment universe are more limited than conventional PPLI. The succession planning function — beneficiary designation to bypass estate distribution — is available in takaful structures in the same way as in conventional policies.

SOURCES AND FURTHER READING

• UAE Federal Decree-Law No. 41 of 2022 on Civil Personal Status — available via the UAE Ministry of Justice
• Dubai Law No. 2 of 2025 on non-Muslim inheritance — Citywealth analysis
• Al Tamimi & Company, UAE Trusts and Foundations for Tax-Efficient Wealth Preservation — tamimi.com
• Withers LLP, Estate Planning for Non-Muslims and Residents in the UAE — withersworldwide.com
• DIFC Wills Service Centre — difcwills.ae
• ADGM, Foundation framework — adgm.com
• EY, Worldwide Estate and Inheritance Tax Guide 2024 — ey.com
• PPLI.Solutions, Mauritius jurisdiction profile (PPLI carrier for GCC-connected clients)