Business Will: Safeguarding Your Business Assets with Legal Precision in the UAE

Below, we offer guidance through crucial questions and provide explanations tailored for business owners under UAE law for non-Muslims. This advice is designed to navigate the complexities of drafting a Business Owner’s Will, ensuring that your business continuity, the financial well-being of your heirs, and the orderly transfer of your assets are thoroughly addressed. Our approach aims to highlight the importance of each aspect of the will-making process, emphasizing the benefits of careful planning for business owners within the unique legal framework of the UAE.

1. Business Information
   • What is the nature of your business?
     • Guidance: Understanding the business’s nature is crucial to evaluating its operations, liabilities, and how it should be handled upon your passing. This includes considering whether the business can continue to operate and under whose leadership.
   • Are you the sole owner, or do you have partners/shareholders? If there are others, what is your ownership percentage?
     • Guidance: Your ownership structure affects how your business interest can be transferred. In the UAE, different rules may apply depending on whether the business is a sole proprietorship or a partnership. Knowing your ownership percentage helps in accurately distributing your assets among your heirs.
2. Professional License Continuity
   • Point of Consideration: If your business operates under a professional license (e.g., legal, medical, engineering services), what happens to this license upon your death?
     • Guidance: Professional licenses are often personal and may not be transferable upon the licensee’s death. This is particularly crucial in businesses where the operation is heavily reliant on the professional qualifications of the owner. In the UAE, the continuity of businesses that require a professional license could be at risk if there is no one else within the business who can hold that license. Planning for this scenario is vital to ensure that your business can either continue to operate under a different qualified individual or that there is a plan for the orderly wind-down or sale of the business. It highlights the importance of having a succession plan that addresses professional licensing requirements, ensuring the business’s viability or facilitating its transition.
3. Succession Planning
   • Do you have a succession plan in place for your business?
     • Guidance:A succession plan ensures your business continues smoothly without disruptions. It’s essential for providing clear instructions on who will take over the business operations, preserving its value for beneficiaries.
   • Who do you intend to take over your business interest in the event of your death?
     • Guidance: Identifying a successor is vital for the seamless transition of your business. It prevents potential disputes among heirs or partners and ensures the business continues to operate according to your wishes.
4. Value and Assets of the Business
   • Have you recently had your business valued? If so, what is its estimated value?
     • Guidance: Knowing the current value of your business is critical for fair asset distribution. It helps in making informed decisions on how your business interests should be divided among your heirs.
   • Are there specific business assets you wish to bequeath separately?
     • Guidance: Certain assets may have operational significance or sentimental value. Specifying these in your will can prevent conflicts and ensure they are passed on according to your preferences.
5. Debt and Liability
   • Is there any outstanding debt or liability associated with the business that should be addressed in your will?
     • Guidance: Clear instructions on handling debts and liabilities can protect your heirs from financial burdens. It’s important to provide a strategy for settling these obligations without compromising the business’s continuity or the beneficiaries’ inheritance.
6. Expanded Debt and Liability Considerations
   • Point of Consideration: Beyond business debts, consider other liabilities such as rent, intellectual property (IP) ownership, and shares in other businesses.
     • Guidance: When drafting a will as a business owner, it’s essential to take a holistic view of your liabilities:
       • Rent: If your business operates from leased premises, your lease agreements may have specific clauses regarding succession and what happens in the event of the owner’s death. It’s important to understand these clauses and plan accordingly to prevent disruption to the business operations.
       • Intellectual Property (IP) Ownership: IPs (patents, trademarks, copyrights) can be significant assets to your business. Their management after your passing should be clearly outlined, especially if they generate revenue (through licensing, for example). Bequeathing IPs requires careful consideration to ensure they continue to provide value for your heirs or the business.
       • Shares in Other Businesses: If you hold shares in other businesses, the impact of your death on these investments should be considered. This includes understanding any shareholder agreements that dictate what happens to your shares. Provisions should be made in your will to deal with these shares, whether they are to be sold, transferred to a specific heir, or handled in another manner.
7. Employees and Management
   • Are there any provisions you wish to make for your employees or management in your will?
     • Guidance: Employees are the backbone of any business. Making provisions for key personnel can ensure business stability and morale, demonstrating your commitment to their welfare beyond your tenure.
       By addressing these points in your will, you’re not only securing your legacy but also ensuring the welfare of your family, employees, and the continued success of your business. Under UAE law for non-Muslims, these considerations help tailor your will to meet both legal requirements and personal wishes, ensuring a comprehensive approach to estate planning for business owners.