Family holdings and succession in the Gulf
Gulf inheritance depends on religion, nationality and where each asset sits. Here is how the rules work, which vehicles families use to hold Gulf assets, and how to make a succession structure work at the moment it matters.
Part of our series on holding structures in the Gulf. Start with the overview: where to hold and why.
Wealth, businesses and the question of what happens next
For families with businesses or investments in the Gulf, the holding question soon becomes a succession question. Shares in a Saudi company, a villa in Dubai, a stake in a Bahraini business and accounts in several banks will one day pass to the next generation, and the rules that decide how they pass vary by country, by asset and, in the Gulf, often by the religion and nationality of the person who dies. A family that has not planned may find its assets frozen, divided in ways it did not intend, or tied up in court proceedings in several jurisdictions at once.
The region has responded with modern tools. The UAE has introduced civil personal status rules for non-Muslims, will registries and common-law foundations and trusts in its financial centres, and its corporate tax law recognises family foundations. Bahrain has a trust law with licensed trustees, and Qatar's financial centre offers its own vehicles. This guide explains how inheritance works in the Gulf, which vehicles families use to hold assets, and how those vehicles interact with tax.
Religion, nationality and the place of the asset
In every Gulf state, the inheritance of Muslims is governed by Islamic law, which fixes shares for heirs and limits what can be left by will to a portion of the estate in favour of non-heirs. For non-Muslims, the position depends on the state. The UAE has gone furthest. Federal Decree-Law No. 41 of 2022 on Civil Personal Status applies to non-Muslim UAE nationals and non-Muslim foreign residents, allows them to make wills disposing of their UAE assets as they wish, provides for equal shares between heirs in the absence of a will, and allows them to choose the law of their nationality instead. For Muslims, the Personal Status Law, Federal Decree-Law No. 41 of 2024, in force from 15 April 2025, replaced the earlier law and applies Islamic principles, subject to the rules on applying foreign law.
Wills for non-Muslims can be registered in the UAE through the DIFC Wills Service, which operates under Dubai Law No. 15 of 2017 on non-Muslims' estates, through the Abu Dhabi civil family court, which has its own non-Muslim personal status law, or with the notary public under the federal civil framework. In the other Gulf states, the treatment of non-Muslim foreigners' estates generally depends on conflict of law rules that may point to the law of their nationality, and the practical steps to transfer assets, such as share registrations, bank accounts and property titles, still pass through local courts and authorities. A will valid at home is not always enough to move a Gulf asset quickly.
Holding assets outside the estate
The most effective way to avoid an asset being caught up in an estate is for the individual not to own it at death. Families therefore hold Gulf assets through vehicles that outlive their founders. The DIFC offers foundations under the Foundations Law, DIFC Law No. 3 of 2018 as amended in 2024, and trusts under the Trust Law, DIFC Law No. 4 of 2018. ADGM offers foundations under its Foundations Regulations 2017 and its own trust rules, and the RAK International Corporate Centre offers foundations as well. A foundation is a legal person with no shareholders, governed by a charter and by-laws that set out who benefits and how decisions are made; it can own shares, property and investments, and succession happens by the rules of the charter rather than through inheritance proceedings.
Bahrain has the Financial Trust Law, Law No. 23 of 2006, under which trusts can be established with trustees licensed by the Central Bank of Bahrain, and the QFC has its own regime for family vehicles. Onshore UAE law has added a federal framework for family businesses, Federal Decree-Law No. 37 of 2022, which allows families to set out ownership and governance arrangements for a family company and to restrict transfers outside the family. Which vehicle suits a family depends on its religion and nationality, where its assets and heirs are, and whether it wants a separate legal person, a trust relationship or a family company with a charter.
UAE family foundations and the home country
The UAE corporate tax law recognises family foundations. A foundation or similar vehicle established for the benefit of identified individuals or charitable purposes, whose principal activity is holding and managing assets for them, can apply to be treated as tax transparent, so that its income is treated as the income of its founders or beneficiaries rather than taxed in the foundation. For families whose members are individuals not taxed in the UAE on personal investment income, that can keep a family holding structure outside UAE corporate tax, subject to the conditions and to the foundation not carrying on business activity of a kind that would disqualify it.
The family's home country is the other half of the analysis. Many European countries look through foundations and trusts to their founders or beneficiaries, apply special rules to distributions, or treat a foreign foundation managed from home as a resident. Controlled foreign company and anti-abuse rules may also apply where a foundation holds companies that pay little tax. A Gulf foundation that works perfectly under Gulf law can produce an unexpected tax charge in Europe if the family has not modelled it there.
Governance, banks and the next generation
Succession structures fail at the moment they are needed if their governance has not been tested. A foundation whose council members are all the founder and his spouse, with no successor named and no process for replacing them, leaves the family exactly where it would have been without it. A trust whose trustee has never met the beneficiaries struggles to act on their behalf. Good structures name successors, set out decision-making rules, appoint a guardian or protector where appropriate, and keep the vehicle's records and accounts up to date while the founder is alive.
Banks are the practical test. When a founder dies, the banks holding the family's accounts, the registries holding its shares and the land departments holding its property will each ask who now has authority. A foundation or holding company whose officers can show their appointments, the charter or articles and the bank mandates can continue to operate; an individual's account frozen pending probate cannot. Families should check, before it matters, that every bank and registry recognises the vehicle and its decision-makers.
Muslim families can plan within Islamic law, using lifetime gifts, endowments (waqf) and company structures with clear governance, and can combine these with foundations in the financial centres. Planning that contradicts the fixed shares of heirs can be challenged, so it should be designed with that framework in mind.
A European family with assets in three Gulf states
A non-Muslim European couple living in Dubai own shares in a Saudi trading company through a Bahraini holding, a villa in Dubai, investment accounts in the UAE and a stake in a Qatari joint venture. Without planning, the husband's death would require proceedings in the UAE for the villa and accounts, the transfer of his Bahraini holding shares under Bahraini procedures, and the recognition of his heirs by the Saudi and Qatari authorities before the companies could register the changes, with Islamic law possibly applied to some assets depending on the forum.
The couple register mirror wills with the DIFC Wills Service for their UAE assets, and transfer the Bahraini holding and their investment portfolio into a DIFC foundation whose charter names their children as beneficiaries and an independent council member alongside the family. They apply for the foundation to be treated as tax transparent under UAE corporate tax and model the treatment in their home country, where foundation distributions are taxed when received. On the husband's death, the foundation continues to own the holding without any change in the Saudi or Qatari registers, the will governs the villa, and the family's accounts at the foundation remain operable. The structure did not remove every formality, but it removed the most damaging one: the freezing of the business while heirs were recognised in four countries.
The example simplifies a process that depends on each family's nationality, religion, residence and assets. Each step should be confirmed with advisers in the relevant jurisdictions.
Questions we get asked first
How is inheritance decided in the UAE for non-Muslims?
Under Federal Decree-Law No. 41 of 2022 on Civil Personal Status, non-Muslims can make wills for their UAE assets, heirs share equally without a will, and they can choose the law of their nationality. Wills can be registered with the DIFC Wills Service, the Abu Dhabi civil family court or a notary.
What law applies to Muslims in the UAE?
The Personal Status Law, Federal Decree-Law No. 41 of 2024, in force from 15 April 2025, which applies Islamic principles to inheritance, subject to rules on foreign law.
What is a DIFC or ADGM foundation?
A legal person with no shareholders, governed by a charter and by-laws, that can own shares, property and investments for named beneficiaries, so that succession follows the charter rather than inheritance proceedings.
Are UAE family foundations taxed?
A qualifying family foundation can apply to be treated as tax transparent under UAE corporate tax, so its income is treated as that of its founders or beneficiaries. The home country's treatment must be checked separately.
Does Bahrain have trusts?
Yes. Bahrain's Financial Trust Law, Law No. 23 of 2006, allows trusts with trustees licensed by the Central Bank of Bahrain.
What makes a succession structure fail?
Weak governance: no named successors, founders as the only decision-makers, outdated records and banks that do not recognise the vehicle's officers. These should be tested while the founder is alive.
Hold the assets in something that outlives you
Gulf inheritance depends on religion, nationality and where the asset sits, and a will alone rarely moves a business quickly. The UAE now offers non-Muslims a civil path and, with the DIFC and ADGM, foundations and trusts that keep assets out of estate proceedings; Bahrain and Qatar have their own vehicles. Choose the vehicle for your family and assets, model its tax at home, and test its governance before it is needed.
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This article is general information, current as of 2026, and is not advice for any specific situation. Confirm current rules with the MOIC, the NBR or the relevant authority before acting.