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Fri 1 Jun 2007 12:00 AM

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Dead expensive

The costs associated with dying abroad and how to prepare for the worst-case scenario.

Every day four people die in Dubai and according to statistics three out of the four will be expatriates.

It's a grim fact that is the usually the last thing on the minds of Dubai's young expatriate population.

But as Vivian Albertyn, founder of the Middle East Funeral Services warns, the costs that a family can incur if a relative dies on the other side of the world can run into thousands of dollars.

Families whose loved ones die in Dubai are often completely unprepared for the process of trying to organise an embalming or of flying them home

Albertyn set up the UAE's first funeral service for expatriates last year and as part of the service, guides expatriate families through the minefield of costs and bureaucracy usually associated with flying their loved ones back home.

"It's not an easy process and without the right guidance you can find yourself tangled in masses of red tape," he says.

"The costs of flying a body home are not cheap and few people are actually aware of the prices involved.

"It's such a taboo subject that most people don't want to talk about it and will avoid it until it's too late." Avoiding the subject can however leave families with expensive costs to pay in the event that a relative dies - particularly if the deceased has neglected to set up a will or life insurance.

Legal experts say the process of distributing the contents of a person's estate through the courts can take several months, or even years, if the deceased has not made a will.

And those that do not set up life insurance to cover debts or provide their spouse with a lump sum or income in the event of their demise create a legacy of financial problems.

In this feature we reveal the cost of death in Dubai - and what you can do to prepare for the event, from making a will to setting up life insurance.

Funeral arrangements

Albertyn admits his job is not something he finds easy to talk about at dinner parties.

But he is keen to raise awareness among the expatriate population of what happens if they die in Dubai - an awareness he says is lacking at present.

"Families whose loved ones die in Dubai are often completely unprepared for the process of trying to organise an embalming and the logistics of flying their loved ones home.

"To make matters worse they often struggle to find the Ministry buildings they need to sort out the administrative issues and then face a language barrier once inside," he says.

Once an expatriate dies in the UAE a long and complex paper trail begins.

Families are required to obtain numerous No Objection Certificates (NOC)s from government officials, in order to prove that the deceased had no pending civil or legal actions and that all financial obligations had been settled.

These must be obtained from the deceased's sponsor, the Dubai Police, Immigration Department, the Labour Department, the relevant embassy and the Dubai Municipality.

The first step on the paper trail is to obtain a death certificate - the document required before you can send a body home or arrange a local burial.

Relatives must first visit the local police station with a copy of the notification of death from the hospital where the person died and then give a statement to the police which will be turned into a report.

Once the report has been made the police will arrange for an ambulance to transport the body from the hospital where the person died, if they died in hospital, to the mortuary at the Rashid Hospital.

The hospital will then determine the cause of death and issue a report confirming it.

Usually a post mortem is not carried out unless the circumstances of the death were suspicious.

If the family wants one carried out they must write a request to the Medical Superintendent at Dubai Police Headquarters.

Under article 17.1 of the Civil Transactions Code it states that for an expat upon death the law of domicile applies

All documents - i.e. the police report and the deceased's passport, visa or residence permit - a copy and an original - must be submitted to the hospital who will then issue a death certificate declaration which must state the cause of death and should be stamped by the police at the hospital.

All these documents must then be taken back to the police station where the police will issue an NOC addressed to Al Baraha Hospital Preventative Medicine Department.

In a situation where the deceased's body is being sent back to their home country NOCs must also be issued to the airport, mortuary and the hospital.

The next stage is to submit all documents at the Al Baraha Hospital Preventative Medicine Department whereupon a death certificate at a cost of around AED50 will be issued in Arabic.

This must be translated into the language of the deceased's home country if they are being sent home.

Finally, the embassy or consulate of the deceased must be informed of their death and they must cancel the deceased's passport and inform the country of origin of their death.

The embassy will issue an embassy death certificate and an NOC if the body is to be flown home and according to Albertyn some charge up to AED1,200 for the registration fee and certificate.

With the official and embassy death certificates in hand, the next stage is to register the death with various authorities in Dubai.

All documents are needed for this - including the deceased person's cancelled passport.

The death must be registered at the Ministry of Health which will charge a fee of AED10.

Next the Ministry of Health where an AED50 attestation fee is charged and then the Immigration Department which will charge an AED100 cancellation fee to cancel the deceased's visa.

The most complex and expensive scenario - and one of the most common, according to Albertyn, is when a family decides to fly a relative back to their home country for burial.

Dnata is currently the handling agent in the UAE that can make the necessary arrangement to transport the body and according to Albertyn, the cost for this can rise to as high as around AED18,000 depending on the weight of the body and where it is being transported to. However the average price he says is between AED10,000 to 12,000 for an average sized male and between AED8,000 to AED10,000 for a woman.

Transportation of the body can be arranged at the Dnata Export Office in Cargo Village.

A space must first be reserved with the cargo department of an airline and a flight ticket should be booked if the body is to be accompanied.

The cargo fee should be agreed and arrangements should be made for the casket to be collected at the other end and for the person due to meet it to fax confirmation to Dnata.

NOCs must then be obtained from the police based at Cargo Village giving permission to send the body out of the country as well as the relevant embassy or consulate.

Once seven copies have been made of all the documentation the paperwork must be submitted to the Dnata Export Office before an NOC is obtained from the police based there to embalm the body.

All documentation must then be given to the Al Maktoum Hospital where the embalming takes place.

The deceased will be transported to the hospital at the cost of AED100 in a Municipality vehicle.

Embalming costs AED1000 and the coffin for the body costs around AED750.

At present there is only one company that manufactures coffins in Dubai and according to Albertyn, there is one rate for all the coffins that are used.

Once the embalming has taken place the casket is transferred back to Cargo Village and must arrive at least four hours before departure.

Cargo fees must then be paid in cash and the deceased must be accompanied by copies of all the relevant documentation.

The cost is far lower for transporting a deceased person's ashes back to their home country is far cheaper at around AED1000.

This can be done by a cargo company, however Albertyn says he has also arranged for courier companies such as Fedex to transport the ashes.

"Ashes are the most expensive things to send per kilogramme because they are so delicate and cannot be lost.

"These can be transported in the urn by a courier company - but only certain companies will do this," he adds.

Cremations in Dubai take place at two crematoriums - Muhaisnah and New Sonapur.

The fee for a cremation is AED2,000 and AED500 must also be paid as a deposit which is reimbursed on the collection of the ashes.

In order for the cremation to take place the family must bring along the death certificate, cancelled passport and residence permit, written permission from the next of kin or sponsor, the next of kin's passport and an NOC from the sponsor that all financial obligations have been cleared.

Those who wish for their relative to have a local, Christian burial can arrange for this to take place at the Christian Cemetery in Dubai at the cost of around AED1,100 for an adult burial and AED350 for a child burial.

The pre-requisite for this is that the deceased was a member of a Christian community and was resident in Dubai.

For the burial to take place the family must bring along the cancelled certificate and residence permit, death certificate, NOC from the deceased's sponsor, letters from Dubai Police, and a clearance letter from Dubai Municipality.

Albertyn says his company arranges very few burials for expatriates however, adding that most prefer for the remains to be repatriated in their home countries.

"Our research has shown that we won't do more than one or two burials a year. Out of all the expats that die here every year, I would say only very few choose to be buried here while the rest are repatriated."

The cost of repatriating a body obviously varies according to which country it is being sent back to.

Albertyn says the cost can rise to as high as AED 18,000 for remains that are being sent back to the US. Meeting these costs can be a challenge for families - and the situation is made even more difficult by the fact that under UAE law, once a person dies their bank accounts are instantly frozen.

This means that spouses holding savings in a joint account may not be able to access the funds just when they need them the most.

Experts recommend therefore that expatriates hold savings in an offshore account that can be accessed by their spouses in the event of an emergency.

William Borland, senior relationship manager with Barclays Bank in the UAE, says: "We always advise our clients to make sure that they hold funds in an account offshore.

"The main concern you can have is that your spouse might not otherwise have access to those funds at a time when they would need them the most. I would recommend holding some assets offshore where you can access them in an emergency."

Making a will

Under UAE law upon the death of an expatriate, the law of domicile would apply with regards to their estate.

So for example if a UK-born expatriate dies in the UAE, English law would apply to the distribution of their estate, as lawyer Cynthia Trench of Trench Associates explains.

You can’t over insure yourself; it’s all relative to how many assets you have and what you earn

"Under article 17.1 of the Civil Transactions Code it states that for an expat upon death the law of domicile would apply. That is their country of origin, or the nationality that they are holding. A lot of expats have been wrongly advised that the moment they are non resident they are no longer domicile. Just because you are non resident in UK does not mean you are not UK domicile. The English law applies when it comes to your estate and that includes tax laws. So basically if you've made a will under English law that should suffice for all your worldwide assets."

This means that in the case of residents of countries that apply tax laws to worldwide assets, inheritance tax is charged on those assets by the UK government.

Unfortunately for UK-born expatriates for example, this means paying 40% of the value of any assets worth US$595,000 or more.

"Even if the beneficiary lives in the UAE, if the deceased person was domiciled in the UK then tax laws would apply," explains Trench.

If an expatriate dies in the UAE then before claiming any assets that they are entitled to under the terms of the deceased's will, the beneficiaries must apply for a Grant of Probate in the deceased's country of domicile.

"A Grant of Probate is document that's been issued from the government proving who are your heirs or beneficiaries and recognising them as such," says Trench.

"It's usually a fairly simple matter and would take two to three months to complete. Once this has been granted the beneficiaries could go directly to where the assets are held and claim them. You could also appoint an attorney to act on your behalf in the UAE."

The situation becomes more complicated however when it comes to assets in real estate or funds held in a bank account.

In this case a Sharia court order may be required, depending on the developer or the bank, as well as a Grant of Probate from the country of domicile, in order for the assets to be distributed according to the terms of the will.

Trench describes the process of obtaining such an order as long, complicated and expensive and warns that in some cases a court may try to apply Sharia law to the distribution of the assets, in which case the beneficiaries would have to appeal.

Because of this she advises all clients, where possible, to purchase property in Dubai in the name of an offshore company - and also to hold funds outside the UAE rather than in a bank account in their personal names in the country.

"Trying to claim real estate or bank account assets can be a very long and expensive process and it can take around 12 months for those assets to be released.

"And it is why we advise clients to hold their property in the name of an offshore company - because an offshore company cannot die. The same applies to your funds - we would advise clients to hold those offshore or in the name of an offshore company."

If a person dies without a will they are described as having died ‘intestate'.

This means that the distribution of their estate becomes subject to the laws of their country of domicile which will have a set of rules laid out as to who gets what in the event that they have not made a will.

Once this has been done the beneficiaries are given a Grant of Administration, which is treated in the same way as a Grant of Probate in the UAE.

Trench advises all clients to make a will - regardless of how big or small their estate is and to seek the advice of a solicitor where larger assets are concerned.

"A will basically gives you peace of mind because it ensures that your assets go to the people you want them to go to. It can be done very simply by buying a form from a stationery shop.

"But anyone who has a larger or more complex set of assets should certainly seek legal advice," she claims.

Life insurance

While a will ensures that your assets are protected and distributed in the way that you would like them to be should you die, life insurance provides some additional financial security to your nearest and dearest in the immediate aftermath of your death.

The extent to which you need life insurance depends on your individual circumstances and it is particularly recommended for those with young families as their dependents are the most vulnerable should they die.

"Primarily the main reason to take out life insurance is to provide protection for the people that are financially dependent on you," says Ben Lester, an independent financial consultant with the GlobalEye Group.

"So if you are the main bread winner in the family and there are people that rely totally on your source of income then you need to provide protection for them should you pass away.

"If you already have dependents then you should start it as soon as possible because for one you need to make sure your family is protected and also the longer you leave it and the older you get, the more expensive the insurance becomes."

He goes on to say that life insurance is also important for those with debts of any kind as it can cover those debts and ensure they are paid off and do not become a burden to your family should you die.

Some banks in the UAE will write off a person's debts in the event of their death, although they are not legally obliged to, as long as they are shown a death certificate providing the death has taken place.

However complications may arise if accounts are held jointly and a widowed spouse may be given full responsibility for paying off the debts.

If a life insurance policy is in place to cover those debts however they will be paid off automatically.

Paul Macbeth, founder of Sharjah-based investment firm and tax specialists Offshore Investor adds: "If the guy has a lot of debts and a large family the need for life insurance is high. But if he is 55 and he's got death in service with his company as well as savings and other assets and no debts then he need for life insurance is less than zero."

Customers looking to set up life insurance are strongly recommended to seek the help of an insurance broker who can guide them through the different options on offer and pick the best one for their personal circumstances.

"Obviously people on their own might have a bit of difficulty so they should seek the advice of a professional life insurance advisor who can actually help them determine number one, what amount of insurance they need and then with them based on their finances and long-term objectives what is the best policy for them," said Bashar Khatib, sales director at Nexus.

The process that goes into choosing life insurance for a client involves looking at how much cover they actually want - how much they can afford and what the premiums are likely to be that the client will pay, bearing in mind their age, health and lifestyle.

As Lester explains, the less healthy and more at risk a person is, the more they will pay out in premiums each month to the insurance company, and the more they are earning, they more they can insure themselves for.

Many people would rather just leave their future to the hands of fate rather than setting up life insurance or writing a will

"If you have a client who is 30, a non-smoker and reasonably healthy, his premium would be a lot less than a client who is 50 and a smoker," he says. "Also you can't over insure yourself; it's all relative to how many assets you have and what you earn," he adds.

Although there are many different types of life insurance policies available, they fall into two broad categories; term insurance and whole of life insurance.

Term insurance provides coverage for a fixed number of years, usually up to 30, and for a specified premium.

The policyholder insures his or her life for a specified period and if he dies before that term is up then his named beneficiaries receive a payout and if he does not die during that term no payout is made.

"With term insurance there's no return of value, it's purely protecting the event of premature death and there's no investment content," says Borland.

"So the only time that any money would be paid out would be in the event of a claim, in other words death."

Khatib explains that such a policy may be suitable as a temporary measure for those who have debts as it can cover those debts until the time when they are repaid.

"It is more suitable for temporary needs such as if you took out a mortgage for ten years or a loan for five years and you need to be protection until that time passes."

He adds that another advantage of term insurance is that it is so much cheaper than whole of life - or permanent insurance.

"Sometimes people need permanent insurance but their finances don't allow for that so they buy the term insurance with some kind of special feature on it which is renewable or convertible in the future."

Whole of life insurance is much more expensive because it is guaranteed that at some point the insurer will pay out - unlike term insurance where the insurer knows that there is every chance the customer won't die during the term of the policy.

These types of policies usually contain an investment component so that part of the money you pay in the form of premiums is invested to increase the value of the policy.

"With a permanent policy you pay more premium but the accumulation of premium and the investment of that premium helps for the increasing cost of cover in the future when the person gets older," says Khatib.

"So the extra money that the person pays is invested at higher returns and will continue to grow.

"And when the cost of insurance continues to escalate there is enough money to continue the policy in force."

It is possible to "cash in" the life insurance at any point - however once you do this you must cancel the policy and no longer have life cover.

Alternatively if after, for example, 20 years the life insurance house is unable to maintain your set premiums you can use the profits from the investment value to pay the premium.

Borland warns that one risk of these types of policies is that many whole of life insurance providers now have reviewable premiums and can only guarantee the premiums for a set period of time.

"Let's say for example that you've taken out a million pounds worth of life insurance and your premium is 100 dollars a month.

"If at the end of the set period that is not enough to pay the life insurance premium, the provider can either increase the premium or reduce the amount of life cover."

He goes on to say that another risk of whole of life insurance policies is that your premiums may not be invested wisely by the insurance company.

"If they are investing in risky assets, you might get a return but the downside might be no value whatsoever so your premiums for your life insurance may increase significantly."

Whatever life insurance policy you take, financial advisors urge that it's important to review the cover you have regularly and especially if your life circumstances change.

"Any client should be reviewed regularly by their financial advisor," says Lester.

"They might say ‘ok, it's been a few years now since we set up the insurance, you now have two more children and your income is 30% higher so we need to review your life insurance policy to reflect that'.

"If there's a major change in the client's circumstances like a child is born or they start a new job, the life cover should be reviewed so that it is proportionate to any new debts or dependents."

Income protection

As well as taking measures to protect their families in the event of their demise financial advisors also advise clients to purchase some form of income protection.

Income protection provides you with financial security should you become ill or have an accident that leaves you unable to work and can be paid in monthly installments.

These types of policies can usually protect up to 75% of your income until you reach retirement age and vary in the length of time between which you stop work and when you can access the funds.

The premiums become more expensive the sooner you want to take the policy, following an accident or illness.

And a client should work out how long this period should be according to what other assets they have to support them in the interim.

So if for instance they have savings in the bank then they may not need to claim the critical illness cover for a number of months after they become ill.

"Generally speaking there's a three or a six-month wait," says Craig Holding, a financial advisor with Acuma Wealth Management.

"So if something happens to you then you'd have to wait either three or six months before the policy kicks in."

He goes on to say that with these types of policies there is usually the option to increase your level of income to meet the rising rate of inflation.

Financial advisors strongly advise clients to take out income protection in this region because some employers provide little in the way of sick benefits or payments.

"Sometimes an employer will pay one month or two months but they will not continue to pay disability income for a long period of time," says Khatib.

"So unless this person has a personal income protection plan then they can end up exhausting all their savings in order to survive."

Macbeth adds, "Generally in this region you get ten days of sick pay, then 50% for the next three weeks then after that nothing.

"Whereas in somewhere like the UK you would get sick pay for up to a month then 50% for the next month and 25% for the month after that."

However according to experts personal income protection products are not easy to come by in the region, and tend only to be provided by offshore companies or by those based in the UK or the US.

Customers are strongly advised therefore that the policy they take covers their income in the UAE as well as in the taxable jurisdiction in which the policy is based.

"Some companies are starting to offer this product in the UAE," says Khatib.

"The main concern with taking such a policy from a company outside the UAE is that they might now want to underwrite the claim itself.

"This is because it would be more difficult for them to verify your claim."

Critical illness cover also provides protection in the event of a person becoming ill but rather than providing income it gives a lump sum.

This can be used to pay for medical bills and other unexpected expenses. This type of cover can provide clients with a lump sum worth two years of income in addition to another lump sum worth a recommended US$100,000.

"If you had a heart attack nowadays you could reasonably speaking go on to live a full and healthy life," says Borland.

"With a critical illness policy, you could access a significant lump sum so that you wouldn't have to change your lifestyle quite so dramatically during the time when you are ill.

"We have to look at the statistics nowadays and one in three of us are going to be diagnosed with one of the big three - a heart attack, stroke or cancer so it's definitely something worth considering," he goes on to say.

Statistics like these make uncomfortable reading and can be seen as scare mongering by the insurance industry.

But there's no escaping from the fact that none of us really know what's around the corner - and without a financial safety net in place to protect us and our families, everything we have worked long and hard to achieve, could go to waste.

"Death and illness are subjects that people really don't want to talk about," says Khatib.

"Many people would rather just leave their future in the hands of fate, rather than setting up life insurance or writing a will."

But by facing up to facts and having that uncomfortable conversation, you could save you and your family a lot of heartache.

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