What happens to an outstanding debt if the borrower dies?

The Dubai resident's husband has credit card balances and she is concerned she will be liable if anything happens to him

Under UAE law, only the person whose name is on the debt is accountable. A spouse is only liable if a debt is in joint names, they have provided a security cheque or they are a guarantor. Illustration by Mathew Kurian 

What happens to a debt if a person dies while living in the UAE? I am concerned that if something happens to my husband, I would have to pay off his debts, even though I don't owe anything. He owes a lot on credit cards and it is worrying me if something happens to him. SW, Dubai

Under UAE law, only the person whose name is on the debt is accountable for it and that applies whether it is a mortgage, a personal loan or a credit card. A spouse is only liable if a debt is in joint names, they have provided a security cheque or they are a guarantor.

If any person dies and has outstanding debts in the UAE, the surviving spouse is not directly responsible and should not be asked for repayment. That said, any debt should be settled from the estate of the deceased before money can be passed to any beneficiary. This is one of the many reasons why proper life insurance is advisable where there are debts and/or dependents.

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'Should I make repayments on a loan I haven't received yet?'

'Can I leave the UAE without cancelling my company's free zone licence?'

I am on a two-year limited contract and have been with the company for 10 months now. I am not happy here and don't like the way they treat their employees so I want to leave. What can I do to cancel the contract? How should I proceed? I would prefer to leave without waiting. IF, Abu Dhabi

Firstly, IF should be aware that if he breaks the terms of a contact he agreed to he will be penalised. This is clearly stated in UAE Labour Law,  Article 116: "Should the contract be rescinded by the worker … the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the rescission of the contract, provided that the amount of compensation does not exceed the wage of half a month for the period of three months, or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.” This equates to 45 days of income.

No matter the type of contract, an employee should give notice to the employer in accordance with the terms of the contract and in most cases, this will be a period of 30 days.

There is provision in Labour Law to leave without paying a penalty but the criteria is very strict and the burden of proof is on the individual. This is covered in Article 120 of Labour Law, which says: “The worker may leave work without notice in the following cases: A — should the employer breach his obligations towards the worker, as set forth in the contract or the law. B — should the employer or the legal representative thereof assault the worker.”  It is understood that neither of these conditions apply in this case.

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'I lent money to a friend who never repaid me. What can I do?'

'Am I liable for bounced cheques I wrote in my company's name?'

Two weeks ago, my company terminated my employment as they claimed the position I hold is no longer required and they will hire someone else with a different position more suitable for the business. They asked me to sign a redundancy letter which stated the settlement will be made after I leave and it will only include the number of days I have worked until the redundancy, the holiday balance and a 30-day notice period. Is that legal? Aren't they supposed to give three months payable notice in the case like this? DS, Dubai

There is no provision for an additional payment in the event a person is made redundant from a job in the UAE. The employer is obliged to give notice per the contract of employment, which will be a minimum of 30 days. They must also pay the salary in full for this period until the last day of service, and once employment has ended, there may be an additional payment for any days of annual leave that have accrued but not been taken and any end-of-service gratuity due.

There is only provision for an additional payment if the reason for the redundancy is deemed arbitrary. This is covered in Article 122 of UAE Labour Law which states: "Termination by the employer of an employee’s service is considered arbitrary if the cause for such termination has nothing to do with the work."  If DS is being replaced by someone in a very similar role, he may have grounds to make a case against the employer and should contact the Ministry of Human Resources and Emiratisation for specific guidance. Note that if a case for arbitrary dismissal is won the payment is a maximum of three months’ salary.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 25 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only