Introduction

International estate planning is critically important for the strategic management of personal and business finances, particularly for high-net-worth individuals with assets or commercial interests in multiple jurisdictions. This is especially true for expatriates and foreign investors in Saudi Arabia, where the country’s legal system, based on Sharia law, presents unique legal and jurisdictional challenges.

This comprehensive guide delves into the intricacies of international estate planning in Saudi Arabia, addressing key aspects such as the impact of Sharia law, the role of wills and trusts, asset protection strategies, tax implications, and estate administration. By understanding these complexities, high net worth individuals can make informed decisions to secure their assets, ensure their wishes are fulfilled, and provide for their beneficiaries in accordance with both Saudi Arabian regulations and their personal objectives.

Understanding the Legal Framework for Estate Planning in Saudi Arabia

This section explains the unique aspects of Saudi Arabia’s legal system based on Islamic law (Sharia) and how it impacts estate planning for international clients. Navigating the complexities of estate planning in Saudi Arabia requires an in-depth understanding of Sharia law and its implications for high net worth individuals.

Sharia Law and Its Impact on Estate Planning

Sharia law governs inheritance and estate distribution in Saudi Arabia, presenting key differences from Western legal systems. It is a comprehensive legal and ethical framework derived from the Quran and the teachings of Prophet Muhammad. In the context of estate planning, Sharia law emphasises the importance of distributing wealth according to a predetermined set of rules based on kinship and religious obligations. This system of forced heirship, now formally codified in the Personal Status Law (issued by Royal Decree No. M/73 on 9 March 2022), significantly limits testamentary freedom. This means individuals have limited control over how their assets located within the Kingdom are distributed after their death.

For example, under Sharia law, a male heir typically receives twice the share of a female heir of the same degree of kinship. Additionally, certain portions of the estate are automatically allocated to specific family members, such as spouses, parents, and children, regardless of the deceased’s wishes. This can create challenges for international clients accustomed to Western legal systems that prioritise individual autonomy in estate planning.

The Role of Wills and Bequests (Wasiyya) in Saudi Arabia

The concept of wasiyya, or bequest, plays a limited role in Saudi Arabian estate planning. While individuals can use a wasiyya to dispose of up to one-third of their estate, the remaining two-thirds is subject to the rules of forced heirship under Sharia law. This means that even after making a will, a significant portion of an individual’s assets will be distributed according to Islamic inheritance principles.

Imagine a scenario where a high net worth individual wishes to leave a larger portion of their estate to a charitable cause or a specific beneficiary outside their immediate family. Due to the limitations imposed by Sharia law, their ability to do so is restricted. The wasiyya allows for some flexibility, but it cannot override the fundamental principles of Islamic inheritance.

Key Considerations for Cross-Border Estate Planning in Saudi Arabia

For high-net-worth individuals with international ties, estate planning in Saudi Arabia presents unique challenges. The interplay of Sharia law with international legal frameworks necessitates a strategic approach to asset protection, tax optimisation, and ensuring that your estate plan aligns with your wishes.

Asset Protection Strategies

Protecting your assets is a primary concern in estate planning. In Saudi Arabia, high-net-worth individuals can explore various strategies to safeguard their wealth, including the use of offshore structures. These structures, such as trusts or foundations established in jurisdictions with favourable legal frameworks, can provide an additional layer of protection against potential claims or liabilities.

For example, an offshore trust could theoretically hold assets to shield them from creditors. However, a landmark 2024 UK Supreme Court ruling has exposed significant risks to this strategy for assets located in Saudi Arabia. In Byers & Ors v Saudi National Bank UKSC 51, the court affirmed that Saudi law, as the law of the asset’s location (lex situs), does not recognise the concept of a trust. As a result, the court found that a valid transfer of legal title under Saudi law could extinguish the beneficiary’s interest under the foreign trust, rendering the trust’s protections ineffective within the Kingdom.

Situs and Its Importance in International Estate Planning

The concept of situs, which refers to the legal location of an asset, plays a crucial role in international estate planning, and a key part of this is understanding situs taxes. Situs determines which jurisdiction’s laws govern the asset and its distribution. For instance, real estate located in Saudi Arabia would be subject to Saudi Arabian law, including Sharia inheritance rules, regardless of the owner’s nationality or domicile. Understanding situs is essential for developing a comprehensive estate plan that considers the legal implications of asset location.

New Opportunities: The Foreign Real Estate Ownership Law of 2025

A monumental shift in the concept of situs for expatriates and foreign investors is the new Law of Real Estate Ownership and Investment by Non-Saudis (issued by Royal Decree No. M/14 on 25 July 2025), which takes effect in January 2026. This law repeals the restrictive 2000 framework and allows non-Saudis, including resident individuals and foreign companies, to own real estate in designated zones across the Kingdom.  

Key features of the new law include:

• Designated Ownership Zones: Foreign ownership is permitted in specific geographic areas to be identified by the Real Estate General Authority (REGA), with cities like Riyadh and Jeddah expected to be included.  
• Expanded Eligibility: The law extends ownership rights to non-resident individuals and foreign-incorporated companies, not just licensed investors or residents.  
• Restrictions in Holy Cities: The general prohibition on foreign ownership in Makkah and Madinah remains, but narrow exceptions now allow Muslim foreigners to acquire limited property rights in specified areas.  

This law transforms real estate into a core asset class for foreign investors in Saudi Arabia. However, any property owned under this law will be considered a Saudi-situs asset and will be subject to the Kingdom’s mandatory Sharia inheritance rules upon the owner’s death.  

Navigating Transfer Tax Issues

Transfer taxes, such as inheritance or gift taxes, can significantly impact the value of an estate. While Saudi Arabia does not currently impose inheritance or gift taxes, international clients may face tax liabilities in their home countries. For example, a Saudi Arabian resident who is a citizen of a country with an inheritance tax could be subject to taxation on their worldwide assets, including those held in Saudi Arabia. Strategic tax planning, which may involve using offshore structures or other legal mechanisms, can help mitigate potential transfer tax liabilities and ensure that your beneficiaries receive the maximum benefit from your estate.

Estate Administration in Saudi Arabia

The Process of Estate Distribution

Estate administration in Saudi Arabia is governed by Sharia law and involves a distinct process for distributing assets. When an individual passes away, their estate is distributed according to a combination of forced heirship rules and any valid bequests (wasiyya) they may have made. The process typically begins with addressing funeral costs and settling any outstanding debts of the deceased.

The next step is obtaining a declaratory deed from the Personal Status Courts, which confirms the rightful heirs of the deceased. This deed is essential for the heirs to proceed with the division of assets. If all heirs agree on the distribution, they can manage the transfer through an amicable division, often formalised in a signed settlement. If there are disputes, such as disagreements over asset valuation or an heir’s refusal to divide the estate, any heir can file a lawsuit to compel a court-ordered division. Furthermore, the Ministry of Justice has launched a digital inheritance distribution service on its Najiz.sa platform, which streamlines the process for distributing financial assets like bank accounts and investment portfolios by automatically verifying heirs and disbursing funds.  

Challenges for Non-Muslim Expatriates

Non-Muslim expatriates living in Saudi Arabia may face unique challenges when it comes to estate planning and administration. Sharia law, which governs inheritance in Saudi Arabia, has specific rules that may not align with the estate planning wishes of non-Muslims. For instance, Sharia law dictates a fixed inheritance structure based on religious affiliation and familial relationships, which may differ significantly from the laws of an expatriate’s home country.

In some cases, non-Muslims may be able to use alternative estate planning vehicles, such as offshore foundations or trusts, to ensure their assets are distributed according to their wishes. However, it is crucial for non-Muslim expatriates to seek expert legal advice to navigate these complexities and create an estate plan that is both compliant with Saudi Arabian law and effective in achieving their objectives.

Alternative Vehicles for Estate Planning in Saudi Arabia

Endowments (Waqf) as an Estate Planning Tool

In Saudi Arabia, endowments, known as “waqf,” offer a unique approach to estate planning rooted in Sharia law. A waqf involves dedicating assets for a specific purpose, often charitable or for the benefit of family members. This dedication is permanent and irrevocable, ensuring the assets are used according to the endower’s wishes.

There are three main types of waqf:

• Charitable endowments (al-waqf al-khayri): These benefit public welfare entities, such as mosques or organisations supporting the poor and needy.
• Family endowments (al-aaqf al-ahli): These are designed to benefit the endower’s family, including their children and descendants.
• Joint endowments (al-waqf al-mushtarak): These combine both charitable and family benefits, allocating a portion of the assets to each.

To establish a valid waqf, several formalities must be met. The endower must be of sound mind and legal age, and the assets must be fully owned by them. The waqf deed must clearly outline the type of endowment, its purpose, and the designated beneficiaries.

The General Authority for Awqaf (GAA), an independent government body, plays a crucial role in overseeing endowments in Saudi Arabia. The GAA is responsible for regulating, preserving, and developing waqf assets to ensure they align with the founder’s wishes and contribute to economic and social development.

Foundations and Trusts: Offshore Solutions

While waqf is a powerful onshore tool, high-net-worth individuals have historically explored offshore solutions like foundations and trusts. However, it is now critical to approach these structures with extreme caution for any assets located in Saudi Arabia. As established in the 2024 UK Supreme Court case Byers & Ors v Saudi National Bank UKSC 51, Saudi law does not recognise the legal distinction between a trustee and a beneficiary that is fundamental to a trust. This means that the intended asset protection may be ineffective, as a Saudi court will prioritise the legally registered owner of the asset, potentially overriding the terms of the foreign trust. Therefore, relying solely on an offshore trust for Saudi-situs assets is a high-risk strategy.  

Foundations, for instance, are separate legal entities that hold and manage assets according to the founder’s wishes. They can be designed to benefit specific individuals or charitable causes, providing a structured approach to wealth preservation and distribution.

Trusts, on the other hand, involve transferring assets to a trustee who manages them for the benefit of designated beneficiaries. This arrangement allows for greater control over how assets are distributed and can be particularly useful for managing inheritance and succession planning.

When considering offshore solutions, it’s crucial to ensure compliance with both Saudi Arabian and international laws. Seeking expert legal advice is essential to navigate the complexities of cross-border estate planning and ensure the chosen structure aligns with the individual’s objectives.

Tax Considerations in Saudi Arabian Estate Planning

Overview of the Saudi Arabian Tax System

Saudi Arabia’s tax system is unique and has seen several important updates in 2024 and 2025. While there is no personal income tax, understanding corporate tax, Zakat, and other duties is crucial.

• Corporate Income Tax and Zakat: A 20% corporate income tax applies to the profits of companies owned by non-Saudis. Saudi and GCC-owned companies are subject to Zakat, a religious levy calculated at 2.5% on the company’s “Zakat base” or net worth. On March 22, 2024, the Zakat, Tax and Customs Authority (ZATCA) issued a new Zakat Implementing Regulation, which updates the rules for calculating the Zakat base for fiscal years starting from January 1, 2024.  
• Tax Amnesty Extension: ZATCA has extended its tax amnesty initiative until June 30, 2025. This initiative waives penalties for late tax filings and payments, offering a valuable opportunity for individuals to ensure their business entities are fully compliant before estate distribution, as all debts must be settled first.  
• Real Estate Transaction Tax (RETT): A new RETT Law was published in late 2024. It codifies the 5% tax on most property sales. Notably, gifts of real estate between spouses and relatives up to the third degree remain exempt, providing a useful tool for lifetime estate planning.

International Tax Planning Strategies

International estate planning involving Saudi Arabia requires careful consideration of tax implications in both Saudi Arabia and the individual’s home country. For instance, while Saudi Arabia does not have inheritance or gift taxes, an individual’s home country might.

Effective tax planning strategies can help minimise tax liabilities. These strategies might include:

• Structuring assets: Strategically holding assets in different jurisdictions can optimise tax efficiency.
• Utilising trusts or foundations: Offshore trusts or foundations can offer tax advantages and asset protection.
• Seeking professional advice: Consulting with tax experts specialising in cross-border estate planning is essential to navigate the complexities of multiple tax systems and ensure compliance.

Navigating the complexities of international tax laws requires expertise and careful planning. Engaging with legal and tax professionals experienced in cross-border estate planning is crucial to develop a comprehensive strategy that aligns with your specific needs and goals.

Planning for Modern and Digital Assets in Saudi Arabia

The nature of wealth is evolving, and a comprehensive estate plan must now account for digital assets.

The MoJ’s Digital Inheritance Service

The Saudi Ministry of Justice (MoJ) has launched a digital inheritance distribution service through its Najiz.sa platform. This service integrates with the Saudi Central Bank and the Capital Market Authority to automate the distribution of regulated financial assets, such as bank account funds and investment portfolios, directly to legally recognised heirs. This innovation greatly simplifies and accelerates the administration of traditional financial estates.  

The Challenge of Decentralised Digital Assets

While the MoJ’s service is effective for centralised financial assets, a legal gap exists for decentralised digital assets like cryptocurrencies (e.g., Bitcoin) and Non-Fungible Tokens (NFTs). Saudi law does not yet have specific provisions for these asset classes. Without a clear succession plan, which is a core part of digital asset international estate planning, these assets can be permanently lost upon the owner’s death. Currently, the most practical tool to manage these assets is the one-third bequest (wasiyya), which can be used to appoint a “digital executor” and provide instructions for their transfer.

Conclusion

Navigating the complexities of international estate planning in Saudi Arabia requires a thorough understanding of Sharia law, local regulations, and international tax implications. For high net worth individuals with assets in Saudi Arabia, a well-structured estate plan is crucial to ensure that their wealth is protected and distributed according to their wishes.

Seeking professional guidance from PBL Law Group’s international estate planning lawyers is essential. By carefully considering the unique aspects of Saudi Arabia’s legal framework and exploring various estate planning vehicles, high net worth individuals can create a robust plan that safeguards their legacy and provides for their beneficiaries.

Frequently Asked Questions