As the COVID-19 pandemic continues to manifest uncertainty around the world, Managing Director - UAE, Nina Auchoybur highlights the importance of succession planning and how Dubai's dynamic foundation vehicle provides an effective solution for the preservation of wealth.
In the UAE, we often witness high-net-worth individuals and businesspeople delaying their succession plans as they feel no immediate threat to their health and life. However, succession planning is essential in safeguarding the interests of their family in the case of sudden death or an incapacitating illness.
Succession planning in the UAE
In the UAE, succession planning provisions for the significant expat population (approx. 80%) living and working here were only introduced in 2015 with the Dubai International Financial Centre (DIFC) Will. With many expats increasingly acquiring property, businesses and making the UAE their primary centre of interest, the DIFC Will allows non-Muslims to register an English Will to govern the succession of Dubai assets free of the constraints of Sharia law. Without the DIFC Will, assets would have to be secured through long and costly probate and legal proceedings.
The unprecedented move, however, came in August 2017 with the introduction of the Abu Dhabi Global Market (ADGM) Foundation and then in March 2018, the DIFC Foundation and most recently in January 2020, the Ras Al Khaimah International Corporate Centre (RAK ICC) Foundation. Their introduction provides both expats and UAE nationals with a local solution to protect their assets and make succession planning arrangements. For example, in the case of family businesses, a foundation enables the business to transcend generations while retaining core values and principles initially outlined by the founder.
Find out more about the DIFC Foundation vehicle, its features and benefits in our article Family governance in the UAE - DIFC Foundations.
A local solution to succession planning
For Muslim families, Sharia law implications are an important aspect of succession planning. As a common law vehicle, the foundation can be fully considered by Muslim families who wish to respect Sharia law principles on inheritance. At Ocorian, we are seeing a variety of structures being put in place using the foundation vehicle to hold businesses, real estate and investments.
We understand that needs evolve over time, particularly in periods of uncertainty. Regardless of the complexity of the desired structure, we enable our clients to pass on the benefits of their assets in full accordance with their wishes to ensure their legacy is preserved.
With service offices in 15 jurisdictions, we can deliver a comprehensive range of private wealth services from the Americas, Europe, Middle East, Asia and Africa, drawing on our global team of private wealth and financial structuring professionals who work with our clients to provide strategic solutions to suit their evolving needs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.