Succession and asset protection in UAE
01 June, 2016
As a business owner, it is quite likely that a significant portion of your personal wealth is tied up in your business and, at some stage, every family owned business must be transferred.
Business succession planning seeks to manage these issues, setting up a smooth transition between you and the future business owners of your business. With family businesses, succession planning can be especially complicated because of the relationships and emotions involved. If you have partners, it is particularly important decision to make.
We provide experienced and practical advice that will integrate your family estate planning and retirement planning needs to maximize the value of your business and enable it to meet future needs.
A substantial number of clients call upon us to help protect their assets from daily operational risks in the course of their trade, from frivolous lawsuits and excessive inheritance tax.
The key to asset protection lies in the separation of liabilities: personal liability, different business ventures, real estate, pension or 'rainy-day-funds' should all be separated. The simplest form of asset protection is a limited liability company. It can be used to separate your private assets from the risks associated with your business venture.
Depending on your needs, additional layers of protection can be added to protect your interests. For example, you can protect your company from the risks of a former sole-proprietorship or general partnership by setting up a Trust. Your estate can be protected from claims using a Foundation, intellectual property can be managed by an offshore IP holding company and so on.
Trusts and Estate Planning
In the world of International tax planning, the trust formation is popular. A trust offers the possibility to separate your business assets from your private assets, and those assets managed on behalf of a beneficiary or charity.
When you decide to set up a trust, you can benefit from all the features of this asset protection tool and the jurisdiction that it is in. You will be able to allocate your funds and assets according to your wishes.
A trust is created by a settlor who transfers some or all of his property to a trustee, who holds those trust assets for the benefit of the beneficiaries. The trustee owes a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property.
A will is a legal document that declares your intentions as to what should happen to the distribution of your assets, on death. These assets typically include real estate, money, investments, jewellery, vehicles and personal or household belonging that you own, and they can be bequeathed to individuals, families or institutions, either in part or as a whole. A Will can also be used to specify other wishes.
For those that have assets in the UAE there is a simple reason to make a will. The Government of Dubai official website states that 'The UAE courts will adhere to Sharia law in any situation where there is no will in place'.
Inheritance issues for Muslims are dealt in accordance with Sharia, whereas for non-Muslims, the law of the deceased's home country can apply. Succession under Sharia law principally operates by a system of forced heirship or reserved shares.
After years of observing the pressing need for clarity on the current UAE wills and inheritance legislation, we welcome the newly launched DIFC Wills and Probate Registry. It provides certainty for non-Muslim expatriates to pass on their Dubai estate in the event of death to their chosen beneficiaries. The Registry marks the introduction of a new set of rules relating to succession and inheritance matters for non-Muslims with assets in Dubai and a mechanism to pass on their estates in Dubai according to their wishes.
You may wish to set up your family office with us, to work with you in administering your company or group and personal affairs. You will be assigned an experienced relationship manager from our office who will take care of your private and family financial affairs. He will be monitored by a partner of our office. We will review together your personal situation, assess your wealth, assets, income and personal expenditure. We will then agree objectives and targets and set out a business and personal plan to accomplish them.
Our aim is to maximize your wealth and, as the same time, deal with issues of succession, asset protection and inheritance.
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