COVID-19 pandemic has posed a global health crisis and turned out to be our greatest adversary since World War Two. Irrespective of the elderly and those suffering from health issues, all individuals are made to ponder over the systematic planning of distribution of their estate and wealth for rightful succession through a legal document declaring individual intentions for the division of their assets upon death.
To provide better living standards to the expatriate community who are in great numbers and both working and residing in the country, the government has put a lot of effort into introducing many crucial amendments to several laws and most important amendments to the issues of succession planning and inheritance. However, this being a complicated and sensitive subject needs careful handling and expert professional and legal advice.
The United Arab Emirates (UAE) has recently announced several legal and regulatory changes in the private wealth space.
The UAE is considered as an investment hub in the MENASA region and its regulatory environment plays an influential role in drafting the succession plan and division of wealth to the future generations of the Ultra High Net Worth Individuals (UHNWIs). As huge private wealth is concentrated in the Middle East mostly owned by family businesses, the successful transfer of such wealth is vital for the future economic development and growth in this region.
UAE’s inheritance provisions, long dictated by the Sharia provision, have recently been replaced with alternative measures for Expatriates and brought in amendments in the distribution of the estate of a non-Emirati individual. The estate planning can now be handled as per the rules of the home country of a non-Emirati when found different. In case of a divorce, similar provisions shall apply for the distribution of wealth and property.
The latest amendments demonstrate the country’s commitment to remain attractive to foreign expatriates and attract foreign direct investment into the country. The changes are made to address certain succession issues and facilitate the planning of transfer of wealth of many expatriate residents and private business owners in the country. Earlier Sharia dictated inheritance provisions applied even to the non-Muslims and for the distribution of assets of individuals on their demise unless a registered will was available with the Wills and Probate the Registry of the DIFC or the Abu Dhabi Judiciary.
The new regime mandates that the country’s rules and regulations shall determine the distribution of assets of the deceased citizen unless a registered will has been made with specific intentions. Similarly, the distribution of real estate in the UAE will continue to be distributed as per the rules prevailing in the country.
Vice President and Prime Minister of the UAE His Highness Sheikh Mohammed bin Rashid Al Maktoum as Ruler of Dubai issued Law No. 9 of 2020 for regulating family-owned businesses in Dubai. A transparent legal structure has been introduced in this legislation in an endeavour to secure and grow the wealth of individual families as well as promote contributions of the family businesses and private wealth for the social and economic development of the nation.
The new law has been made optional for new and existing family businesses including corporate equity securities and proprietorship. Family ownership in public joint-stock companies including movable and immovable properties however have been excluded from this regulation.
A legal framework for the internal business processes of family-owned entities has been provided in this new law regulating articles of family ownership contracts, organizational structure and management, responsibilities and authorities management with clearly defined delegation of power including the composition and structure of the board. The responsibilities of government entities towards the formation of family businesses have also been clearly outlined.
To make the family ownership contract legally binding, a few conditions have been put forth as under. Once the conditions are successfully met, the contract will require an attestation from a notary.
- All parties of the contract to be members of the same family with a single common interest.
- Shares of each member to be clearly defined, and,
- The legal monetary rights including rights of assets must lie with the concerned parties under the purview of the contract
We, at IMC, continually strive to offer families personalized services that can create maximum value. We are a UAE based professional services provider with an entire range of solutions fully compliant with UAE laws and regulations and backed by advanced technological infrastructure and systems.
We put our clients first and build a trusting relationship with a commitment to utmost confidentiality and help our clients for an effective and smooth transfer of family assets to their future generations.
We religiously coordinate with inheritance, tax and estate law experts and commit our most value-added services to establish and administer estate planning and succession structures to families across the globe. We also provide our services for asset management and protection, tax planning, trade transactions, business and family succession, and estate planning.
The succession planning process can be complex at times and especially when it involves establishing Company Structures, Foundations and Trusts at an international level. It usually calls for professional and expert consultations and can be outsourced to a local service provider for ensuring the continued security of assets and smooth succession.
Mr. Johnson K. Rajan, is part of the management team at IMC. His core expertise lies in Trust advisory & Family office with several years of multinational experience in Wealth planning, External Asset Management, Fund Administration & Custodial Banking. A Registered Trust & Estate Practitioner with the Society of Trust and Estate Practitioners (STEP) United Kingdom and an MBA from Bharathiar University, India.
He primarily manages Client Advisory, Relationship Management & Business Development amongst other responsibilities in Advisory & Secretarial capacity on the board of client companies, managing large and key client relationships along with driving the identification, execution of new business opportunities.