Middle Eastern private and family businesses have experienced rapid expansion over time. Without proper planning, though, fragmentation could occur, and family businesses might split. With that being said, high-net-worth individuals often seek to preserve family businesses for future generations while passing them on to subsequent generations, so in this article, we will look at strategies which may help achieve such goals.
Ownership Structure
Although direct ownership might appear to be the easiest and most flexible option, it may not suit all types of assets. Your goals could range from maintaining control over certain assets to safeguarding them against creditors or family members. So it is crucial that you fully comprehend any legal ramifications that accompany any chosen ownership structure.
As families consider which vehicle to use and where to establish it, several considerations need to be taken into account when making this important decision. Tax implications, legal considerations, public disclosure requirements, asset protection measures and legal ownership restrictions all need to be considered when selecting the most appropriate structure for them. Trusts and foundations provide structured solutions, offering some asset protection as well as succession planning benefits.
Wills can simplify probate proceedings and provide certainty to heirs, yet in parts of the Middle East wills are not recognized and Shariah law takes precedence when allocating assets upon death. Non-Muslims living in Dubai or Ras Al Khaimah can register DIFC Wills that cover immovable and movable property as well as guardianship of any children habitually resident there.
Corporate and Family Governance
Good governance is critical to protecting and managing sustainable growth for any family business and ensuring its future generations. A robust governance model should promote transparency, clarity, accountability and fairness. Shareholder protocols or family councils may help to facilitate continuity, smooth succession or address family concerns as they arise.
Transparency and Privacy for Better Transaction Experience
Global tax transparency measures such as the OECD Common Reporting Standard and Ultimate Beneficial Ownership registers have dramatically increased the amount of information about financial assets owned by individuals that are available to authorities and the public. It is crucially important that you are aware of any information publicly accessible that poses threats to the security of yourself or your family, which could compromise security measures.
Establishing a family office can be an effective solution to effectively managing wealth and assets for any family. A family office may take different forms depending on your family’s specific needs and objectives. More families are now turning to family offices in order to maximise financial interests, decrease complexity, and manage personal affairs efficiently.
Family offices provide essential administrative support as well as more comprehensive services that incorporate strategy, asset management and governance. Since each family has unique needs and requirements for its family office services, there can be as many different kinds of family offices as there are families.
At its core, wealth preservation and succession require careful planning and strategic execution. At IMC Group we can assist in setting up a family office tailored specifically to your specific needs and objectives to ensure the successful continuation of your family legacy into future generations.
