Below are the highlights of the webinar:
Introduction to Wealth Transition: The term "Great Wealth Transition" refers to the significant transfer of wealth between generations, particularly among high-net-worth families in the Middle East. We are currently witnessing one of the largest wealth transfers in history, driven by substantial wealth growth over recent decades. For example, BRICS1 countries saw a combined wealth increase of 54% from 2013 to 2020, and the UAE is expected to hold over a trillion dollars in assets by 2025. This generational transition is unique, as many first-generation wealth creators are now entering their 70s, 80s, and 90s, making succession planning critical for preserving their legacies.
Key Risks in Wealth Transition: Failure to plan for wealth transition exposes families to risks such as family business succession disputes, personal succession issues, tax liabilities, and mental capacity concerns. Addressing mental capacity is often overlooked, especially in cultures where discussing incapacity is considered culturally sensitive. Families must implement strategic planning to mitigate these risks, particularly in regions with complex legal frameworks like the Middle East.
The Importance of Early Planning: Planning for wealth transition should be initiated early to prevent disputes and challenges. Key steps include:
Preparing a comprehensive list of assets and updating it annually.
Appointing the right advisors with expertise in cross-border wealth management.
Creating provisions for mental capacity and succession to ensure seamless wealth transfer across generations.
Legal Structures for Wealth Planning: Various legal structures such as wills, trusts, and companies are available for succession planning, each with its own benefits:
Wills: Provide control over asset distribution but may be subject to forced heirship rules in certain jurisdictions.
Companies: Offer consolidation of assets and ease of transfer without probate but may lead to shareholder fragmentation.
Trusts: Allow for more controlled succession planning and gradual transfer of wealth to younger generations.
Advisory and Ongoing Review: It’s crucial for families to establish long-term relationships with advisors to regularly review and update their wealth transition plans. Annual check-ups are recommended to account for changes in tax laws, family circumstances, and global economic shifts.
Final Advice: Start the process of wealth transition planning in manageable steps. Regularly review the plan to ensure it aligns with evolving family and legal circumstances. Wealth transition, when handled early and strategically, can help secure the family's legacy for generations.
Watch the full webinar to learn how to preserve wealth and ensure a smooth generational transition with offshore structuring.
(1) BRICS is an intergovernmental organization comprising Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates, founded by Russia, China, India and Brazil in 2009 for political and economic purposes.