In these rapidly changing times, periods of transition can be difficult, distressing and downright complicated for any family or business and so Succession Planning in UAE is of paramount importance as it plays a vital role in maintaining the success of any family business. These changing times are clearly reflected in the results of the 2019 PwC Middle East Family Business Survey, which saw Succession Planning as a key issue for 53% of respondents. To deal with the difficulties, expectations and feelings of a more or less sensitive subject matter, high-net worth families should have a proactive succession plan ready to be implemented as soon as possible. This can be achieved via frank and sincere discussions with Succession Planning advisors.
What exactly is Succession Planning?
At Wincore, we have an affinity to Rothwell’s definition of Succession Planning defined as a deliberate and systematic effort by an organization to ensure leadership continuity in key positions… So in essence a poorly executed succession plan will often lead to disagreements & disputes in families and family businesses, financial pressure and risks. Therefore, a great succession plan is required to be implemented professionally and well in advance, allowing time for a smooth transition.
What is the Importance of Succession Planning in UAE?
- Succession planning clearly sets out the direction of the family business and other family assets and coordinates the organization if the key family leader retires or dies.
- Succession planning would help mitigate the risk of disintegration of family businesses and can ensure its survival for future generations.
- Succession planning maintains the integrity and viability of business through generations and engraves into the marble, the guidelines of the patriarch.
- Succession planning allows for the consolidation of assets within one umbrella, the foundation OR trust.
- Succession planning offers asset protection against third parties.
- Succession planning Maintain integrity and viability of business through generations.
- Succession planning helps families and businesses avoid succession disputes before courts and dislocation of group into parts.
- Succession planning allows aggregation and capitalisation of business income through generations.
- Succession planning aids organizations to develop talent for current and future needs. Family Businesses without succession plans have no choice but to act in response in a state of panic while met with unavoidable losses, which results in ineffective succession decisions.
- Succession planning guarantees that senior managerial talent is accessible.
Typically, family businesses have carried out succession in families through a will. However, one needs to be mindful of the fact that a will as a document and is easily contestable in courts. It is for this reason that more and more families have been transitioning their wealth into Family Trusts and Foundations as they are considered to be more viable succession planning vehicles. Unlike in the case of a will which leads to disintegration of family wealth, trusts & foundations can continue for generations to come even in the event of demise of the family leader.
For Succession Planning in the UAE, regardless of whether the entity is property, a free zone company or an LLC, owners should understand that under UAE law, assets – including the bank accounts – of a deceased person are frozen until a UAE court releases the succession mandate. In this case, families of expatriate owners are often caught in a situation of confusion and distress. The improbability of life may cause unforeseen situations, and succession planning is a definite way to prevent a family and business from plunging into chaos.
Wincore specializes in Tax, Corporate and Fiduciary matters. We provide pragmatic, flexible and efficient solutions to individual entrepreneurs, startup businesses, foreign and local SMEs, multinationals, wealthy international families, HNWIs and UHNWIs.
Wincore Advisory Group’s full range of services on : CRS (AEOI) – OECD exchange of information ; Economic Substance Regulations; Trusts & Foundations; Asset protection, Estate Planning; Succession Planning; Tax Planning; Sophisticated UAE Sponsorship Planning; Corporate Services; Debt Collection Services in UAE; Residency & Citizenship Services ( Foreign second passports).
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