Family Offices in the United Arab Emirates

Family Offices in the United Arab Emirates

This article covers the family offices in the United Arab Emirates.

The UAE has established itself as a center for family wealth, experiencing a 20% growth in financial wealth in the region in 2021, which is higher than the global average of 11%. In 2021, around 41% of this wealth was generated by Ultra High Net Worth Individuals (UHNWI), projected to increase to 46% by 2026.

The Role of a Family Office

A family office is a private wealth management advisory firm that provides comprehensive financial and investment services to high-net-worth families and individuals. The primary objective of a family office is to preserve and grow its clients’ wealth across generations.

A family office typically provides investment management, tax planning, estate planning, philanthropic advisory, and administrative support services. It can be either a single-family office (SFO) serving only one family or a multi-family office (MFO) serving multiple families.

The scope and range of services offered by a family office can vary widely depending on the needs and goals of its clients. Some family offices offer lifestyle and concierge services like travel planning, event coordination, and personal shopping.

Overall, the primary goal of a family office is to provide customized and personalized financial solutions to meet the specific needs of high-net-worth individuals and families.

Set Clear Goals for Family Offices

Individuals contemplating the establishment of a family office should begin by outlining their objectives for the future and identifying the resources they require to fulfill them.

Pose the question to yourself, “What are my aspirations for the coming decade or two from now?” and thoroughly evaluate the intricacy of your assets and reasons that necessitate a family office arrangement.

Although there are fundamental responsibilities that a family office performs, such as managing taxes, trusts, and estates, families must also establish the extent of involvement they require from professionals in other domains, including charitable giving and financial education. Families can benefit from more extensive and holistic guidance in the long run by integrating these services.

Benefits of Setting Up a Family Office in the UAE

There are many reasons why high-net-worth families and individuals set up their family office in the UAE; some of these include the following:

  • Zero personal and corporate income tax and no profit or capital repatriation restrictions.
  • Maintain confidentiality through a corporate setup.
  • Ensure intergenerational wealth transfer through corporate succession planning.
  • Separate the management of family wealth from their businesses.
  • Start with low capital and no minimum workforce requirement.
  • The UAE government is known for its efforts to maintain stability and security, and it has a strong record of safeguarding wealth for expats and citizens.
  • The UAE is often ranked as the most stable and prosperous country in the MENA region.

Establishing Family Offices

In your exploratory phase, you must decide on the structure of your family office, whether a single-family office (SFO) or a multi-family office (MFO).

Dubai International Financial Centre (DIFC)

To operate a family office in the UAE, you must obtain a license from the relevant regulatory authority. In Dubai, the most popular jurisdiction is the Dubai International Financial Centre (DIFC), regulated by the Dubai Financial Services Authority (DFSA). In Abu Dhabi, the most popular jurisdiction is the Abu Dhabi Global Market (ADGM), regulated by the ADGM Financial Services Regulatory Authority. You’ll need to select a suitable location for your family office within the DIFC or ADGM.

Dubai Multi Commodities Centre (DMCC)

In recent years, the Dubai Multi Commodities Centre (DMCC), a free zone in Dubai, has also started to cater to family offices. To establish a family office in the DMCC, you must register and obtain a license from the DMCC authority. The DMCC offers various services and benefits, including access to world-class infrastructure, a business-friendly regulatory environment, and a wide range of support services. Additionally, the DMCC has a dedicated Family Office Unit that offers customized services for family offices, including wealth management, estate planning, and corporate services.

Hire Experienced Professionals for Your Family Offices

Though whatever jurisdiction you select, you have to hire a team of experienced professionals, such as financial advisors, investment managers, lawyers, and accountants, to provide comprehensive financial services to your family. In addition, establishing robust policies and procedures is essential to ensure compliance with regulations and best practices. You must also set up IT infrastructure, including hardware and software, to manage data, communication, and other administrative functions.

Finally, it is essential to periodically review and refine your family office’s performance and adjust your strategies and objectives accordingly. Also, it is highly recommended to seek the assistance of professional advisors and legal counsel to set up a family office in the UAE.

Don’t hesitate to contact one of our seasoned professionals to discover how we can help you launch your family office in the UAE!

Note: You might be interested to read about UAE Foundation and Comparison between Trust and Foundation.

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