UAE Law and Practice Contributed by: Yann Mrazek, Kath Zagatti, Hermione Harrison and Keerthi Voodimudi, M/HQ Corporate Services Ltd
used to regulate control, manage leadership transi- tions and provide structured mechanisms for dispute resolution. This approach is particularly effective where wealth is concentrated in trading groups, real estate portfolios, or operating businesses, as it pre- serves operational continuity while enabling orderly succession. Insurance Structures Life insurance is commonly used as a liquidity plan- ning tool, particularly where estates are asset-rich but lack readily available cash. This is often the case where wealth is concentrated in real estate or oper- ating businesses that cannot easily be sold without disrupting value or control. Insurance proceeds can provide immediate funds upon death, allowing distri- butions to heirs without requiring the sale of underly- ing assets. Structured Transfers and Reorganisations Families in the UAE often use structured transactions to transition ownership gradually rather than through immediate transfers. These may include intra-family sales, capital reorganisations or phased share trans- fers within holding companies. Such arrangements allow senior family members to retain oversight while introducing the next generation to ownership and responsibility. They also help prevent fragmentation of assets and align control with experience. 6.2 Tax and Regulatory Constraints As the UAE does not impose inheritance tax, estate tax or personal income tax, lifetime succession plan- ning is generally not driven by wealth transfer taxation. Instead, structuring decisions are shaped primarily by regulatory, ownership and compliance constraints. From a regulatory perspective, asset type presents the most significant limitations. Transfers of UAE real estate require registration with the relevant Emirate land department and payment of applicable transfer fees. Ownership restrictions may apply depending on the Emirate, the location of the property (for example, designated freehold areas) and the nationality or legal status of the transferee. Comparable considerations arise in relation to shares in regulated businesses, where licences, regulatory approvals or sector-spe-
cific rules may affect transferability and operational continuity. Corporate law considerations also influence the choice of planning vehicles. Holding companies, foun- dations and other structures must be implemented in compliance with applicable company law, free zone regulations and any transfer restrictions or govern- ance provisions contained in constitutional docu- ments or shareholder agreements. Anti-avoidance considerations arise primarily through general legal principles and, increasingly, through cor- porate tax and transparency frameworks. Although the UAE does not have a succession-specific anti- avoidance regime, the federal corporate tax system introduces substance and classification requirements that may affect group reorganisations, intra-group transfers and the tax treatment of certain entities. Global transparency standards and cross-border reporting obligations similarly influence structuring decisions for internationally mobile families. Where families have cross-border exposure, foreign tax regimes often become the primary constraint. Estate, inheritance, gift and income tax rules in other jurisdictions may affect the suitability of lifetime gifts, trusts or holding structures, as well as the recognition of foundations or trusts for foreign tax purposes. In practice, UAE structuring is frequently co-ordinated with foreign tax advice to ensure that a locally effective succession plan does not create unintended conse- quences abroad. In summary, the desirability of lifetime succession mechanisms in the UAE is shaped less by domestic taxation and more by regulatory transfer requirements, corporate governance constraints, tax classification rules and cross-border reporting considerations.
7. Succession of Digital Assets 7.1 Legal Framework
In the UAE, the legal treatment of digital assets depends on both the nature of the asset and the jurisdiction in which it is held. A distinction must be drawn between digital accounts and data (such as
196 CHAMBERS.COM
Powered by FlippingBook