$1 Trillion at Stake – Why the UAE Government Is Urging Action
A historic wealth transfer is underway in the United Arab Emirates. According to Bloomberg, nearly $1 trillion in family-owned assets are expected to pass from the first to second and third generations by 2030. In response, the UAE government encourages families to establish formal succession plans to avoid disputes and economic disruptions.
In 2022, the UAE enacted Federal Decree Law No. 37 of 2022 concerning family businesses. This law ensures business continuity, protects assets, and formalises governance across generations. The urgency is clear: without proper planning, family businesses risk fragmentation, internal conflict, and operational breakdown.
Understanding Succession Planning in the UAE
Succession planning is more than just passing down ownership. It involves creating a structured roadmap for leadership transition, asset protection, and business continuity. In the UAE, where family-owned businesses make up 80% of the private sector, strategic succession planning is critical for long-term stability.
Key Components of Succession Planning
- Identifying future leaders
- Defining roles and responsibilities
- Establishing governance structures (e.g., family councils, advisory boards)
- Creating or amending Memorandums of Association (MOAs)
- Registering the family business with the UAE Family Business Register under the Ministry of Economy
Legal Framework for Family Business Succession in the UAE
The UAE has implemented several legal frameworks to encourage and protect structured succession planning:
Federal Decree-Law No. 37 of 2022
This law allows for:
- Family constitutions to define governance rules
- Asset protection through holding companies, foundations, or trusts
- Simplified dispute resolution mechanisms
- Ownership transfer without disruption
DIFC and ADGM Structures for Wealth Management
The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) offer modern legal frameworks aligned with common law. Through these, families can establish:
- Private family foundations
- Trusts and Special Purpose Vehicles (SPVs)
- Wills for non-Muslim residents registered under DIFC Wills Service
These structures are legally recognized and enforceable, offering a high level of asset protection and flexibility.
Why UK and Global Families Are Focusing on UAE Succession Planning
The UAE has become a magnet for global wealth due to:
- Zero personal income tax
- Robust legal systems (DIFC/ADGM)
- Political and economic stability
- Flexible residency through Golden Visa programmes
British entrepreneurs and families with UAE investments must consider succession structures to avoid inheritance complications, especially in cross-border estate planning.
Common Mistakes in Family Business Succession Planning
Even wealthy families often overlook:
- No formal succession roadmap
- Unclear leadership roles post-founder
- Lack of legal documentation
- Failure to separate personal and business assets
These can lead to internal disputes, tax complications, and weakened brand continuity.
How to Get Started with Succession Planning in the UAE
Here’s a step-by-step guide:
Step 1 – Assess Your Business Structure
Determine whether your business is better suited for a Mainland, Free Zone, or Offshore jurisdiction.
Step 2 – Choose a Legal Framework
Select from structures like a foundation, holding company, or family trust, depending on your asset distribution goals.
Step 3 – Register with Family Business Register
Under the Ministry of Economy, this registration gives your business legal recognition as a family-owned entity.
Step 4 – Draft a Family Constitution
Define governance rules, ownership shares, and dispute resolution procedures.
Step 5 – Work With Professional Advisors
Consult business setup and legal advisory firms like Flyingcolour® to ensure full compliance and optimal structuring.
How Flying Colour Business Setup Services Can Help With UAE Succession Planning
At Flying Colour Business Setup, we understand that succession planning isn’t just legal—it’s personal. With over 20 years of experience and 3000+ 4.9-star reviews, we’ve helped countless families secure their business legacies.
Here’s how we support you:
- Structuring foundations, holding companies, or trusts in DIFC, ADGM, and Free Zones
- Drafting family constitutions and MOAs
- Guiding through the UAE Family Business Law registration
- Facilitating cross-border wealth and succession planning
- Providing end-to-end business setup solutions
We combine legal knowledge, market expertise, and personalized attention to help you preserve your wealth, leadership, and family harmony for generations.
Frequently Asked Questions (FAQs)
Q1: Is succession planning legally required in the UAE?
No, but it is strongly encouraged by the government under Federal Decree Law No. 37 of 2022 to protect and formalize family businesses.
Q2: Can expats or non-Muslims create wills or succession plans in Dubai?
Yes. DIFC and ADGM both allow non-Muslim wills and offer enforceable legal structures for succession planning.
Q3: What’s the difference between a trust and a foundation in the UAE?
A trust is a fiduciary arrangement, while a foundation is a legal entity. Both are used for asset protection, but foundations offer greater control and flexibility in the UAE.
Q4: How long does the family business registration process take?
Typically 2–4 weeks, depending on documentation and chosen jurisdiction.
Q5: Can I start planning succession before my business is registered?
Absolutely. It’s often ideal to incorporate these structures during the company formation stage for seamless transition planning.
Therefore, to learn more about Succession Planning for UAE Family, Book a free consultation with one of the Flyingcolour® team advisors.
The article was published on 12/04/2025. It is important to note that the federal policies and updates mentioned may have changed since then. For the most current information, please contact our consultant!
