Living and working in the United Arab Emirates (UAE) is an exciting prospect for many high net worth individuals seeking financial success and personal growth. However, expats in the UAE, especially those with substantial wealth, encounter unique challenges in their financial planning journey. In this blog, we explore the intricacies of financial planning for expats in the UAE, focusing on high net worth individuals. Prestovia Trust, a leading financial advisory firm, brings you expert insights, practical tips, and valuable advice to help you navigate this financial landscape confidently.

Financial Planning for High Net Worth Expats: A Holistic Approach

To secure your financial future as an expat in the UAE, a holistic approach to financial planning is essential. Addressing various aspects of your financial life can create a robust and sustainable financial strategy. Here are key areas to consider:

1. Wealth Preservation in the UAE

As a high net worth individual in the UAE, preserving and protecting your wealth is a top priority. Diversifying your investment portfolio, leveraging offshore trusts, and understanding the local legal and tax environment are crucial. Prestovia Trust’s advisors can guide you through the intricacies of wealth preservation.

2. Tax Planning for Expats

UAE’s tax regime is favourable for expatriates, but navigating international tax laws can be complex. Proper tax planning can optimise your financial situation and help you take advantage of available tax exemptions. Stay compliant with international tax regulations while maximising your savings with expert assistance from Prestovia Trust.

3. Retirement Planning and Pension Solutions

Planning for retirement is vital, even for high net worth expats. Understanding pension schemes, offshore investment options, and retirement income planning will contribute to a financially secure future. Prestovia Trust can design customised retirement solutions tailored to your specific needs.

4. Estate Planning and Succession

Effective estate planning ensures that your wealth is transferred to your beneficiaries according to your wishes. With careful estate structuring and asset protection strategies, you can safeguard your legacy for generations to come. Our advisors at Prestovia Trust can assist you in creating a comprehensive estate plan.

5. Investment Opportunities in the UAE

The UAE offers a plethora of investment opportunities, from real estate to innovative businesses. Understanding the local market, risk appetite, and potential returns is crucial. Benefit from Prestovia Trust’s expertise in identifying suitable investment options aligned with your financial goals.

6. Risk Management

Life is unpredictable, and managing risks should be an integral part of your financial plan. From health and life insurance to liability coverage, our advisors can help you assess your risk exposure and recommend the most suitable protection strategies.

7. Education Planning for Children

Expats often seek a top-quality education for their children. Planning for their educational needs early on is essential. Our experts at Prestovia Trust can assist you in creating an education fund that ensures your children’s academic aspirations are well-supported.

8. Financial Management for Business Owners

If you are a high net worth expat with a business in the UAE, optimising your company’s financial structure is crucial. Prestovia Trust can help you manage cash flows, access financing, and explore growth opportunities.

Conclusion

Financial planning for high net worth expats in the UAE is a multifaceted journey that requires careful consideration of various factors. Whether it’s tax planning, investment opportunities, or estate structuring, Prestovia Trust is your trusted partner in achieving your financial goals. With our expert guidance and tailored solutions, you can navigate the unique challenges of expat life in the UAE with confidence. Secure your financial future today with Prestovia Trust.

Cross Border Estates: What Happens to Your Global Assets After Death?

When it comes to managing our finances, it’s essential to consider the potential implications of our assets after we pass away. For those who hold assets around the world, the implications can be even more complex. This is where cross-border estates come into play, and it’s crucial to understand what they are and what they mean.

In this blog post, we’ll delve into the topic of cross-border estates and how they can impact your assets after your death.

What are cross-border estates?

A cross-border estate is one where the deceased has assets located in different countries. It could be a bank account, real estate property, shares, or any other asset that has value. These estates are becoming more common as people are increasingly investing and owning assets across the globe. 

The complexity of cross-border estates arises due to the differences in legal systems and tax laws across different countries. For instance, if you have a property in the UK and another in the US, your beneficiaries may have to go through two separate legal processes to inherit these assets. 

What happens to your cross-border estate after you die?

When you pass away, your estate goes through a legal process called probate. This process is different for every country, and it can be complicated when you have assets in different jurisdictions. 

The probate process involves validating your will, identifying your assets, and distributing them to your beneficiaries. If you have assets in multiple countries, your estate may need to go through probate in each of those countries. This can be time-consuming and expensive, and it’s essential to plan ahead to avoid complications.

Why is Planning Important?

Cross-border estates can be particularly challenging because of the differing laws and regulations in each country. For example, inheritance laws can vary greatly from one country to another. Without proper planning, your loved ones could face a number of difficulties in trying to navigate the complexities of cross-border estates.

One key aspect of planning for a cross-border estate is understanding the concept of domicile. Domicile refers to the country in which a person is considered to have their permanent home. It is important to establish your domicile for estate planning purposes, as this will determine which country’s laws apply to your estate.

Another important aspect of planning for a cross-border estate is understanding the concept of forced heirship. Some countries have laws in place that require a certain portion of a person’s estate to be distributed to their heirs, regardless of what is stated in their will. This can be a particularly important consideration for those with assets in countries with forced heirship laws.

How can you plan for your cross-border estate?

Planning ahead can save your beneficiaries time, money, and stress. Here are some steps to consider:

1. Create a will: Your will should clearly state your wishes regarding your assets and who you want to inherit them. 
2. Seek legal advice: You should consult with an experienced estate planning attorney who can help you understand the legal and tax implications of your cross-border assets. 
3. Consider setting up a trust: A trust can help you avoid the probate process and ensure that your assets are distributed according to your wishes. 
4. Keep your documents up to date: Make sure your beneficiaries know where to find your will and other important documents, such as deeds, titles, and account statements. 

Estate Planning Strategies:

There are a number of estate planning strategies that can be used to help mitigate the challenges of cross-border estates. One important strategy is to work with a team of attorneys, accountants, and financial advisors who can help you navigate the complex legal and tax implications of cross-border estates.

Another strategy is to create a comprehensive estate plan that takes into account the differing laws and regulations of each country in which you hold assets. This may include establishing trusts or other legal structures that can help to protect your assets and ensure that they are distributed according to your wishes.

It is also important to review and update your estate plan regularly to ensure that it remains up-to-date and reflects any changes in your personal circumstances or in the laws and regulations of the countries in which you hold assets.

Conclusion

In conclusion, cross-border estates can present a number of challenges for those who hold assets in multiple countries. However, with proper planning and the assistance of a team of experienced advisors, it is possible to navigate these challenges and ensure that your assets are distributed according to your wishes. At Prestovia Trust, we are committed to helping our clients plan for their cross-border estates and achieve peace of mind knowing that their assets are protected.

Personal Wealth Management for High Net-Worth Families

Personal wealth management is a critical aspect of financial planning for high-net-worth families. It involves the management of financial assets and liabilities, as well as the development of a comprehensive financial plan to achieve long-term financial goals. The goal of personal wealth management is to help high-net-worth families protect, grow, and transfer their wealth effectively over time.

One of the key aspects of personal wealth management is asset allocation. This involves determining the appropriate mix of investments, such as stocks, bonds, real estate, and cash, to meet the specific needs and goals of the family. Asset allocation is important because it can help minimise risk and maximise returns over time. For example, a higher allocation to stocks may provide higher potential returns but also more volatility, while a higher allocation to bonds may provide more stability but lower potential returns.

Another important aspect of personal wealth management is tax planning. High-net-worth families often have complex tax situations with multiple sources of income and different types of investments. Tax planning can help minimise the overall tax burden and maximise the after-tax returns on investments. This can be done through a variety of strategies, such as utilizing tax-advantaged investments and taking advantage of tax deductions and credits.

Estate planning is also a crucial aspect of personal wealth management for high-net-worth families. It involves developing a plan for the transfer of wealth from one generation to the next, as well as addressing other important issues such as incapacity and end-of-life decisions. Effective estate planning can help to minimize the potential for disputes among family members, as well as reduce taxes and other costs associated with the transfer of wealth.

Risk management is also a key aspect of personal wealth management for high net worth families. This involves identifying and managing potential risks that could negatively impact the family’s financial well-being, such as market fluctuations, natural disasters, and legal issues. Risk management can help to protect the family’s wealth and ensure that it is available to meet their long-term financial goals.

Another important aspect of personal wealth management is philanthropy. High-net-worth families often have the resources to make a significant impact in their communities and beyond through charitable giving. Philanthropy can be an important part of a family’s financial plan, as it can provide a sense of purpose and fulfilment, as well as tax benefits.

One way to manage personal wealth for high-net-worth families is to work with a team of professionals. This may include a financial advisor, an attorney, a tax professional, and a risk management specialist. By working together, these professionals can help to develop a comprehensive financial plan that addresses all of the family’s needs and goals.

How can a Wealth Manager help?

A wealth management company like Finsbury can assist families with succession planning and intergenerational transfer of wealth. A qualified professional can assist with ensuring the correct structure is in place to help distribute wealth in accordance with family’s wishes, taking into account cross-border estates and jurisdictions, inheritance tax, philanthropic ambitions, structures, and much more. 

In conclusion, personal wealth management is a critical aspect of financial planning for high-net-worth families. It involves the management of financial assets and liabilities, as well as the development of a comprehensive financial plan to achieve long-term financial goals. By focusing on key areas such as asset allocation, tax planning, estate planning, risk management, and philanthropy, high-net-worth families can effectively protect, grow, and transfer their wealth over time. Additionally, working with a team of professionals can help to ensure that all aspects of personal wealth management are addressed in a comprehensive and cohesive manner.

Are Cybersecurity Investments Right for Your Portfolio?

The tech sector has been seeing a lot of volatility, but there is still one category within it that is going strong, and with good reason.

A slew of major cyberattacks over the past years, and the increasing threat it poses across industries and geographies have spotlighted the need for cybersecurity. Studies show that cybersecurity is and will continue to be a top priority for businesses across sectors in 2023, bolstering the strength and long-term outlook of the industry.

Cybersecurity is the application of technologies, processes, and controls to protect against the unauthorised exploitation of systems, networks, programs, devices and data, and reduce the risk of cyber attacks.

It is an important consideration for a number of reasons, including:

(1) The increasing cost of cybersecurity

(2) Increasingly sophisticated cyberattacks

(3) Its significance as a critical board-level business issue; and

(4) Cybercrime becoming big business, with a recent report stating that the world economy loses over 1 trillion dollars a year due to cyber attacks.

The need of the hour

Digital transformation, migration to the cloud, a move towards open access software, remote working and the application of AI into key industries have all been massive shifts that governments, businesses and individuals have been making in just a few years.

This rapid growth of tech in our daily lives has left it open to vulnerabilities, and cybersecurity has to match this pace of growth.

Scaling tech directly influences the scale of the risk it faces. As we digitize everything from oil lines and defence infrastructure to medical data and business information, security plays an increasingly important role in protecting our key interests and even geopolitical security.

Investing in cybersecurity

Some analysts say that leading cybersecurity vendors could see their revenues rise rapidly but also sustainably, given the expected long-term demand for cybersecurity services. The natural consequence of the growing complexity of cyberthreats and hackers’ capabilities is the increasing demand for and value of the security sector.

Cybersecurity could be a good addition to long-term portfolio holdings, and research has shown that it is geared to be the fastest-growing category compared to others in the software space.

However, investments into specific providers need to be considered carefully. Not all companies are doing well, and there are a number of mergers and acquisitions that have weakened rather than strengthened companies’ balance sheets.

Cybersecurity investments worth considering

Some factors you need to consider when investing in cybersecurity equity are governance, including the company’s risk management, the nature of its products, the data available and their projections. It’s worth spending some time familiarising yourself with the industry itself to gauge the value and potential of your choice of investments.

Vendors in sectors such as endpoint security and network security could be good additions to a balanced portfolio as these are services that cater to a wide range of users, from governments and global corporations to individual home users.

In our unpredictable geopolitical climate, defence and aerospace cybersecurity providers could also be lucrative opportunities to diversify your portfolio.

A thematic ETF is also a great option since its varied options could lend your capital stability, as well as help you stay on top of market trends.

The 2022 Q3 earnings season, along with market forecasts show that the demand for cybersecurity services is not likely to slow down anytime soon. Many sector leaders are likely to continue hitting high long-term revenue growth targets amid surging demands.

Talk to one of our experts at Prestovia Trust to discuss whether cybersecurity is a smart investment opportunity for you to diversify your portfolio and take advantage of compounding gains in the long term.

What is ESG Investing?

Environmental, social, and governance (ESG) investing represents a way of sustainable investing that takes into consideration ESG factors. ESG investing is based on the idea that environmental and social factors are leaving a stronger impact on the financial performance of corporations and organizations.

This method of investing adheres to environmental criteria which gives importance to how a company protects the environment and corporate policies focused on climate change and human well-being. ESG investing also considers strict social criteria which analyse the relationships between the company and its staff, customers, suppliers, and so on. 

Finally, it also follows governance criteria that address a company’s executive pay, audits, leadership, and shareholder rights, among others.

How does ESG investing work?

As ever, investors allocate their funds to assets with the highest-return potential. Given the growing importance of ESG factors in recent years, global brokers and mutual funds have started launching exchange-traded funds (ETFs) and other financial tools that adhere to ESG investing criteria. 

ESG-based ETFs and mutual funds hit a new high of $400 billion in assets under management (AUM) in 2021, marking a 33% year-over-year growth. This trend is expected to continue gaining traction in the future. Furthermore, industry reports showed that investors held $17.1 trillion in ESG-related assets in 2022, up from $12 trillion in 2018. 

The coronavirus pandemic played a major role in stimulating this trend as market turmoil drove numerous investors toward ESG-specific funds to provide more portfolio stability. In the first three months of 2022, ESG-specific funds saw inflows of $45.6 billion.

Incorporating ESG into your Portfolio

Incorporating ESG considerations into investment strategies is rapidly becoming a must for accessing capital. While investors continue showing more interest in ESG investing, many face issues related to how to actually incorporate ESG into their portfolios. Below are two key factors to consider.

Primarily, investors must specify their ESG beliefs and then decide how much ESG they wish to incorporate. 

One of the key steps to consider when incorporating ESG is active ownership. This method, which can be implemented via proxy voting or company engagement, has proven to be an efficient way to mitigate ESG-specific risks while maximising return potential and maintaining a positive social and environmental influence. 

Secondly, it is essential for investors to ensure they hire fund managers that can properly incorporate ESG factors into their portfolios. For this reason, it is important that their investment consultant thoroughly understands the importance of ESG factors and knows how to evaluate investors’ ESG capabilities. 

Big money managers have been adopting ESG investment principles quite slowly over the past decade, but that trend has been picking up steam much faster in the more recent period. Rising concerns over immediate threats looming over global economies and the planet, such as climate change, have brought asset managers to a turning point. 

That said, asset managers around the world are now facing a difficult challenge that involves developing a sustainable business model around the new age of ESG-specific investments.

Future of ESG investments?

It is clear that ESG investing will keep gaining traction in the future as investors continue to show an appetite for sustainable investment funds. There are several factors driving this trend, making it highly unlikely that ESG investing is a short-term movement. 

Both individual investors and the largest money managers are increasingly shifting portions of their portfolios toward ESG-specific investments as they seek ways to use their money to help build a more sustainable world. 

While ESG investing dipped in 2022 due to a tough environment, it is widely expected that investors should return to ESG investing as the market recovers and the global investor sentiment improves.

Talk to one of our experts at Prestovia Trust to discuss whether ESG Investments is a smart investment opportunity for you to diversify your portfolio and take advantage of compounding gains in the long term.

Succession planning is a vital component of wealth management to maximise the transfer of wealth through generations, regardless of your faith or country of domicile. However the location of your assets, country of domicile, your faith and wishes all play a determining factor in how your wealth is transferred after you pass away. Adequate succession planning with a qualified professional is crucial to ensure that you understand how your wealth can legally be transferred and what measures you can take now to ensure that this is done in line with your wishes.

Within the Islamic faith, succession principles are generally based on Sharia Law, the principles of which are explained below.

Basic Islamic succession planning principles

Simply put, these are similar across the GCC region with some variation in certain jurisdictions. There is a system of forced heirship with males assuming a more favourable position under Sharia Inheritance principles. The most obvious example being that sons inherit twice the share of daughters and there is a diminished share for female spouses. Although there is limited testamentary freedom, one third of an estate can be given away in a written Will although there are rules around who this can be bequeathed without permission from other heirs.

Within Sharia Law, results vary depending on family structure, regional and religious adaptations.

Lifetime gifts (hiba) are permitted, while these gifts could be within your values and Sharia Law, however, if you are from the UK and you are used to common law, it could be useful to set up an appropriate structure. Here is why:

Mohamed dies with assets in the UAE. He has no will. He is survived by his lifelong sweetheart – his wife, two sons and two lovely daughters. He also has a surviving brother. How would this play out  according to Sharia Law? His wife would receive ⅛ of his estate (12.5%). His children; sons would receive 7/12 (58.33%) and his daughters would receive 7/24 or 29.17%. His brother would receive nothing.

This may or may not be the result Mohamed would most likely have wished for.

When considering succession planning, where should you begin?

Understanding how your assets will be distributed and reviewing whether this is in line with your wishes.

A Will is always the basic necessity of succession planning. In the UAE there has been recent media reporting that Wills from your home country are set to be recognised for expatriates or non-Emiratis, but this is not, as yet, considered standard practice. 

Therefore our advice if you are a non-muslim is that you should still review your need for either a DIFC Will or ADJD Will (Abu Dhabi Judicial Department) and if you have children to include the necessary guardianship arrangements. 

Gifting during lifetime is also a great solution for obtaining your wishes in regards to succession planning. The use of a Foundation, or Trust, offers a way to structure your assets whilst still retaining control during your lifetime.

Another key consideration which is often overlooked with regards to succession planning is ensuring the right level of life insurance coverage. A life insurance policy can be paid offshore on death to provide liquidity outside of the Will and before probate is granted.

You live in the UAE; do you need to worry about  tax?

You should take into account tax planning, for example if you are domiciled in the UK, your worldwide estate would be subject to UK inheritance tax. Other jurisdictions have other tax issues that need to be reviewed. We strongly advise sitting with a qualified professional to ensure that you understand your current inheritance tax position and understand what if any measures can be taken to help structure this more effectively.

How can advice help for succession planning?

Estate planning can be complex. Drafting a Will is not an easy feat – you may have assets in different locations and multiple jurisdictions. Perhaps your wife is a different nationality to you, or you may have been married previously and not to mention that division of assets can often cause family feuds. All this, before you even approach tax, religious or domicile, residence and/or citizenship considerations.

Prestovia Trust remains at your disposal.  We are well placed to discuss your personal situation and provide guidance in formulating the best and most advantageous succession plan for you. Please get in touch if you would like a free review of your current circumstances.