Global investment and digitalization: a new approach to legacy planning for expats

The Gulf Coast economies (GCC) pride themselves on economic policies that promote long-term legacy planning. It is the process of protecting, managing and distributing a person's wealth in the context of inheritance and succession, typically involving careful planning and tax-efficient structuring of assets, maximizing inheritance value and safeguarding the financial interests of heirs/inheritors.

For expats, in addition to inheritance tax and other routine formalities, legacy planning includes international aspects. For example, a Dubai resident with assets in the UAE and a country of domicile may face additional complexities in legacy planning. In such a case, expats should consider their retirement plans, comparative analysis of applicable taxes, heir preferences and other socio-political and economic aspects.

If the legacy consists mainly of bank accounts and intangible assets such as stocks, the allocation becomes relatively easy compared to a portfolio that includes real estate. Fortunately, increasing connectedness in a globalized world makes legacy planning easier. Today, Gulf residents, especially high-income individuals and family offices, regardless of nationality, are diversifying their portfolios by gaining strategic exposure to a variety of financial markets and asset classes. In addition to tax-efficient and hassle-free wealth transfer, these international strategies help maximize income and stay in tune with the ever-evolving financial industry.

The increasing digitalization, development of alternative asset classes and heightened awareness of legacy planning across all income groups has led financial advisors to believe that now is the right time to start the discussion. The rational is that the best time to invest was 10 years ago and the next best time is now. Expats, especially high-net-worth individuals and family offices with assets and heirs scattered around the world, can benefit greatly from trust funds.

In addition, Gulf countries continue to strengthen their financial markets with expat- and investor-friendly reforms. Initiatives encouraging the adoption of fintech and the recent establishment of the Dubai Family Business Center by the UAE government provide a good example. However, in recent years there have been many complex changes in the way trust funds are treated in different countries.

The impact of digitalization on expat legacy planning remains significant, and the future promises even more. The increasing adoption of digital documentation has helped to simplify legacy planning, reducing manual processes and paperwork. In the UAE, Emirates Blockchain strategy is facilitating the transition to paperless administrative processes by providing immutability, greater transparency and accessibility in the system. It can also affect the ownership, transfer and inheritance of assets. In parallel, the digitalization of traditional asset classes such as real estate (tokenization) and gold (digital gold) has created alternative investment opportunities for long-term legacy planning strategies.

In general, digitalization has increased access to global financial markets. An individual can invest in a variety of asset classes around the world and manage the entire portfolio virtually using mobile devices in the convenience of their home - an attractive proposition for expats.

Many investors have purchased offshore high value life insurance policies and placed them in unquestioned life insurance trusts (ILITs) as part of their legacy and legacy planning. How can blockchain revolutionize legacy planning? Blockchain, as an immutable registry, can facilitate smart and self-executing contracts in which data related to identification, ownership and transfer can be recorded without the possibility of future errors and inconsistencies. In this way, blockchain can replace the probationary process and significantly reduce legal challenges. As governments, especially in the Gulf, become more open to blockchain, it could be institutionalized in the financial industry in the near future. And because blockchain is a decentralized environment with no geographic or administrative barriers, its benefits for expats and international legacy planning are enormous.