Borders and the digital world: effective legacy planning for expats - Khaleej Times News

The GCC economies are characterized by economic policies that promote long-term legacy planning. The basic idea is to protect, manage and distribute human wealth in the context of inheritance and succession. This usually requires careful planning and tax-efficient structuring of assets, maximizing their inheritance value and safeguarding the financial interests of heirs.

For foreigners, inheritance taxes and other routine formalities also involve crossing borders. For example, a Dubai resident with assets in the UAE and a country of domicile may face additional complexities in inheritance planning. Foreigners should then consider their retirement plans, compare applicable taxes, heir preferences, and other socio-political and economic aspects.

If the wealth consists mainly of bank accounts and intangible assets such as stocks, the allocation becomes relatively simple compared to a portfolio that includes real estate. Fortunately, growing connectedness in a globalized world makes inheritance planning easier. Today, GHG residents, especially high net worth individuals (HNWIs) and family offices, regardless of nationalities, are diversifying their portfolios by gaining strategic exposure to a variety of financial markets and asset classes. In addition to tax-efficient and seamless wealth transfer, these international strategies help maximize income and stay in tune with the ever-changing financial industry.

The increase in digitalization, the emergence of alternative asset classes and the growing awareness of inheritance planning across income groups have financial advisors believing it's the right time to start the conversation. The logic is that the best time to invest was 10 years ago and the next best time is now. Anselm Mendes, executive director of sales and technology at The Continental Group - a leading insurance intermediary and financial services provider in the GGH - brings more clarity.

Expats, especially high-net-worth individuals and family offices, with assets and heirs spread across the globe, can benefit enormously from participating in trust funds. Moreover, GHG countries continue to strengthen their financial markets with expat- and investor-friendly reforms. Initiatives promoting the adoption of fintech and the recent establishment of the Dubai Family Business Center by the UAE government are good examples.

The impact of digitalization on expat legacy planning continues to be significant, and the future promises even more opportunities. The growing adoption of digital documentation has helped streamline estate planning processes, reducing manual processes and paperwork. In the UAE, the Emirates blockchain strategy is facilitating the transition to paperless administrative processes by providing immutability, greater transparency and accessibility in the system. It may also affect asset ownership, transfer and inheritance.

At the same time, the digitalization of traditional assets such as real estate (tokenization) and gold (digital gold) has created alternative investment opportunities for long-term inheritance planning strategies. Overall, 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 handheld devices in the comfort of their home - a tempting proposition for expats.

Many investors have purchased offshore high value life insurance policies and placed them in irrevocable life insurance trust funds as part of their legacy and legacy planning. How can blockchain change inheritance planning? Because blockchain is an immutable ledger, it can facilitate the creation of smart and self-executing contracts in which data related to identification, ownership and transfer can be recorded, eliminating the possibility of errors and discrepancies in the future. In this way, blockchain can replace the inheritance process and significantly reduce legal problems. As governments, especially in the GOP, become more open to blockchain, it may soon be institutionalized in the financial industry. And because blockchain is a decentralized environment with no geographical or administrative barriers, its importance to expats and overseas inheritance planning is enormous.