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Caring For Generations

A Cautionary Estate Planning Tale from Dubai

On Behalf of | May 18, 2022 | business planning, estate administration, estate and tax planning

If ever there was a reminder of the need for proper estate planning by business owners, the situation with the estate of Dubai billionaire Majid Al Futtaim is it. Since Al Futtaim’s death half a year ago, his inheritance remains undistributed and unresolved. There are ten people (three wives, a son, and six daughters) with claims on the $6 billion estate, which includes business interests in 17 countries, including shopping malls, entertainment centers, hotels, planes, and boats. To oversee potential disputes, Dubai’s leader has appointed a special judicial committee.

Two complicating factors:

  • Al Futtaim’s wife from Abu Dhabi transferred her holdings to her daughters.
  • Only one of the heirs, Tariq (the sole survivor of three sons), has ever played a role in the company.

The exact distribution of the holdings between the shareholder groups hasn’t been disclosed, but “the company will continue to run as it has been running,” asserts the lawyer for Tariq. “It had one owner, and now it has nine owners.”

Many owners envision their business continuing after their own retirement or even into future generations, and whether you own a small family business or a large corporation, It’s never too soon to give thought to business succession planning. In fact, as we know from experience helping Geyer Law clients form and transfer businesses, having business succession conversations now can avoid costly disputes and pain later on.

Tools and tactics that can be used in business succession planning include::

  • Re-forming the business, and creating voting and nonvoting stock shares
  • Using life insurance to “equalize” the inheritances (those children not involved in the business receive cash)
  • Giving children not involved in the business other assets as their share of the inheritance

The story about Tariq Al Futtaim’s estate highlights the demanding work of estate administration. “There is a lot of work being done on cataloging, evaluating and distributing Al Futtaim’s personal assets in various locations. All told, the inheritance talks are likely to take at least a year.” At Rebecca W. Geyer & Associates, we understand how complicated estate administration can be, including gathering property, distributing the deceased’s assets and paying any remaining debts. When business interests are involved, the complexities are multiplied.

India Times reporter Vanya Cautam describes the situation as the “messy inheritance in Dubai”. The purpose of proper estate and business succession planning is to avoid leaving just such a “mess”.

– by Rebecca W. Geyer