Legacy planning for non-resident Indian businesses in the UAE
country. India is the UAE’s second largest trade partner and the UAE has become India’s third largest trading partner, with the total non-oil trade between the two at $35.9 billion in 2018. Estimates from a recent HSBC survey indicate that by 2030, India will overtake China to become the single largest source of imports into the UAE.
The next stage
visa arrangements, they must think harder about the legacy they build.
Apart from supporting families financially and funding a mortgage back home, the most common financial activity among NRIs remains savings and investments followed by remittances. Of the Dh169 billion in outward personal remittances in 2018 from the UAE, India had the lion’s share at about 38 per cent.
In recent years, property in the UAE has also been added to the portfolios of affluent Indians. In 2018, among non-GCC buyers, Indian expats were the top investors in Dubai’s real estate market, investing around Dh10.8 billion. We are seeing NRI investors holding more and more assets in different jurisdictions, which makes wealth management and planning more important than ever. Everyone’s circumstances are different.
Some seek growth and income-generation for the future while for others wealth preservation is paramount. For some, legacy planning is not so much about leaving large amounts of wealth for their children as it is about investing in their education and growth.
Whatever the motivation, the one cultural tenet that every generation shares is the focus on tradition and family. The transfer of wealth from one generation to the next is part and parcel of wealth planning.
Assessing risk
One rule of thumb is to put your own financial oxygen mask first. A clear-cut plan for retirement should be the first port of call. Avoid relying fully on the family business to fund it as it can put a disproportionate burden on the business, making it difficult to let go.
Diversifying wealth and building assets outside the business early on is important.
We are seeing a combination of new money and new ideas driving a new generation of affluent NRIs, who are expanding the concept, looking for ways to actively improve a much broader impact to the society in the long term, preserve culture, or take an existing family legacy in a new direction.
To ensure the ambitions of these aspirants are not clipped mid-flight, senior generations must give ample consideration to planning their legacy, balancing the demands of wealth generation and life-after-retirement, along with funding the evolution of their business in the hands of an eager new generation.
■ Marwan Hadi is Head of Retail Banking and Wealth Management, HSBC UAE.