Family Offices in the UAE: A Complete Guide

Of late, an increasingly high number of super-rich families are investing in the UAE, and this trend does not seem to be slowing down. With an existing count of over 100,000 millionaires, the UAE is projected to further attract over 6000 more millionaires in 2024. These High-Net-Worth-Individuals (HNWIs) are noted to be coming from countries like India, Russia, China, the UK and the USA. The reason for this trend is mainly the increasing inflation seen in many regions post the COVID times. On the contrary, the UAE is one of those few countries that pulled off a remarkable recovery post the pandemic.

If you are a High-Net-Worth-Individual (HNWI), you may very well know that managing wealth comes with its own complexities and demands specialized services for planning and structuring. While most individuals can consult standard professionals to manage their finances, the affluent require specialized services since there is too much to manage, too much at stake, and delays or errors could prove to be costly. This calls for a dedicated entity catering to the numerous needs of an affluent family or individual. This is exactly where family offices come into picture and HNWIs often depend on these entities to handle their wealth portfolios. Through this article, we shall explore the different types of family offices, and the procedure to set them up.

What is a Family Office in Dubai?

A family office is an entity that is set up with the purpose of managing wealth portfolios of high-net-worth families and individuals. The functions of a family office can encompass estate planning, investment strategies, wealth management, structuring, and so on. A family office offers personalized solutions for the various financial and investment needs of the super-rich. For a family that has set up a business in the UAE or owns assets, a family office acts as an all-in-one management solution for the assets and businesses based in the UAE as well as across the globe.

Types of Family Offices in Dubai

Single-Family Office

A Single-Family Office is set up and staffed by a wealthy individual or family to exclusively serve its own investments and assets portfolio. Usually, it is required for an SFO to be owned entirely by a single family and its shareholders to be of the same lineage. An SFO is not permitted to offer services to third parties apart from the family’s members. It can only serve businesses, trusts, foundations, and all other entities owned by that family only.

Multifamily Office

A Multifamily Office can serve multiple families and is usually set up by professional consultants, advisors, or even by firms.

Steps for Setting up a Family Office in Dubai

1. Choose a jurisdiction

Setting up a family office in a free zone jurisdiction can benefit you in numerous ways. Free zones like IFZA offer an excellent ecosystem for setting up a family office in Dubai.

2. Choose a legal entity

In the UAE, a family office can be established with the legal entity as FZE (Free Zone Establishment) or FZCO (Free Zone Company).

3. Choose your business activity

Depending on the type of family office you wish to set up, you can select the appropriate activities from the ones permitted by the free zone.

4. Choose the type of office space

Based on your requirements, you may choose an office space in the free zone.

5. Obtain pre-approvals

If your business activity requires, you may have to obtain pre-approvals from relevant government bodies.

6. Apply for a business license

Based on your business activity, you can apply for the appropriate license type along with the required documents.

7. License issuance

Once issued, you can get started with your family office. It is necessary to renew this license periodically. Failure to do so can result in hefty penalties.

If you are looking to streamline your wealth management, setting up a family office will be highly beneficial for you. However, there are certain criteria to be fulfilled and specific procedures to be followed. Therefore, it is recommended to consult a business setup advisory firm like InZone to establish your family office. This way, you can stay assured of constant expert assistance throughout the formation process of the entity.