Asset Protection in the UAE: Available Options and Strategies
The issue of the asset protection becomes more and more important taking into account the highly competitive global markets and difficult economic and political situation in many countries worldwide.
The assets, which you wish to protect, may include both your companies and other types of assets – monetary funds, real estate, and others. Registration of the assets in the company in the UAE can become the reliable solution for asset protection.
Asset protection strategies
Now let’s take a look at some of the strategies, that your asset protection attorney may offer you. All of them will help you to minimize losses under any circumstances.
The classic hedging option involves the purchase of the same asset in the commodity and futures markets. Along with the product, you buy futures on it, with a predetermined delivery date, or another derivative option can be used. It differs from futures in the possibility of not delivering if this is preferable. For example, if the option price of oil is $50 per barrel, while the actual price at the time of closing increased to $60. Such insurance against abrupt change of quotes is used by manufacturers and suppliers of real goods and is rarely used in investment trading. It is more profitable to acquire contracts for assets with a close correlation of the schedule.
Another commonly used option is the protection with hard constraints of loss. If the stock price falls below a certain level, the position is forced to be closed. Although in this case, the drawdown is inevitable, the basic rules of risk management are observed:
- one operation should not reduce the deposit by more than 5%;
- related assets make up a maximum of 10% of the portfolio;
- each order is protected in some way.
It is not always possible to pick up an adjacent instrument or futures, but almost any security allows limiting a loss by a pre-set order.
Diversification. Diversification is another popular option for asset protection. This strategy of asset protection implies the purchase of shares in such a way that, with a steep fall in one or several shares, the increase in the value of others compensates for this loss. There are the following options for diversification:
- Currency. Bought securities of different countries.
- Instrumental. Funds are placed simultaneously in stocks, deposit accounts, bonds, and other instruments.
- Institutional. Various financial organizations handle capital management.
Asset protection trust. First, let's find out what is an asset protection trust. International asset protection trust allows third parties and government agencies to remove the legal binding of ownership of a particular person to an asset. In other words, a person does not directly own some property contributed to the trust. And if there is no evidence of ownership, such property cannot be taken away. Thus, an asset protection trust provides more flexibility and confidentiality than a will, allowing you to retain control over assets and confidence in their inheritance by specified persons in the event of death or incapacity. Trust assets are exempt from local taxes. Asset protection trust is one of the most profitable and popular asset protection strategies.
The classic asset protection trust model assumes the presence of three subjects: the founder, the trustee and the beneficiary. In this case, the founder of the trust may simultaneously be its manager or beneficiary. The founder of the trust transfers any property or rights to the other person who manages the trust, entrusting this person with the responsibility to manage this property on own behalf as an independent owner in order to benefit in favor of third parties – beneficiaries.
Many wealthy people, moving away from personal participation in the formation and management of their assets, prefer to keep them in "tax havens" under the protection of international of asset protection trust agreements. The main factors influencing the choice of the best asset protection jurisdictions include the presence of a developed legal basis for its functioning; simplified registration requirements and low trust maintenance costs; availability of a reliable and qualified manager; geographical, transport and visa accessibility as well as tax advantages. And all this can be found in the UAE offshore jurisdictions!
If you become a tax resident of the country, as this opportunity is available and can be implemented with our help, you can also get all the benefits from the personal tax residency in the UAE. After becoming a tax resident of the UAE, you are exempted from all kinds of income taxes.