DUBAI: The Middle East is set to witness a historic generational wealth transfer worth US$ 1trillion (Dh3.67 trillion) by 2030, according to a newly launched whitepaper by DIFC Innovation Hub, Julius Baer, and Euroclear.
The report, Navigating the Future of Inheritance, explores the evolving inheritance landscape, with a focus on digital technologies that could streamline the process for families and businesses.
The study highlights the increasing complexity of wealth portfolios, with high-net-worth individuals (HNWIs) in the UAE alone seeing their assets grow by 20 per cent to USD 700 billion since 2022.
Transforming inheritance with tech
It suggests that technologies such as Artificial Intelligence (AI), Smart Contracts, Distributed Ledger Technology (DLT), and Tokenisation could revolutionise wealth transfer by improving transparency, security, and efficiency.
Despite these advancements, only 24 percent of HNWIs currently have a full estate plan in place. The report notes that more than half (53 percent) of families find the inheritance process too complicated and time-consuming to plan effectively.
The report underscores the need for close cooperation among wealth managers, family offices, regulators, and service providers to develop a structured approach to wealth succession. It aims to foster the adoption of modern inheritance planning tools and position the Middle East as a leader in best practices for wealth transfer.
Mohammad Alblooshi, CEO of DIFC Innovation Hub, commented: “We stand on the crossover of a monumental generational wealth transfer in the Middle East in an era when wealth portfolio compositions are increasingly complex, driven by ever-widening asset categories and an appetite towards investments in digital assets. This report is the fruit of our partnership with Julius Baer and Euroclear, aiming to leverage this inflection point and drive meaningful change along the inheritance journey.”
The role of blockchain and tokenisation
Alireza Valizadeh, CEO of Julius Baer (Middle East) Ltd, highlighted how digital assets are shaping the future of inheritance. “As we work closely with current and future generations, it becomes more important than ever to take into account the evolving landscape with the onset of digital assets. We increasingly see the potential of technology, particularly blockchain and tokenisation, in enabling a secure and transparent process for wealth transfer,” he said.
Isabelle Delorme, Global Head of Product Strategy and Innovation at Euroclear, added: “Together, we have crafted a comprehensive guide to address the unique regional challenges and vast opportunities within this sector. Our ambition is to empower financial stakeholders and policymakers to embrace innovation, promote efficiencies and build a future-ready inheritance framework that benefits generations to come.”
DIFC’s support for family businesses
Beyond inheritance, the report acknowledges the varied needs of family businesses at different stages of their growth. DIFC has introduced a range of flexible family business structures and solutions to address these needs, compiling them in a series of guides prepared in collaboration with DIFC Family Wealth Centre partners, including M/HQ, Equiom, Clyde & Co, and KENDRIS.
The first two guides in the series – Understanding DIFC Foundations: A Key Tool for Wealth Structuring and Legacy Planning and Understanding DIFC Trusts: A Comprehensive Guide – are available for families and advisors. These resources build upon DIFC Family Wealth Centre’s earlier publication, Prosperity Across Generations: Unlocking the Power of DIFC for Families, which has been translated into Arabic, English, Mandarin, and Spanish to cater to the region’s diverse business community.
As the Middle East prepares for an unprecedented transfer of wealth, DIFC and its partners remain committed to helping families navigate this complex landscape with innovative, technology-driven solutions.