For many entrepreneurs, a business is more than an income source, it is a legacy. Business owners living in Dubai often spend decades building successful companies, only to discover that ownership transfer and succession planning are far more complex than expected.
Without a proper structure, businesses face risks such as:
- Family disputes
- Leadership uncertainty
- Forced sales
- Loss of control after death or incapacity
What is Business Succession Planning?
Business succession planning is the process of:
- Deciding who will own the business in the future
- Determining how control will be transferred
- Ensuring the business continues operating smoothly
Why Wills alone are often not enough for Businesses
Many business owners rely solely on a will to transfer ownership. While wills are important, they often:
- Trigger probate delays
- Transfer shares abruptly
- Create uncertainty for management
- Expose the business to disputes
How Trusts Support Business Continuity
A trust allows business ownership (such as shares) to be held and managed according to predefined rules.
Key Benefits of Using a Trust for Business Succession
- Business shares are placed into a trust
- Trustees manage ownership in line with the trust deed
- Beneficiaries receive economic benefits without disrupting operations
- Succession rules are clear and enforceable
- Children are not yet ready to manage the business
- Professional management is preferred
- Gradual transition of control is required
How Foundations Support Business Succession Planning
A foundation is often seen as the most effective structure for long-term business ownership.
Why Foundations are popular with Business Owners
- The foundation becomes the owner of the business
- A board or council governs decision-making
- Ownership is separated from personal circumstances
- Business continuity is maintained even after the founder’s death
- Family businesses
- Group companies
- Multi-generational ownership plans
Foundations vs Trusts for Business Succession
Many entrepreneurs prefer foundations because they:
- Feel more like a company structure
- Reduce dependence on individual trustees
- Provide long-term governance certainty
Preventing Family Disputes in Business Succession
One of the biggest threats to business continuity is family conflict. Foundations and trusts help by:
- Clearly separating ownership from management
- Defining who benefits financially
- Avoiding equal-but-unworkable ownership splits
- Preventing sudden control changes
- Businesses with multiple heirs
- Blended families
- Next-generation successors with different skill levels
Planning for Incapacity and Unexpected Events
Succession planning is not only about death. Trusts and foundations ensure:
- Business operations continue if the founder becomes incapacitated
- Decision-making authority remains clear
- Banks, partners, and employees retain confidence
Using Foundations and Trusts with Wills
A common misconception is that foundations or trusts replace wills. In reality:
- Foundations/trusts – Own and control business interests
- Wills – Cover personal assets and residual matters
Who should consider these structures?
Foundations and trusts are particularly suitable for:
- Family business owners
- Entrepreneurs with valuable companies
- Owners planning multi-generational transfer
- Business founders concerned about disputes or continuity
Common Succession Planning Mistakes
- Waiting until retirement or ill health
- Relying only on a will
- Dividing ownership equally without governance
- Ignoring next-generation readiness
FAQs - Business Succession Using Foundations and Trusts
1. Can a foundation own a business in Dubai?
Yes. Foundations are commonly used to hold shares in companies.
2. Are trusts suitable for operating businesses?
Yes, especially when professional management is involved.
3. Do these structures protect the business from family disputes?
They significantly reduce the risk when structured properly.
4. Can succession be gradual rather than immediate?
Yes. Both structures allow phased transitions.
5. Do I still need a will?
Yes. Wills complement trusts and foundations.
6. Is succession planning only for large businesses?
No. Any valuable business can benefit from proper planning.
Conclusion
Foundations and Trusts for Business Continuity and Succession Planning are not about giving up control—they are about preserving what you’ve built.
For business owners in Dubai, these structures offer:
- Stability
- Clear governance
- Protection from disputes
- Smooth multi-generational transfer