Trusts & Foundations Setup in Dubai and UAE

Create a lasting legacy for your family and protect your wealth with our expert guidance on Trusts & Foundations in the UAE.

UAE Compliance

Your Guide to Trusts & Foundations in the UAE

Trusts and foundations are essential tools for protecting assets and succession planning. The UAE’s thriving economy and robust regulations make it a prime location for establishing these entities. Now, experience these benefits within the UAE’s legal landscape, specifically through ADGM and DIFC.

Key Benefits of UAE Trusts & Foundations

Top-tier Regulations

ADGM and DIFC provide a secure framework based on common law principles.

Strategic Location

Benefit from the UAE’s position as a global business hub.

Customized Service

Clear processes, efficient processes, and a transparent fee structure within these jurisdictions

Foundations vs Trusts: Choosing the Right Structure for Your Needs

Trusts Foundations
Tax Requirements Tax exempted Tax exempted
Asset ownership Legal owner – trustee, beneficial owner – beneficiary Owns its assets
Jurisdictions ADGM, DIFC, & UAE onshore ADGM, DIFC, & RAK ICC
Controlled by Trustee Council
Accountability The trustees ultimately answer to the beneficiary The foundation council members answer to the foundation
Duration Flexible Indefinite
Controlled by Common Law governing a legal arrangement Civil Law governing a legal entity

Depending on your goals, wealth management plans, and succession planning, you can choose between a foundation and a trust. While a trust is governed by common law, a foundation complies with civil law.

Establishing a foundation ensures wealth protection from personal liabilities and extension beyond the founder’s lifetime. In addition, it provides better confidentiality and can be transferred to the regulatory frameworks of ADGM, DIFC, or RAK ICC for better flexibility.

Mistakes

What is a Foundation?

A foundation in the UAE is an independent legal entity that can act like a corporation. It has its bank accounts, can enter into contracts, and makes its investments. Similar to trusts, a foundation can also be used for asset protection.

When establishing a foundation, you can pass over the legal ownership of the assets to the foundation, therefore freeing your liability and further using it for efficient estate planning. Any foundation consists of a management body and a council.

Unlike a trust, a foundation can be sued or file a court case as a legal entity and hold legal titles to all the assets.

Advantages of Setting Up a Foundation in the UAE

Establishing a foundation in the UAE can offer several potential benefits, including:

1. Asset Protection

  • When you transfer your assets to a foundation, you make them less vulnerable to government claims, family disputes, and creditors, enabling better security and privacy of your assets.

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2. Confidentiality

  • A foundation’s beneficiaries remain confidential, enabling discreet family wealth management and helping reduce the potential for claims by third parties.

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3. Flexibility

  • UAE foundations are flexible, providing families with scattered assets a strategic advantage for handling multiple jurisdictions.
  • Separating the beneficial and legal owners allows the family to adapt their wealth management to current goals.

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4. Succession Planning

  • Through the establishment of a foundation, founders can ensure that the benefits will comply with their wishes and not be affected by local succession laws.

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5. Perpetuity

  • A UAE foundation is a long-term commitment that ensures the founder’s goals and vision continue after their death. 

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6. Philanthropic Opportunities

  • In the UAE, founders can align their foundations with humanitarian and ethical values, supporting causes and initiatives by regular donations.

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  • When you transfer your assets to a foundation, you make them less vulnerable to government claims, family disputes, and creditors, enabling better security and privacy of your assets.

  • A foundation’s beneficiaries remain confidential, enabling discreet family wealth management and helping reduce the potential for claims by third parties.

  • UAE foundations are flexible, providing families with scattered assets a strategic advantage for handling multiple jurisdictions.
  • Separating the beneficial and legal owners allows the family to adapt their wealth management to current goals.

  • Through the establishment of a foundation, founders can ensure that the benefits will comply with their wishes and not be affected by local succession laws.

  • A UAE foundation is a long-term commitment that ensures the founder’s goals and vision continue after their death. 

  • In the UAE, founders can align their foundations with humanitarian and ethical values, supporting causes and initiatives by regular donations.

Guide

UAE Foundation Legislation and Regulations

UAE foundations are governed by the ADGM, DIFC, and RAKICC, offering a modern and flexible legal framework. 

DIFC Regulations

Under this, foundations are required to have a minimum of two council members. In addition, registration requires a physical presence in the DIFC. The appointment of a registered agent and guardian is optional unless it is a charitable foundation.

ADGM Regulations

The ADGM also requires a minimum of two council members. Here, the role of the guardian is compulsory in cases where there is no surviving founder. The foundation should have a physical presence in the AGDM.

RAKICC Legislation

Under the RAKICC legislation, a registered agent and a minimum of two council members are mandatory. However, having a guardian is optional until the foundation is a charitable foundation and should be present in the UAE.

Mistakes

The Structure of a Foundation

  • Purpose-Driven

    Foundations in the UAE are designed for specific goals such as wealth preservation, asset protection, estate and legacy planning, or charitable endeavors. They cannot engage in commercial activities for profit.

  • Funding

    Often established and funded by a single individual or family for intended beneficiaries.

  • Governance

    Foundations are managed by a Council and operate according to their founding charter and by-laws.

  • Oversight (Optional):

    Guardian: May be appointed to ensure the Council acts in accordance with the foundation’s purpose.

    Registered Agent: Required to receive legal notices and official communications.

  • DIFC & ADGM

    • Familiar legal framework based on English common law.
    • Asset use must directly support the foundation’s purpose.
  • RAK ICC

    • Offers greater confidentiality with non-public registry.
    • Provides flexibility in how foundation assets are utilized.

Key Considerations for UAE Foundations

  • Location: Which free zone aligns best with your objectives?
  • Purpose: What are the specific goals of your foundation (estate planning, philanthropy, etc.)?
  • Control: How much oversight do you desire over asset use?
  • Confidentiality: Is maintaining a high level of privacy a priority?

Setup

How to Set Up a Foundation in the UAE

To set up a foundation for wealth management in the UAE, you need to follow the steps mentioned below:

Establish your foundation’s purpose.

Select the optimal jurisdiction between DIFC and ADGM, which caters to global financial entities as financial free zones, and RAKICC, which has a more lenient regulatory environment.

Appoint a registered agent to assist with the application process.

Draft the foundation charter, which is the document that details the objectives, capital, assets, governing structure, and beneficiaries of the foundation.

Appoint the foundation council.

Register the application with the appropriate authority and secure all the essential licenses.

Types of Foundations

Foundations in the UAE fall in the following three categories:

1. Charitable Foundation

Purpose: It is setup for charitable purposes and philanthropic activities, such as education, poverty alleviation, healthcare, or environmental protection. They receive donations from individuals, corporations, and other entities. They must have a clear charitable purpose outlined in the foundation’s charter or deed.

Private foundations (Private Interest Foundations)

Purpose: Also known as a private interest foundation, Primarily serves the interests of an individual, family, or group of individuals. They can be established for asset protection, wealth management, succession planning, philanthropy, or a combination of reasons. It can be an alternative to will.

2. Corporate foundation

It’s established by corporations to manage their philanthropic activities and corporate social responsibility initiatives.

Guide

What is a Trust?

Under the regulations set by the Dubai International Finance Centre (DIFC) and the Abu Dhabi Global Market (ADGM), a trust is a relationship between three entities:

Settlor

Who creates the trust by adding assets to it

Trustee

Who managed the trust’s assets and holds legal title to them

Beneficiary

One who benefits from the trust, which is generally an heir of the settlor

With the help of a trust, the settlor gives control of the asset management and distribution to the trustees while explaining its distribution to the beneficiaries in the trust deed.

Playing a vital role in asset management without the need for continuous interference by the settlor, a trust also helps plan the inheritance and succession of an individual’s assets. Moreover, a trust is not a legal entity and, therefore, cannot take any legal action.

Advantages of Establishing a Trust in the UAE

A trust in the UAE is highly beneficial to the settlor and the beneficiaries in the following ways:

1. Asset Protection

  • UAE trusts offer protection against potential creditor claims, legal judgements, family disputes, political risks, and other unforeseen liabilities, helping safeguard them for the beneficiaries. Not being a legal entity, a trust cannot be sued or take any legal action.

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2. Succession Planning

  • Trusts help you plan the succession and inheritance of your assets, ensuring a smooth transfer of wealth to future generations, often without a probate process.
  • While establishing the trust, you can specify the asset distribution terms, ensuring correct distribution even after your death.

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3. Maintaining Confidentiality

  • UAE regulations ensure a high level of privacy in trusts by ensuring the confidentiality of the assets added to the trust, the distribution arrangement, and the details of the beneficiaries and trustees.
  • The AGDM and DIFC offer a robust framework for trusts based on English common law.

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4. Flexibility

  • When establishing a trust in the UAE, you can define the beneficiaries, wealth distribution, and duration of the trust, among other things.

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5. Tax Considerations

  • The UAE is a tax-friendly jurisdiction which doesn’t impose any tax on income or capital gains for trusts.

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6. Lifestyle Perks

  • With the golden visa, you and your family have access to good healthcare and schools in the UAE. They add to the high quality of life in the country.
  • Also, you can save money on taxes since the UAE doesn’t impose personal income tax or capital gains tax.

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  • UAE trusts offer protection against potential creditor claims, legal judgements, family disputes, political risks, and other unforeseen liabilities, helping safeguard them for the beneficiaries. Not being a legal entity, a trust cannot be sued or take any legal action.

  • Trusts help you plan the succession and inheritance of your assets, ensuring a smooth transfer of wealth to future generations, often without a probate process.
  • While establishing the trust, you can specify the asset distribution terms, ensuring correct distribution even after your death.

  • UAE regulations ensure a high level of privacy in trusts by ensuring the confidentiality of the assets added to the trust, the distribution arrangement, and the details of the beneficiaries and trustees.
  • The AGDM and DIFC offer a robust framework for trusts based on English common law.

  • When establishing a trust in the UAE, you can define the beneficiaries, wealth distribution, and duration of the trust, among other things.

  • The UAE is a tax-friendly jurisdiction which doesn’t impose any tax on income or capital gains for trusts.

  • With the golden visa, you and your family have access to good healthcare and schools in the UAE. They add to the high quality of life in the country.
  • Also, you can save money on taxes since the UAE doesn’t impose personal income tax or capital gains tax.

UAE Trust Legislation and Regulations

The UAE has embraced trusts as a legal tool for entrepreneurs and high-net-worth individuals, with distinct laws governing their establishment in each emirate.

Federal Level

The UAE’s 2020 Trust Law governs trusts at the federal level, recognizing them as legal entities.

Dubai

The 2018 Dubai Trust Law, amended in 2022, governs trusts in the Dubai International Financial Center (DIFC), the sole location for trust establishment in the emirate.

Abu Dhabi

The Abu Dhabi Global Market (ADGM) regulates trust formation and establishment in Abu Dhabi.

The Structure of Trusts

Trusts are legally binding private arrangements generally used for tax planning, estate planning, estate protection, and succession planning. They are governed by a trust agreement that outlines the terms, conditions, rights, and responsibilities of the beneficiaries.

With a simple structure, a trust has the following entities:

Settlor

Who forms the trusts and enlists his assets that are to be protected by the trust

Trustees

Are appointed individuals who make decisions for asset management

Beneficiary

For whom the trust is generally formed and ultimately gets the asset’s benefits

Protector

Is an official, generally a lawyer, who has power over the terms of a trust but is not a Trustee

Assets

Which are identifiable and subject to the declaration of the trust

Trust deed

Which is a written declaration of the trust

Eligibility

How to Set Up a Trust in the UAE

You can set up a trust in the UAE mainland or the free zones.

To create a trust in the UAE mainland, you can follow either of the following two methods:

These documents are sent to the Ministry of Finance to issue the certificate and validate the contract for the trust.

  • Issue a trust instrument that allows the settlor to transfer the assets to a trust
  • Draft a will that comes into effect after the death of the settlor, allowing the trust to manage the assets.

To create a trust in the free zones, you can follow the guidelines introduced by the DIFC and ADGM. While the process is similar to that of setting up a trust in the mainland, DIFC and ADGM have additional provisions for registering the trust.

For example, ADGM requires you to have an elaborate trust deed and have a professional trustee licensed by the ADGM. For DIFC, you must have regulatory compliance with the DFSA’s rules.

  1. Prepare the trust deed that outlines the terms and conditions of the trust, identifying the trustee, settlor, beneficiaries, and purpose of the trust
  2. Submit the application to the authorities
  3. Pay the registration fees
  4. Ensure compliance and due diligence
  5. Allow the authorities to review the application
  6. Transfer the assets to the trust
  7. Receive your registration certificate upon approval

While establishing a trust sounds easy, having a well-written trust declaration and gathering supporting documents is essential for approval. The deed of trust needs to satisfy both regulatory requirements and the interests of a settlor.

Since there are different laws governing trust establishment in various zones, it is recommended that professional help be obtained for the planning and drafting of the trust document, as it is a demanding task.

A trustee can be any person of legal capacity or a commercial company licensed as a professional trustee.

When choosing an individual trustee, you can enjoy low set-up costs. However, you will be handing over the liability of all your assets to an individual, which may also affect their assets. Moreover, you may have to create a new trust in case the trustee is unable to perform their role.

On the other hand, choosing a licence from a UAE-based trust company allows you to separate personal and trust assets better. In addition, they have limited liability, and the company will remain your trustee even if the directors or shareholders change.

When choosing a trustee, keep in mind that while a trust is not taxed under UAE laws, the residency of the trust may be determined by where the trustees reside, and this can impact taxation and jurisdiction.

Depending on the settlor’s and beneficiary’s needs, a trust can be established for a specific period or be perpetual, the conditions of which are included in the trust deed. Under the AGDM and DIFC, since trusts have a company trustee, they can last until wound up by the trustees, even after the settlor’s death.

Trusts in the UAE are generally categorised into the following types:

1. Charitable trust

This type of trust is created for charitable purposes only. It could be used to advance education, promote public health, relieve property, etc.

2. Non-charitable or purpose trust

This refers to a trust that holds or invests in shares in a company or other assets.

3. Express trust

It is created with the settlor’s express intent declared in the trust deed.

4. Protective trust

These are designed to protect the assets for continued support of the beneficiary.

5. Discretionary trust

Here, the trustee has complete discretion to decide which beneficiaries receive the assets of the trust.

Why Choose Us

Choose Juriszone for Asset Protection and Succession Planning in the UAE

At Jursizone, we have a team of experts, comprising of foundation speciality, trust specialists, administrators, lawyers, financial planners, and accountants, who can help you in the journey of asset protection and succession planning in the following ways:

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    Creating a compliant and founder, settlor, or beneficiary favoring foundation charter or trust deed

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    Providing reliable council members and licensed trustee companies

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    Maintaining statutory records and obligations

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    Handling accounting and financial reporting

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    Registering trusts or foundations with the appropriate authorities

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    Experienced advice on wealth distribution and management

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    Detailed estate planning and creation of wills and power of attorneys

Contact us today and schedule a consultation with our experienced agents for personalised solutions on asset protection and wealth management vehicles according to your needs, assets, and family.

Contact Juriszone Today To Begin Trust & Foundation Setup In UAE