Establishing a trust in the UAE offers various opportunities for asset structuring and protection, in particular, trusts can be used in the ownership and management structures of companies
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Trusts should be carefully structured as banks and counterparties might view them suspiciously as a means to obscure ownership structure and assets
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One of the significant advantages of setting up a trust in the UAE is the ability to ensure a high level of confidentiality with respect to its founders and beneficiaries, as well as confidentiality of its asset structure
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The most common option is to set up an offshore trust in Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM)
Onshore Trusts
Place of Establishment: Trusts can be formed on the mainland as onshore trusts, where they are officially recognized as legal entities.
Applicable law: Onshore trusts are subject to Sharia law.
Dispute resolution: Legal disputes arising from the management of onshore trusts are considered by the courts of the UAE mainland.
Registry: The Trust Deed of an onshore trust, along with any transactions related to trust assets, must be registered with the UAE Ministry of Finance, though this register remains confidential.
Offshore Trusts
Place of Establishment: Trusts may be established within the DIFC or ADGM free zones, where they are regarded as legal arrangements between the trustee, beneficiaries, and the assets under management rather than as independent legal entities.
Applicable law: Trusts set up in DIFC or ADGM operate under the principles of English common law.
Dispute resolution: Disputes concerning offshore trusts fall under the jurisdiction of the DIFC or ADGM courts, which resolve matters in accordance with the respective free zone regulations and principles of English law.
Registry: The Trust Deed of an offshore trust, as well as transactions involving offshore trust property, are not subject to registration.
Trust Structure
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Settlor
The settlor of a trust is the individual or entity that establishes the trust and contributes assets to it. The law requires the settlor to have legal capacity, can be an individual or a legal entity. Under the provisions outlined in the Trust Deed, the settlor retains considerable authority over the trust, which includes the power to dissolve the trust entirely or in part, alter its purpose, or adjust the terms of the deed. Additionally, the settlor may also be designated as a beneficiary.
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Trustee
Trustee is a person responsible for managing the trust property in accordance with the provisions of the Trust Deed. It can be either a legally capable natural person or a legal entity possessing an appropriate license. Their primary duty is to safeguard the value of the trust property while acting in the best interests of the beneficiaries. Trustees are granted the authority to oversee, utilize, and transfer trust assets, which may include opening bank accounts or making investment decisions, unless specific limitations are imposed by the Trust Deed.
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Beneficiaries
Beneficiaries are individuals or groups designated in the Trust Deed who have the right to receive benefits from the trust assets under predetermined conditions. Their main role is to receive distributions of the trust property in accordance with the terms set forth in the Trust Deed. The trust may stipulate certain conditions or events that must be fulfilled before the beneficiaries acquire entitlement to the assets.
For comprehensive information on establishing an onshore or offshore trust, including the roles and authorities of the settlor, trustee, and beneficiaries, along with other key details, please consult the FAQ section
For detailed information on setting up an onshore or offshore trust, including the powers of the settlor, trustee, and beneficiary, as well as other essential details, please refer to the FAQ section.
FAQ
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What is the procedure for establishing onshore trusts?
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What is the procedure for establishing offshore trusts?
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What are the powers of a settlor of a trust?
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What are the trustee’s responsibilities and powers?
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What powers do the beneficiaries have?
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What is the level of privacy of the settlors and beneficiaries of the trust?
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Are there any limitations on owning assets?
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