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When setting up trusts, it is essential to approach the structure with caution, as banks and other counterparties might perceive them as methods for concealing ownership or assets.
One notable benefit of establishing a trust in the UAE is the assurance of a high degree of confidentiality concerning its founders, beneficiaries, and asset arrangements.
The most popular choice for forming a trust is to establish an offshore trust within the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM).
Place of Establishment: UAE trusts can be established on the mainland as onshore trusts, which are recognized as legal entities.
Applicable law: an onshore trust would be governed by Sharia law.
Dispute resolution: disputes involving onshore trusts are resolved in UAE mainland courts.
Registry: the Trust Deed of an onshore trust, along with transactions involving trust property, must be registered with the UAE Ministry of Finance, however, the register is not public.
Place of Establishment: It is also possible to incorporate a trust in the UAE in DIFC or ADGM free zones. Such trust would be considered as a legal arrangement between the trustee, beneficiaries, and property under management rather than standalone legal entity.
Applicable law: DIFC or ADGM trust would be governed by the principles of English common law.
Dispute resolution: disputes concerning offshore trusts are addressed by the courts of DIFC or ADGM, following the regulations of respective free zones and English law principles.
Registry: offshore trusts do not require registration of the Trust Deed or transactions.
The settlor of a trust is the individual or entity responsible for establishing the trust and transferring assets to it. The law mandates that the settlor has legal capacity, whether as an individual or a legal entity.
Within the terms of the Trust Deed, the settlor retains significant control over the trust, which can include the authority to terminate the trust fully or partially, amend its purpose, or modify the terms of the deed. The settlor can also be a beneficiary.
The trustee is the individual or legal entity responsible for managing the trust property in line with the Trust Deed. Trustees are tasked with preserving the value of the trust assets and acting in the best interests of the beneficiaries.
They have the authority to manage, use, and dispose of trust property, including opening bank accounts or making investment decisions, unless such powers are restricted by the Trust Deed.
Beneficiaries are individuals or groups named in the Trust Deed who are entitled to benefit from the trust assets under specific conditions. Their primary role is to receive distributions of the trust property as outlined in the Trust Deed.
The trust may specify conditions or events under which the beneficiaries are entitled to the assets.
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