Foundations & Trusts Services in UAE

Foundations & Trusts Setup in the UAE

In today's world, where wealth preservation and succession planning are critical, trusts and foundations serve as essential tools for safeguarding assets and ensuring they are managed and transferred according to the owner's wishes. 

These legal structures offer stability, control, and flexibility, making them highly attractive to high-net-worth individuals, families, and businesses alike.

Although both trusts and foundations are designed to efficiently protect and manage wealth, they differ in structure and governance. A trust is a legal arrangement in which a settlor transfers assets to a trustee, who manages these assets on behalf of beneficiaries, which may include individuals, organizations, or other entities. 

Trusts are highly flexible, allowing the settlor to establish customized terms for asset management and distribution. This adaptability makes trusts particularly useful for achieving a variety of personal, financial, or charitable goals, as well as providing long-term solutions for wealth management, asset protection, and succession planning.

A foundation, by contrast, is an independent legal entity with its legal personality, often created for a specific purpose, such as philanthropy or family wealth management. 

Unlike trusts, foundations are self-governing, with the foundation itself holding and managing its assets under the direction of a board or appointed managers. 

This structure allows for greater control over the administration and distribution of assets, making foundations an excellent option for individuals who want continuous involvement in how their wealth is handled.

Both trusts and foundations offer substantial benefits in asset protection, tax efficiency, and long-term financial security. With expert guidance, these structures can be tailored to meet specific objectives and provide a seamless way to manage and preserve wealth across generations.

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What are Trusts and Foundations?

Trusts and Foundations are legal structures that enable individuals and families to protect, manage, and transfer their wealth efficiently. While both serve similar purposes, they differ in structure and governance:

Trust

A trust is a legal arrangement where one party (the settlor) transfers assets to another party (the trustee) to be managed for the benefit of specific individuals or entities (the beneficiaries). Trusts are highly flexible, allowing for customized terms that can address a variety of personal, financial, and charitable goals.

Foundation

A foundation is an independent legal entity that holds assets for a specific purpose, typically philanthropic or family-oriented. Unlike a trust, a foundation is a self-governing organization with its own legal personality, making it an ideal structure for those looking to maintain control over asset management and distribution.

Trust & Foundation Setup Advantages 

Asset Protection

Provide a legal framework to safeguard assets from creditors, legal disputes, and other liabilities.

Succession Planning

These structures ensure the seamless transfer of wealth to future generations, reducing complications in inheritance and distribution.

Tax Efficiency

Trusts and foundations can be structured to optimize tax liabilities, offering potential tax benefits and reductions in certain jurisdictions.

Confidentiality

Allow for the private management of wealth, as details of the trust or foundation and its assets can be kept confidential.

Philanthropy

Foundations are ideal for individuals or families who wish to establish charitable organizations and control how their donations are distributed.

Flexibility

Both trusts and foundations offer flexibility in terms of asset management and distribution, customized to meet specific objectives.

Control and Governance

A foundation, in particular, allows for self-governance, where the founder can maintain control over the assets and how they are used.

Risk Mitigation

By separating assets into a trust or foundation, businesses and individuals can reduce exposure to risk from personal or business liabilities.

Why Choose UAE for Setting Up Trusts & Foundations?

The UAE is an ideal destination for establishing trusts and foundations due to its robust legal framework, particularly in zones like DIFC and ADGM, which follow common law principles. 

These structures provide strong asset protection, shielding wealth from liabilities while offering control over management. The UAE's favorable tax environment, with no income or capital gains tax, enhances tax efficiency, making it appealing for both residents and non-residents.

Confidentiality is a key advantage, ensuring private management of assets. Trusts and foundations also simplify wealth transfer and succession planning, allowing seamless, controlled distribution of assets. 

As a global financial hub, the UAE offers advanced financial services and strategic access to international markets, making it an attractive jurisdiction for wealth preservation and management.

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How Is a Trust Taxed in the UAE?

In the UAE, trusts enjoy a straightforward tax regime as they are not subject to income tax. 

Role of the Settlor
While the settlor plays a key role by contributing assets to establish the trust, this role generally has minimal ongoing tax implications in the UAE. Initial contributions can be nominal, with family members or others often adding assets over time. 
However, if the settlor resides in a country that imposes income or gift taxes, their contributions to the trust may trigger tax liabilities. Settlors should consult with tax advisors to fully understand potential tax consequences when transferring assets into a trust.
Importance of the Trustee
The residency of the trustee plays a critical role in determining the tax residency of the trust. Similar to corporations, where the management is located can influence the trust's tax obligations. 
In some cases, multiple jurisdictions may claim the trust as a resident, potentially creating conflicts. Tax treaties between countries can mitigate such issues, ensuring clearer tax obligations for both the trustee and the trust.

Our Services

01. Initial Assessment

A comprehensive analysis of the client’s financial situation, family dynamics, and long-term objectives is conducted to recommend the most suitable structure.

02. Customized Solutions

Personalized trust or foundation structures are designed to meet specific goals, whether for asset protection, succession planning, or philanthropy.

03. Legal Documentation

All necessary legal documents are drafted to ensure compliance with UAE regulations and international standards.

03. Registration & Compliance

The entire registration process with the relevant authorities is managed, guaranteeing full compliance with local laws.

03. Tax & Legal Advisory

Expert guidance is provided on tax planning, legal matters, and cross-border issues, ensuring the efficient and effective operation of the trust or foundation.

03. Succession Planning

Strategic advice is offered on succession planning to facilitate the smooth transfer of wealth and business interests to future generations.

Documents required for Trusts & Foundations

Document Trusts Foundations
Legal Document Trust Deed outlining the terms and conditions of the trust. Foundation Charter defining the foundation’s purpose, governance, and structure.
Identification Settlor Identification: Copy of the settlor's passport or identification. Founder Identification: Identification documents of the founder(s).
Trustee Information Details and identification of the appointed trustee(s). Board of Directors: Information and identification for board members or trustees.
Beneficiary Details Information on beneficiaries, including identification documents. Bylaws: Internal rules governing the foundation’s operations.
Asset List Comprehensive list of assets being transferred into the trust. Asset Contribution: Documentation of assets being contributed to the foundation.
Legal Compliance Any additional documentation required by local authorities. Any additional documentation required by local authorities.

Why Choose RadiantBiz?

RadiantBiz is committed to providing personalized and professional services that empower you to protect and grow your wealth with confidence. Our deep understanding of Dubai’s legal and financial landscape, combined with our expertise in trust and foundation services, makes us your ideal partner in wealth management.

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Frequently Asked Questions

What is the primary difference between a trust and a foundation in the UAE?
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