Trusts, Foundations & Family Wealth Planning in the UAE

The UAE's private wealth offering has matured significantly. The DIFC Foundations Law (DIFC Law 3 of 2018) and the ADGM Foundations Regulations 2017 provide internationally mobile families with civil-law foundation vehicles inside two English common-law jurisdictions — a combination that is rare globally and increasingly central to cross-border succession planning. Sitting alongside them are the DIFC Trust Law 2018, the ADGM trust regime and the DIFC Wills Service Centre. Used properly, these tools cover most of what a HNW family needs.

Foundations — the vehicle most families end up with

A foundation is an orphan legal entity with its own charter and by-laws, a council that manages it, and (optionally) a guardian who oversees the council in respect of certain reserved matters. Unlike a trust, it has separate legal personality and contracts in its own name — which makes it more readily recognised by banks and counterparties in civil-law jurisdictions where Anglo-Saxon trusts are misunderstood. Unlike a company, there are no shareholders; the assets are owned by the foundation itself.

In practice DIFC and ADGM foundations are used to hold shares in operating businesses, investment portfolios, private equity carry, intellectual property, real estate holding companies and aircraft and yacht SPVs. Both centres allow firewall provisions, reserved powers for the founder, and the use of letters of wishes. The choice between DIFC and ADGM usually comes down to existing relationships, the regulator's familiarity with the assets in scope, and the preferences of the family's onshore advisers.

The holding architecture beneath

Most families do not run a single foundation. They run a foundation that sits at the top of a deliberate holding architecture: an investment SPV in DIFC or ADGM for marketable securities; a real estate holding company for the property portfolio; one or more operating subsidiaries in the relevant free zones; and, where appropriate, an offshore jurisdiction (BVI, Cayman, Jersey) for non-UAE assets. The architecture is designed around the family's tax residencies, the substance requirements of Cabinet Decision 100 of 2023, and the CRS reporting profile of each entity.

Governance — the harder part

The legal vehicle is the easier conversation. The harder one is governance. Who sits on the council, on what authority, with what checks. How distributions are decided. How disputes between branches of the family are resolved. How council membership transitions across generations. The strongest foundations we have helped establish were built around a charter that survived a serious family disagreement — because the document had been drafted with that disagreement in mind.

Cross-border recognition and CRS

A UAE foundation that holds assets and beneficiaries across multiple jurisdictions must be coordinated with the family's onshore tax and legal advisers. UK-resident beneficiaries can trigger settlor and beneficiary charges under the trust and settlements code; Indian-resident beneficiaries trigger Schedule II of the Black Money Act considerations; US connections raise grantor and throwback issues. CRS reporting under the UAE's Common Reporting Standard framework also needs to be mapped — the foundation is a reporting financial institution in most configurations.

When a foundation is the right answer — and when it is not

Foundations are the right answer for families with multi-generational assets, multiple beneficiaries, an active operating business and a genuine governance requirement. They are not the right answer for a single principal with straightforward holdings, for short-horizon planning, or where the principal wants direct, unconstrained control. In those cases a simpler UAE holding company, a DIFC Will, or a hybrid arrangement does more work.

How Morifar supports the work

We coordinate foundation and holding-structure design alongside the family's existing onshore legal and tax counsel, and we work with licensed UAE firms on the registered agent, council services and ongoing administration. Formal legal advice is delivered through licensed counsel; our role is the coordinating spine across jurisdictions, advisers and operations.