Trusts for asset protection and succession

An arrangement where a trustee holds and manages assets for the people you choose. People use trusts to protect assets, plan succession, keep ownership private and provide for family in a controlled way.

There is no single best one. It depends on tax residence, asset type and family circumstances. We advise on the right fit rather than defaulting to one.

DIFC trust law does not apply forced-heirship rules, which gives flexibility over distribution. We explain how that interacts with the law of any country you or your assets are connected to.

You give up legal ownership, which is what makes the structure work, but not influence. As settlor you set the trust's terms: who benefits, on what conditions, at what ages, and what the trustee may and may not do without consulting others. A letter of wishes records your intentions for the trustee's guidance, and a protector can be appointed with power to approve major decisions or replace the trustee.

Reserving too much control is the common mistake. Where a settlor keeps day-to-day command of the assets, a court or tax authority may treat the trust as a sham and look straight through it, which defeats the point of having one. The design task is to keep meaningful influence while leaving genuine discretion with the trustee. We draft to that line deliberately rather than by accident.

Most classes of asset: cash and investment portfolios, shares in private and listed companies, real estate, intellectual property, life policies, art and other chattels. The trust becomes the registered owner, so each asset has to be capable of being transferred and re-registered in the trustee's name.

A few asset types need particular handling. UAE real estate must be checked against the rules of the relevant land department before transfer. Shares in an operating company usually need a review of the articles and any shareholders' agreement, and often the appointment of a holding company beneath the trust so the trustee is not drawn into daily management. Bank accounts require the trustee to complete account opening in its own name. We identify these points before the trust is established, not after.

Anyone you choose: a spouse, children including those not yet born, wider family, and, in a non-charitable purpose trust, a purpose rather than a person. Beneficiaries can be named individually or described as a class, such as your children and their descendants, which lets the trust accommodate a family that has not yet finished growing.

You can generally be a beneficiary of your own trust, and many settlors are. Whether that is advisable depends on the tax position in your country of residence and on how much protection you need from creditors, since being a beneficiary of a trust you settled can weaken it against claims. We look at both before deciding how you should be described in the deed.

A trust is a relationship: a trustee holds assets for beneficiaries under a deed, with no separate legal entity. A foundation is a legal person in its own right, registered and managed by a council under a charter, which many clients from civil-law backgrounds find more familiar and easier to explain to banks and registries.

The practical differences matter more than the theory. A foundation can contract, sue and hold assets in its own name, is registered, and often deals more smoothly with counterparties who do not recognise trusts. A trust is private, has no registration, and is well understood in common-law jurisdictions and by international banks. Where the family is spread across both traditions, we sometimes use both. Our Foundations page sets out that route in more detail.

The trustee holds legal title and is under a duty to act in the beneficiaries' interests, to the exclusion of its own. In practice that means safeguarding and insuring the assets, keeping proper accounts and records, making and documenting distribution decisions, dealing with banks, auditors and regulators, filing whatever the jurisdiction requires, and communicating with beneficiaries.

Family members can act as trustees, but rarely should where there is real value or any prospect of disagreement: the role carries personal liability and the duties are demanding. A professional trustee brings continuity, records that stand up to scrutiny, and independence when beneficiaries disagree. We establish trusts and administer them, so the structure is set up properly and stays that way, and where a client prefers an external trustee we will say so.