UAE Law and Practice Contributed by: Yann Mrazek, Kath Zagatti, Hermione Harrison and Keerthi Voodimudi, M/HQ Corporate Services Ltd
9. Trusts, Foundations and Related Entities 9.1 Choice of Planning Vehicle In the UAE, foundations have emerged as a leading structuring vehicle for estate and wealth planning, particularly for high net worth families and family business owners. Their prominence reflects practical considerations, including separate legal personality, compatibility with direct asset ownership (including UAE real estate), and clear recognition by financial institutions and regulatory authorities. Foundation regimes are available in the DIFC, ADGM and RAK ICC. In each of these jurisdictions, a foun- dation is established as an independent legal entity capable of holding assets in its own name and operat- ing within a dedicated statutory framework. The DIFC and ADGM regimes operate within common law court systems, while the RAK ICC framework is influenced by common law concepts and permits the election of dispute resolution mechanisms, including DIFC or ADGM courts where appropriate. This entity-based structure provides certainty of ownership, simplifies dealings with counterparties, and facilitates the con- solidation of family assets within a single legal plat- form. Trust regimes are likewise recognised within the UAE. The DIFC and ADGM operate established common law trust frameworks, while Federal Decree-Law No 31 of 2023 provides a statutory basis for trusts out- side the financial free zones. Trusts remain suitable for discretionary planning and structured fiduciary administration, particularly in cross-border arrange- ments where alignment with common law fiduciary concepts is important. They may also be preferred where foreign tax treatment or recognition in another jurisdiction makes a trust structure more advanta- geous from an international planning perspective. A private trust foundation (PTF) may be utilised to act as trustee, allowing enhanced governance structuring and greater family oversight while preserving a trust- based framework. In practice, the choice of vehicle is influenced by the nature of the assets, governance preferences, cross-
border considerations and the desired degree of insti- tutional formality. 9.2 Recent Developments Affecting Planning Vehicles Recent legislative and regulatory developments have reinforced the UAE’s position as a regional hub for private wealth structuring, while simultaneously rais- ing expectations around governance and compliance standards. At the federal level, Federal Decree-Law No 31 of 2023 modernised the onshore trust framework and clarified statutory recognition of trusts outside the financial free zones. This reform enhanced legal certainty for domestic trust arrangements, although in practice free zone regimes continue to be more commonly used for complex succession structures. Within the DIFC, significant amendments to the Trust Law and Foundations Law enacted in 2024 enhanced asset protection and firewall provisions and introduced limitation periods for certain claims. These reforms materially increased legal certainty and reinforced the resilience and international competitiveness of DIFC trust and foundation vehicles. In 2025, RAK ICC simi- larly updated aspects of its foundations framework, further strengthening asset protection features and governance clarity. The introduction of federal corporate taxation has added a further dimension to wealth structuring analysis. While corporate tax does not directly affect inheritance planning, it requires greater attention to how holding and group structures are organised and documented. Importantly, the framework accommo- dates tax transparency treatment for qualifying family foundations, and Ministerial Decision No 261 of 2024 extends such treatment, in certain circumstances, to wholly owned and controlled underlying entities, sub- ject to specified conditions. The enactment of the DIFC VCC Regulations has introduced a complementary structuring tool, particu- larly for families seeking flexible pooled investment platforms capable of operating alongside foundation or trust arrangements.
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