Many entrepreneurs who want to ensure their capital protection decide to register a family fund in Dubai, the UAE. With such legal entity, a businessperson can count on continuity of assets when applying this decision. In Dubai, among others, there is a free zone which offers the possibility of registering a family fund. This free zone is called the "International Financial Center of Dubai" (DIFC). The UAE Prime Minister, Sheikh Mohammed bin Rashid Al Maktoum has signed several laws designated to improve the planning and management of private capital in the free zone of DIFC.
The main legal innovation is the Law on the Right of Trust and Private Funds. This document takes into account the recommendations of the working group on capital management in DIFC, various stakeholders and specialists in this field. Here, the best world practices in the field of family trusts and foundations are applied.
In the DIFC free zone in Dubai, there are excellent conditions for the work of trusts and funds and in regards to inheritance law. The approved changes help to efficiently manage capital and provide the necessary flexibility for the work of beneficiaries and trustees.
The Law on the Rights of Trust and Private Funds brings the conditions for family capital management to a new level and provides the necessary legal protection in the inheritance processes in the free zone of DIFC.
What should you know about registering a family fund in the UAE?
According to the definition, a family fund (or family trust) is a legal structure similar to a company, but having the rights of the trust. It is structured as a separate legal personality, and there are no shareholders like in the company, and most importantly – unlike in a company, a trust cannot conduct commercial activities, except for those necessary for its purposes.
To open a family trust in Dubai, you need to:
- Develop the provisions of the future structure – a trust agreement;
- Choose the optimal structure of the trust which is the best one for its tasks;
When developing a trust agreement, you should determine:
- Assets that your trust can acquire, as well as the procedure for buying and selling securities;
- How the income is distributed to the beneficiaries of a trust (money is paid all at once, or in parts, and if so, what are these parts and what are the terms of it)?;
- What is the form beneficiaries get a profit (money, real estate, shares in the business, etc.);
- Powers, amount, remuneration and operation order of the trustees work;
- Special conditions of the trust (if any).
As a rule, trusts are registered for specific tasks of one family, for example, for the management of family property and its transfer to descendants. Thus, the opening of a family fund in Dubai, the UAE will assure to its founders that the family property will be transferred to the beneficiaries in the order that is defined by the trust's settlor.