Setting Up a Trust in ADGM Free Zone, Abu Dhabi, UAE. Service offer

Settlor is a person who establishes a trust and who is the legal owner of the property transferred to the trust. After transferring his property to the trust, he ceases to be the owner of such property.

Trustee is a person appointed to manage the property of a trust. This person must manage the trust property for the benefit of the trust’s beneficiaries or in such a way as to achieve the trust’s purpose.

Beneficial owner / beneficiary is a person in whose interest the property is transferred to the trust and in whose interest such property is then managed.

Protector is a person whose function it is to supervise that all participants in a trust duly comply with the Trust Deed.

A trust can be a good instrument for tax, family or estate planning because the property placed in trust by the settlor is no longer part of his estate upon death and can subsequently be distributed as designated by the Trust Deed. The rights of beneficiaries do not pass over by succession either. And thanks to the flexibility of law, a Trust Deed can be drafted in such a way that will represent the interests of a trust’s settlor and beneficiaries as best as possible.

ADGM trusts are governed by the local Trusts Regulations, and all other aspects not covered by the Trusts Regulations, are governed by English law.

The application of English law in ADGM is stated in the Application of English Law Regulations 2015. This document contains a schedule listing the legislative acts that are applicable in ADGM:

• Trustee Act 1925 as amended by sections of the Inheritance and Trustees Power Act 2014;
• Variation of Trusts Act 1958;
• Trusts of Land and Appointment of Trustees Act 1996;
• Trustee Delegation Act 1999;
• Trustee Act 2000.

As a matter of fact, ADGM trusts are governed largely by English law, supplemented by local legislation.

The local Trusts Regulations only contain special rules for:

• the recognition of foreign judgments on whether trusts are invalid/voidable;
• the effect of foreign heirship laws for the property held by an ADGM trust;
• regulation of non-charitable purpose trusts;
• settlement of rules for Trustees.

Some additional provisions on trusts can also be found in COMPANIES REGULATIONS 2020.

ADGM trusts are not required to be registered or recorded in a register in any way – ADGM does not have a register of trusts. Nor do trusts have to be recorded in the register of companies.

The process of setting up a trust in ADGM consists of drafting as elaborate and accurate Trust Deed as possible, which would include the following provisions described in detail:

• all participants in the trust and how functions and responsibilities are divided between them;
• mechanisms regulating the relationships between the participants in the trust;
• contractual mechanisms to secure the interests of all participants in the trust;
• conditions for the existence and termination of the trust;
• mechanisms for securing the trust itself, including cases where it is necessary to change key participants in the trust (such as in the case of a forced change of the Trustee);
• additional provisions individually drafted for each particular trust and taking into account the specific nature of its operations and goals.

The second step in setting up a trust is to find and appoint a licensed professional Trustee (this must be a company licensed as a Trustee in ADGM).

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