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

A trust is a legal arrangement constituted by an agreement (Trust Deed) under which one person renounces a title to and transfers property to another person for that person to manage such property for the benefit of the beneficiaries designated in the Trust Deed.

Structure and purpose of a trust

Main actors in a trust

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.

Popular uses for trusts

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.

However, it must be emphasized that when a trust is established, the Trustee becomes a rightful owner of the property with all the consequences, except that the Trustee cannot benefit from the use of such trust property – that benefit must always be derived by the beneficiaries.

Trust regulation in ADGM

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.

Establishing a trust in ADGM

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.
Important: for a trust to be deemed established under the ADGM law, this must be directly stated in the Trust Deed.

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).

We offer to our clients the establishment and structuring of ADGM trusts, taking into account individual requirements in each specific case and identifying and addressing potential risks in the future operations of a trust.

We also address the issues related to the transfer of assets to a trust (corporate and tax aspects) and communication with banks.

Fees for Basic Services[1]

Services
Fees (USD)
Basic cost of establishing a trust, including drafting of trust documentation and structuring of assets transferred to the trust
From 9 000
Finding a Trustee, basic cost
From 10 000
Compliance fee
Payable in the cases of:
- liquidation of a trust,
- issue of a power of attorney to a new attorney,
- change of participants in the structure of a trust
250 (standard rate, includes the check of 1 individual)
+ 150 for each additional individual or legal entity if such legal entity is administered by GSL
+ 200 for each additional legal entity if such legal entity is not administered by GSL
350 (rate for high-risk trusts, includes the check of 1 individual)
100 (signing of documents)
Preparing financial statements, conducting an audit, and submitting financial statements to the free zone authorities
400 / hour
Advice on tax matters
400 / hour
Other related legal services
Request a quote from your consultant
DISCLAIMER: This document is not a formal legal or tax opinion. The information contained herein cannot be relied upon for the purposes of avoiding tax in any country of the world or for conducting illegal activities. Nor can the information contained in this document be used to recommend any transaction to another person. The information contained herein is intended solely for the personal lawful use of the recipient and is confidential. We recommend that additional advice on tax and legal consequences of using this information be sought from lawyers and auditors.

[1] 5% VAT applies.

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