Family Trust Fund: What is it and what is it for?
A trust fund is a legal structure designed to ensure the storage and management of the founder’s assets and property, the distribution of income, and the assets themselves between beneficiaries. It operates on the basis of an agreement, the parties to which are:
- the founder (grantor), who owns movable and immovable property, funds, and other assets that are the subject of the trust;
- an owner, trustee, or manager – the rights of ownership and management of the founder’s assets are transferred to him;
- beneficiaries – persons chosen by the founder to receive the income and assets of the fund. They have the right to demand from the manager the proper performance of the duties assigned to him.
A family trust is a special entity with a separate legal personality in which the beneficiaries are members of the founder’s family.
Why do you need a family trust?
A family trust can be created for a variety of purposes. The main ones:
- preservation of family wealth, protection of assets from claims of former spouses, business partners, creditors or government agencies, since when a trust fund is established, ownership rights to the subject of the trust are transferred from the owner of the assets to the trustee;
- protection of capital from waste by heirs who do not know how to properly manage money. In such cases, the contract stipulates the frequency and amount of funds allocated to them;
- maintaining the confidentiality of information on the distribution of property and assets after the death of the founder. Unlike inheritance by will or law, this information is not subject to public disclosure.
Family trust in the UAE, in Dubai
Favorable conditions for the operation of family trusts and foundations owned by foreign citizens have been created in Dubai. You can register a fund in this emirate of the UAE in two free economic zones – DIFC and DMCC.
Family trust fund in DMCC and DIFC: features and benefits
Registration of a trust in Dubai is regulated by Law 14/2017, which is mandatory for the entire territory of this emirate. In addition, the Dubai International Financial Center (DIFC FZ) has its own trust law 4/2018, which introduces some differences in the process of creating a fund in different SEZs. Therefore, when choosing a jurisdiction for its registration, it is necessary to take into account the law that is more suitable for the specific circumstances and purposes of creating a trust.
Features of family trusts registered in Dubai include:
- the presence of legal personality, which makes them similar to companies that do not have shareholders;
- the inability to conduct commercial activities at the discretion of the manager, except for those provided for in the agreement with the founder to maintain the work of the fund and achieve its goals;
- confidentiality of information about the fund’s assets and its management activities;
- the optional physical presence of the founder on the territory of the FEZ. In this case, the fund must be managed by a person registered in the corresponding free zone.
Registering a trust in the offshore zone of Dubai (DMCC or DIFC) has the following advantages:
- permission for 100% ownership by a foreign citizen or company;
- the ability to create a trust with any minimum capital;
- complete tax exemption;
- high degree of protection of the founder’s assets;
- high level of anonymity.
How to create a trust fund in Dubai
To open a family trust fund in the DMCC and DIFC free zones of the Emirate of Dubai, you must:
- allocate assets from your property that are supposed to be transferred to the trust;
- decide on the type and structure of the trust fund, clearly define its goals, and acceptable ways to achieve them. If necessary, you need to restructure assets;
- select the appropriate jurisdiction and trustee;
- draw up a trust agreement;
- prepare a package of necessary documents to create a family trust. Their list depends on the type of fund and jurisdiction;
- transfer assets to a trust.
Cost and timing of trust registration in the UAE
Creating a family trust requires painstaking work, taking into account the individual characteristics of the business and the structure of the assets transferred for management. There are many nuances to consider, from your goals and needs to the specifics of the legislation in force in the relevant jurisdiction. All this affects the cost of the costs required to register the fund. Well, the entire registration process takes about two months if professionals do the work.
If you want to open a family trust fund without delay and in the optimal time frame, contact the specialists of Dynasty Business Adviser!
Procedure and cost of registering a family trust fund with DMCC (Single Family Office License)
Documents required for company registration
- Business plan
- Proof of capital of at least 1 million USD
- Documents confirming a family relationship
- Letter of commitment signed by the applicant
- Fill out questions from DMCC
- Registration of a company in DMCC
- Cost of resident visas
Registration of a company in DMCC
|
DMCC COMPANY REGISTRATION WITH SINGLE FAMILY OFFICE LICENSE |
COST, USD |
|---|---|
|
DMCC registration fees, including Flexi office license with the ability to open 1 resident visa |
$9,900 |
|
$3,200 |
|
In Total |
$13,100 |
