How to Create a Trust in Dubai, UAE

Creating a trust in Dubai involves choosing a jurisdiction, either the DIFC, ADGM, or UAE mainland, selecting the type of trust, drafting and notarizing a trust deed or will naming a settlor, trustee, and beneficiaries, then registering that trust with the relevant authority, a process that typically takes several weeks from drafting to final registration. Trusts registered in the DIFC or ADGM operate under common law frameworks modeled on English trust law, offer 100% foreign ownership with no minimum capital requirement, and benefit from the UAE’s zero personal income tax and zero capital gains tax environment for individuals.

Why People Set Up Trusts in Dubai

Trusts are used primarily for wealth protection, succession planning, and asset confidentiality. By transferring assets, property, cash, securities, or business shares, into a trust, a settlor creates legal separation between those assets and their personal estate, which can shield wealth from certain claims and provide more control over how assets pass to beneficiaries than a standard will alone. This has made Dubai an increasingly popular jurisdiction for both residents and non-residents seeking a stable, common law-based structure for managing family wealth, particularly given the added benefit that trust distributions can bypass Sharia-based forced heirship rules that would otherwise apply to a deceased Muslim’s estate under UAE default succession law.

Choosing a Jurisdiction: DIFC, ADGM, or Mainland

DIFC (Dubai International Financial Centre): The most commonly used jurisdiction for trust formation in Dubai, operating under DIFC Law No. 4 of 2018, the DIFC Trust Law, and regulated by the Dubai Financial Services Authority (DFSA). DIFC trusts follow English common law principles, offer strong confidentiality, since trust deeds are not publicly available, and allow both residents and non-residents to establish trusts without needing to be physically present, as the process can typically be managed digitally through a registered agent.

ADGM (Abu Dhabi Global Market): Abu Dhabi’s equivalent free zone, also built on English common law principles and regulated by the Financial Services Regulatory Authority (FSRA), offering a broadly similar trust framework to the DIFC for those preferring an Abu Dhabi-based structure.

UAE Mainland (onshore): Trusts can also be established on the mainland, where they are subject to Sharia law principles and registered confidentially with the UAE Ministry of Finance rather than a free zone authority. Disputes involving onshore trusts fall under the jurisdiction of UAE mainland courts rather than the DIFC Courts.

Most individuals and families seeking a common law structure, particularly non-Muslim expatriates wanting to avoid default Sharia inheritance rules, choose the DIFC or ADGM route over the mainland option.

Step-by-Step: How to Create a DIFC Trust

Step 1: Define the trust’s purpose and select a trust type. DIFC law allows for several trust structures, including charitable trusts designed to benefit specified causes, and non-charitable (private) trusts designed for family wealth management, succession, and asset distribution. Trusts can also be set up as limited (for a fixed period) or unlimited (indefinite) in duration.

Step 2: Choose the formation method, will or deed of trust. A trust can be established either through a formally drafted will, which takes effect upon the settlor’s passing, or through a deed of trust (sometimes called a codicil), a standalone written document that can take effect during the settlor’s lifetime and explicitly sets out the trust’s purpose, assets, beneficiaries, and the trustee’s responsibilities.

Step 3: Draft the trust deed. The deed must satisfy the legal formalities required under DIFC Trust Law, clearly identifying the settlor, trustee, beneficiaries, the assets being placed into the trust, and the terms governing distribution and administration. Careful drafting at this stage is essential, since ambiguity in the deed can create disputes or administrative complications later.

Step 4: Appoint a qualified trustee. The trustee, an individual or a licensed corporate trustee, must be approved to act in that capacity within the DIFC. Given the significant responsibility involved in managing trust assets on behalf of beneficiaries, trustees are expected to demonstrate adequate expertise, reputation, and capacity to fulfill their fiduciary duties.

Step 5: Notarize the deed. The trust deed or will typically needs to be notarized as part of the formation process, a step that generally takes around five days to complete.

Step 6: Register the trust with the DIFC. Once notarized, the trust is submitted for registration with the DIFC Registrar of Companies. Registration in the DIFC generally takes between two and four weeks, after which the trust is legally recognized and can begin operating according to its deed.

Step 7: Transfer assets into the trust. After registration, the settlor formally transfers the designated assets, property, cash, investment holdings, or business shares, into the trust, at which point the trustee assumes responsibility for managing those assets according to the deed’s terms.

Key Roles in a Trust Structure

The settlor can generally choose whether to name beneficiaries explicitly in the deed or retain a degree of confidentiality, since DIFC trust deeds are not publicly accessible documents, though certain disclosures may still be required to satisfy anti-money laundering (AML) regulations.

Costs and Capital Requirements

A DIFC trust does not require a specified minimum capital to register, and 100% foreign ownership is permitted, meaning there is no local shareholding requirement as can apply to certain other UAE business structures. Costs instead relate primarily to legal drafting fees, notarization, registration fees payable to the DIFC, and any ongoing professional trustee or administration fees, which vary depending on the complexity of the trust and whether a professional corporate trustee is appointed.

Tax Treatment of Trusts in Dubai

Trusts established in the DIFC generally benefit from the UAE’s broader tax environment for individuals, meaning settlors and beneficiaries are not subject to personal income tax or capital gains tax on distributions or asset growth within the trust. Trust structures are also commonly used as part of tax planning strategies, subject always to the tax laws applicable in the settlor’s or beneficiary’s own home jurisdiction, since assets held in a UAE trust may still be reportable or taxable elsewhere depending on an individual’s residency and citizenship. Businesses connected to trust administration, such as licensed corporate trustee firms, remain subject to the UAE’s standard 9% corporate tax above AED 375,000 in profit.

Confidentiality and Regulatory Oversight

DIFC trusts benefit from a meaningful degree of confidentiality, since trust deeds and related documents are not available to the public. This privacy is not absolute, however, as licensed trustees and administrators must still comply with AML and know-your-customer regulations, which can require certain disclosures to regulators or, in specific circumstances, to relevant authorities. Any disputes arising from a DIFC trust are handled by the DIFC Courts, which operate under a common law system separate from the UAE’s onshore civil courts, offering an added layer of procedural familiarity for international settlors accustomed to common law jurisdictions.