Maximising asset protection and management with DIFC trusts and foundations

The Dubai International Financial Centre (DIFC) provides a robust asset structuring framework through foundations and trusts. These vehicles offer a myriad of benefits that cater to the diverse needs of high-net-worth individuals and families. In this article, Akeela Bharuchi, Head of Middle East at Equiom highlights the key advantages of utilising DIFC trusts and foundations, highlighting their roles in asset protection, confidentiality, tax efficiency, and more.

Key Benefits of Using DIFC foundations and trusts for structuring assets
 
1.    Asset Protection

Foundations: Assets placed in a DIFC foundation are legally separated from the founder's personal assets. This structure can protect against creditors, legal claims, and familial disputes, ensuring that the assets are preserved for future generations.

Trusts: Similarly, DIFC trusts offer robust asset protection by placing assets under the control of trustees, who manage them for the benefit of the beneficiaries. This arrangement shields the assets from personal liabilities and claims against the settlor.
 
2.    Confidentiality

Both DIFC foundations and trusts provide high levels of confidentiality, as the details of the assets and the beneficiaries are not publicly disclosed. This privacy is particularly beneficial for high-net-worth individuals and families seeking to maintain discretion regarding their wealth.
 
3.    Tax Efficiency
 
The DIFC provides a favourable tax environment, including no taxes on income, capital gains, or inheritance for the assets held within its jurisdiction. This can significantly enhance the tax efficiency of wealth management and estate planning strategies.
 
4.    Flexibility and Control
 
Foundations: Founders can retain significant control over the management and distribution of the foundation's assets. They can set specific rules and guidelines that align with their wishes and objectives, providing flexibility in asset management and succession planning.
 
Trusts: Trusts offer similar flexibility, allowing settlors to specify detailed instructions on how the trust assets should be managed and distributed. This flexibility can be tailored to meet various family needs, philanthropic goals, or business succession plans.
 
5.    Legal Certainty and Robust Governance
 
The DIFC operates under a common law framework, providing a high level of legal certainty and robust governance standards. This environment ensures that both foundations and trusts are managed in a transparent and regulated manner, safeguarding the interests of all parties involved.
 
6.    Succession Planning
 
DIFC structures are ideal for succession planning, allowing for the seamless transfer of wealth across generations. Foundations and trusts can be structured to provide ongoing financial support to beneficiaries while ensuring that the founder’s wishes are respected and maintained over time.
 
7.    Global Recognition and Compliance
 
The DIFC is recognised globally as a reputable financial jurisdiction. Using DIFC structures can facilitate international business and investment activities, ensuring compliance with global regulatory standards and enhancing the credibility of the asset management framework.
 
 
Conclusion

The advantages of using DIFC foundations and trusts are clear. They offer robust asset protection, maintain confidentiality, enhance tax efficiency, and provide flexibility and control over asset management. These benefits make them an excellent choice for anyone looking to safeguard their wealth and plan for the future. By leveraging the DIFC's legal framework and global reputation, individuals and families can ensure their assets are managed effectively and their legacy is preserved for generations to come. For more information and personalised advice on DIFC foundations and trusts, contact Akeela Bharuchi.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom Group to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.