How to approach a private trust for a family with assets in the UAE

A private trust for a family with assets in the UAE requires a deliberate sequence: establish the governing law, map the forced-heirship exposures across the family's jurisdictions, select a trustee and seat, then execute the settlement and asset transfer in the correct order. A misstep in that sequence – particularly around asset siting and the interaction between UAE law and the chosen trust law – can unwind the structure entirely.

The commercial stakes are significant. UAE-based families increasingly hold assets across multiple systems: real property and operating businesses in the UAE, liquid and investment assets in Hong Kong, the BVI, or the Cayman Islands, and beneficial owners who are residents in two or three jurisdictions at once. Each of those connections creates a separate legal question. Which jurisdiction's succession rules reach which asset? Where does forced heirship apply, and how far does a trust law's firewall extend? What happens when a beneficiary moves?

This guide walks through the decision sequence in order – the options first, then the steps, then the common mistakes, and finally a checklist for the in-house counsel or family-office adviser preparing the engagement.

What decision does the family actually face?

The starting point is identifying the decision correctly. Most families approaching a private trust do not have a single question; they have three overlapping ones: how to hold assets across the family during the founders' lifetimes, how to transfer those assets on succession without court intervention in multiple jurisdictions, and how to protect the fund from claims – including forced-heirship claims – by individuals the settlor does not wish to benefit.

In a UAE-connected family, those three questions interact with a legal environment that is not uniform even within the Emirates. Onshore UAE applies federal personal law, which for Muslim nationals incorporates Sharia (Islamic succession law) principles for inheritance. The UAE's financial free zones – principally the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) – operate their own common-law systems with their own succession and trust regimes, largely insulated from federal inheritance rules for assets and entities within the zone. That distinction is material, because where an asset sits determines which system initially reaches it.

The principal structural options for a UAE-connected family are: a discretionary trust under a common-law jurisdiction (Hong Kong, BVI, Cayman Islands, Guernsey, Jersey, or a DIFC/ADGM trust under DIFC or ADGM law); a purpose trust where a trust for a private-trust company is interposed; or a waqf (a charitable or family endowment under Islamic law). A hybrid structure combining a common-law trust for internationally-held assets with appropriate arrangements for UAE-sited real property is frequently the most practical answer.

In our cross-border private-wealth practice, the families who arrive with the clearest path forward are those who have already mapped the question in those three layers – lifetime control, succession transfer, and protective intent – before choosing a jurisdiction or trustee. The families who arrive having already chosen a trustee and a jurisdiction before mapping the question are the ones who later need a restructuring.

How does the Hong Kong angle interact with a UAE-connected family trust?

Hong Kong offers a trust law environment specifically suited to multi-jurisdictional families, particularly since the Trustee Ordinance (Cap. 29) was substantially reformed with effect from 1 December 2013. The reforms matter to a UAE-connected family for three reasons.

First, the rule against perpetuities and the rule against excessive accumulations were abolished for Hong Kong-law trusts under the 2013 reform. A trust settled under Hong Kong law can, in principle, hold and accumulate assets across generations without a defined expiry date – relevant for a family operating a multi-generational business or holding long-horizon assets.

Second, Hong Kong's trust law expressly protects settlors who reserve powers. A settlor who retains the power to appoint and remove trustees, to consent to investment decisions, or to add and remove beneficiaries does not, by that reservation alone, invalidate the trust under Hong Kong law. For a founder who is not ready to relinquish control entirely – a common position in UAE-connected family structures – that statutory protection matters.

Third, Hong Kong law includes a strengthened firewall provision: a Hong Kong-law trust is protected against foreign claims based on forced-heirship or similar mandatory succession rules from another legal system. That protection is directly relevant to a family where one or more beneficial owners is subject to a jurisdiction that applies forced-heirship (whether civil-law European, Mainland Chinese, or Sharia-based). It does not operate as a blanket shield – assets physically sited in the foreign jurisdiction may still be reached by local courts – but it protects the trust fund as a whole from a judgment that would, in effect, require redistribution in accordance with a foreign succession formula.

The cross-border interface between Hong Kong and the UAE is also practical rather than merely legal. Hong Kong operates as a common-law hub with English as an official working language of the courts, direct common-law heritage shared with the DIFC and ADGM, and well-established trustee and private-wealth infrastructure. A Hong Kong-law trust with a Hong Kong-based trustee sits comfortably alongside a DIFC or ADGM holding structure for UAE-sited assets.

For a structured assessment of how Hong Kong trust law applies to your family's position, see our Private Wealth practice.

What is the step-by-step sequence for establishing the trust?

Step 1: Asset mapping and jurisdictional audit

Before any trust document is drafted, the adviser must produce a complete jurisdictional map of the family's assets. The map identifies, for each asset: its physical or legal siting; the succession law or laws that reach it on the death of the current owner; any forced-heirship exposure; and any existing encumbrances, mortgage, pledge, or ownership restriction that would affect transferability into trust.

For UAE-connected families, this step regularly surfaces surprises. UAE onshore real property held in the name of a non-UAE-national individual may be subject to different succession rules than the family assumed. Assets held in a DIFC or ADGM entity are reached by the free-zone regime, not by federal personal law – but only if the structure is correctly maintained. Liquid assets held in a Hong Kong account or a BVI company are reached by different rules again. The gate at this step is completeness: the structure cannot be designed until every asset and its succession exposure is on the map.

Step 2: Governing-law selection

Governing-law selection is a consequential decision, not a formality. The choice of law for the trust determines: which rules apply to its validity, administration and interpretation; whether the firewall protection applies; and what happens if a beneficiary or creditor challenges the trust in a foreign court.

The principal candidates for a UAE-connected family are Hong Kong law, BVI law, Cayman Islands law, Guernsey law, Jersey law, and DIFC or ADGM law (for assets within those free zones). Each has a different trust statute, a different firewall provision, and a different trustee-service infrastructure. Hong Kong law is frequently selected where the family has a Greater China or Asia-Pacific holding axis and where the long-duration and reserved-powers provisions of the reformed Trustee Ordinance are relevant. DIFC or ADGM law is often selected for assets that will remain within the UAE's financial free zones, because enforcement stays within the same common-law system.

A dual structure – a Hong Kong-law trust for internationally-held assets, and a DIFC or ADGM trust or foundation for UAE-sited assets – is a structurally coherent answer to a family that genuinely straddles both systems. It is also more administratively complex than a single trust, and that complexity should be evaluated against the family's actual asset map and succession timeline, not assumed to be necessary.

Step 3: Trustee selection and jurisdiction of administration

The trustee's jurisdiction of residence and administration is often treated as secondary to the governing-law question. It should not be. A trust governed by Hong Kong law but administered by a trustee in a third jurisdiction may not benefit from all of Hong Kong's statutory protections. A trustee in a jurisdiction that does not give effect to the chosen trust law creates enforcement and governance complications if the structure is ever challenged.

The trustee should be a professional trustee licensed and supervised in the chosen administration jurisdiction. For a Hong Kong-law trust, that means a trust company holding the required authorisations under Hong Kong's regulatory regime and subject to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. Substance – the genuine conduct of trustee functions in the jurisdiction – is increasingly tested by both tax authorities and courts in cross-border enforcement and recognition disputes.

Step 4: Trust deed preparation and execution

The trust deed is the governing instrument. It should address: the trust's governing law; the class of beneficiaries and the discretionary powers of the trustee; the settlor's reserved powers, if any; the letter of wishes (a non-binding but operationally important expression of the settlor's intentions); provisions for trustee change and protector appointment; and the anti-forced-heirship and firewall elections available under the chosen statute.

The gate at this step is legal advice from counsel qualified in the chosen governing law. A draft prepared without that input may contain provisions that are valid in the drafter's home jurisdiction but unenforceable or counterproductive under the actual governing law. We work alongside locally licensed counsel in the relevant jurisdictions to prepare trust instruments that are effective under the governing law in force at the time of execution.

Step 5: Asset transfer and funding

The trust is legally constituted once the deed is executed and assets are transferred to the trustee. The transfer step is where practical complications most often arise. For UAE-sited real property, transfer to a trust or trustee may not be registrable under UAE onshore property law; the asset may instead need to be held through an intermediary entity (a free-zone company or an onshore LLC) in which the trustee holds the interests. For Hong Kong-listed securities or accounts, the transfer triggers a stamp-duty assessment: ad valorem stamp duty of 0.1% per party (0.2% in total) applies to transfers of Hong Kong stock based on the higher of consideration or value. For shares in a non-Hong Kong company holding no Hong Kong-situated assets, the position is generally outside Hong Kong stamp duty, but that should be verified on the specific facts.

The gate at this step is completion: a trust that is executed but not funded – or a trust where some assets are transferred and others are not – is an incomplete structure. The unfunded assets remain in the settlor's estate and are reached by the succession law that would have applied without the trust. That is the most common single failure mode we see on review of existing structures.

Step 6: Ongoing administration and compliance

A private trust is not a one-time filing. It requires ongoing trustee administration, annual review of the family's changed circumstances (new beneficiaries, new assets, residence changes, regulatory developments), and periodic review of the trust document in light of any legislative or tax change in the relevant jurisdictions. For families with UAE and Hong Kong connections, the relevant changes to monitor include the DIFC and ADGM trust law positions, the Hong Kong Trustee Ordinance, and the applicable automatic exchange of information regimes to which both Hong Kong and the UAE are parties.

Tax residence changes in the family are particularly important. If a beneficiary moves to a jurisdiction that taxes trust distributions, the tax treatment of distributions from the trust changes. If the settlor moves, the situs of the trust for tax purposes may change. These are planning events, not surprises – but they require the adviser and trustee to be informed promptly when they occur.

See also our analysis of private trust companies for multi-generational families and our guide to succession planning across Hong Kong and the United Kingdom for related considerations.

The sequence above describes the standard position. Your matter turns on the documents, the jurisdictions actually engaged, and the order of steps – which is where the route is won or lost. For a preliminary read on your family's cross-border position and the trust options, email info@lockhartyip.com.

What does forced heirship actually mean for a UAE-connected family trust?

Forced heirship is the legal rule that reserves a fixed share of a deceased person's estate for defined relatives – typically children, surviving spouses, or parents – regardless of the contents of the will or any trust arrangement. It operates as a mandatory entitlement, not a default that can be contracted away simply by choosing a different governing law for a trust document.

For a UAE-connected family, the forced-heirship question arises in at least two legal systems simultaneously. UAE federal personal law applies Sharia succession principles to the estates of Muslim nationals; those principles define fixed shares (fard, obligatory inheritance shares under Sharia) for defined heirs and allow only a limited portion – historically one-third of the estate – to be disposed of freely by will or trust. The DIFC and ADGM have introduced opt-in wills and succession systems that allow non-Muslims, and in some circumstances Muslims, to elect for an alternative succession regime, but the scope and limits of those elections continue to develop and should be verified carefully on the current legal position.

Where a beneficiary or heir is resident in a civil-law European jurisdiction – France, Germany, Spain – EU succession law may apply to the deceased's estate in that jurisdiction, with the potential for a forced-heirship claim under that system's réserve héréditaire (the protected share of an estate that cannot be taken away from defined heirs). A beneficiary in Mainland China is subject to the statutory heirs provisions of Chinese succession law. A Hong Kong-law trust's firewall provisions protect the trust fund from a judgment seeking to redistribute it under a foreign forced-heirship rule, but they do not prevent a foreign court from reaching assets physically sited in its own jurisdiction.

The practical result is that a well-structured trust for a UAE-connected family must do two things. It must place the most mobile and internationally-held assets within the trust fund under a governing law with strong firewall protection. And it must address UAE-sited assets – particularly onshore real property – through the appropriate local mechanism, which may be a DIFC or ADGM structure, a UAE-law will registered in the UAE, or a combination.

In our private-wealth desk's experience, the families who encounter forced-heirship claims in multiple jurisdictions simultaneously are almost always those who structured the trust without first mapping the assets and the family's jurisdictional connections in the way described in Step 1. The sequence is not bureaucratic formality. It is the reason the structure holds under pressure.

What are the most common mistakes, and how does the correct route avoid them?

The most frequent error we see is governing-law selection without an asset map. A family selects a jurisdiction for its trust based on a recommendation or familiarity, and the trust deed is executed – but the assets it is designed to protect remain in the settlor's personal name because the transfer step was never completed, or because the transfer of UAE-sited property was not legally possible in the form assumed. The trust exists on paper; it does not hold the assets it was designed to protect.

The second common error is the assumption that a trust deed eliminates forced-heirship exposure automatically. It does not. The firewall provisions in Hong Kong law, BVI law, Cayman Islands law, and similar statutes protect the trust fund as a structure from being redistributed by a foreign court order that applies a forced-heirship formula. They do not prevent a court in the UAE, France, or Mainland China from reaching assets that are still physically sited in, or legally connected to, that jurisdiction. The structure must address each asset in the jurisdiction where it sits, not simply at the level of the trust document.

A third error is failing to account for the settlor's own tax and residence position when designing the trust. Where the settlor is resident in a jurisdiction that taxes the income or gains of trusts settled by residents – as is the case in the United Kingdom, certain European jurisdictions, and increasingly in Asian jurisdictions reviewing their CFC and trust look-through rules – the choice of trust structure, timing of settlement, and reservation of powers each have tax consequences that cannot be treated as afterthoughts. Hong Kong itself has no capital gains tax and no withholding tax on dividends, and the profits tax rate for a corporate trustee is well-structured for cross-border holding purposes; but the settlor's own jurisdiction of residence is a separate question entirely.

Finally, we regularly review structures where the letter of wishes contradicts the trust deed, or where the letter of wishes was drafted so narrowly that the trustee has limited practical discretion. The letter of wishes is not a binding instruction, but it is the document the trustee turns to when making discretionary decisions. A letter that does not reflect the family's actual circumstances, updated as those circumstances change, creates administration problems and, in contested situations, can become evidence that the trust was not genuinely discretionary.

If an earlier structuring attempt produced an incomplete or challenged result, a second read can identify the specific gap and the routes still available. Write to info@lockhartyip.com with a brief description of the structure and the concern.

A short decision checklist for in-house counsel and family-office advisers

Before the first engagement with a trust counsel, work through the following questions. They are not a substitute for legal advice, but they are the questions any competent cross-border trust adviser will ask in the first meeting – and arriving with the answers shortens the process and reduces the risk of structuring errors.

• Asset map: Are all assets identified, listed by jurisdiction of siting, and characterised as to the succession law that reaches them?
• Forced-heirship exposure: For each asset jurisdiction, is there a forced-heirship regime? If yes, which individuals in the family are potential forced heirs under that regime?
• UAE asset category: Are UAE-sited assets held onshore, in the DIFC, in the ADGM, or in another free zone? Is the asset real property, an equity interest, or a bank account?
• Settlor's residence and nationality: In which jurisdiction is the settlor currently tax-resident? Does that jurisdiction have rules taxing trust income or gains attributable to resident settlors?
• Beneficiary map: Where are the beneficiaries resident? Do any of their residence jurisdictions tax trust distributions received by residents?
• Reserved-powers position: Does the settlor intend to retain powers over trustee selection, investment decisions, or addition and removal of beneficiaries? If yes, that reservation must be structured under a trust statute that expressly validates it.
• Trustee substance: Is the proposed trustee a licensed professional trustee in the chosen administration jurisdiction, with genuine staff and decision-making capability in that jurisdiction?
• Existing structures: Are there existing companies, foundations, or partial trusts in the family's structure? A new trust must be designed to fit with or replace them, not to sit alongside them in an uncoordinated way.
• Succession timeline: Is the trust being designed for an immediate succession event, or as a long-horizon holding and protection structure? The answer affects the choice of governing law and trustee powers.
• Regulatory compliance: Is the family subject to automatic exchange of information reporting (CRS/AEOI) in any jurisdiction? Trust structures are reportable in most participating jurisdictions; the design should be tax-transparent and compliant from the outset.

A practical illustration

A family from the Gulf region – the founders UAE nationals resident in Dubai, their adult children living across Hong Kong, the United Kingdom, and continental Europe – came to our desk in early 2026. The family held significant real property onshore in the UAE, a DIFC-based investment holding company, a BVI entity holding listed securities in Hong Kong, and a family home in the United Kingdom.

The existing structure had no trust. The founders' estate would, on their deaths, have been reached by four different succession systems simultaneously: UAE federal personal law (for the onshore UAE property and potentially for movables); DIFC succession rules (for the DIFC entity); Hong Kong succession law (for the BVI company's Hong Kong assets, depending on the situs analysis); and English law (for the United Kingdom property), with the complication that one of the children resident in a European civil-law country had a potential forced-heirship claim under that country's rules as well.

The approach taken was a two-layer structure. A Hong Kong-law discretionary trust – governed by the Trustee Ordinance as amended in 2013 – was settled to hold the BVI entity and a new Hong Kong holding company for liquid and investment assets. A DIFC-law trust was established for the DIFC investment holding company, using the DIFC's own succession-election mechanism. The UK property was addressed through a separate UK-law arrangement. The UAE onshore real property was reviewed for DIFC registration eligibility; where that was not available, appropriate UAE-law provisions were put in place.

The result – qualitatively – was a structure in which the three most internationally mobile asset pools were held under trust laws with strong firewall provisions and well-tested governance rules, while UAE-sited assets were addressed through the mechanisms that UAE law actually supports. No single step was technically complex in isolation. The complexity was in the sequencing and in ensuring that the asset-transfer steps were completed, not merely drafted.

Related practices

Related practices

• Private Wealth – succession, trust structuring, asset protection and family-office advisory across jurisdictions
• Holding Structures – BVI, Cayman, Hong Kong and offshore holding entity design for cross-border families and groups
• Tax Positions – residence, source and FSIE analysis for internationally mobile settlors and beneficiaries

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This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.