Matter note: asset protection for a principal UAE

A family with operating assets in the UAE and a next generation educated in Europe presents a structural question that neither a UAE adviser nor a European estate planner can answer alone. The question is not which law governs the will. The question is which law governs the assets when those laws conflict – and how much of the family's wealth survives the interface.

Asset protection for a principal with significant UAE exposure turns on identifying the gap between the lex situs (the law of the place where assets are situated) of UAE-held assets and the succession regime that would otherwise apply under the principal's personal law. In practice, that gap generates forced-heirship exposure. Under Hong Kong's Trustee Ordinance (Cap. 29), as substantially reformed with effect from 1 December 2013, a properly constituted Hong Kong trust can hold interests in offshore holding entities – including those above UAE operating assets – and benefit from Hong Kong's express statutory firewall against foreign forced-heirship claims. The cross-border analysis is not academic. The principal's residence, the location of the holding entity, and the choice of governing law each operate as separate levers.

This note describes an anonymised engagement in which those levers were applied across the Hong Kong–UAE corridor. It is structured as four stages: the situation and the constraint; the issue and the route chosen; the sequence and the turning point; and the transferable lesson.

The situation and the constraint

The principal was an entrepreneur whose group operated in the Gulf through a locally licensed UAE entity. The family spanned three generations and two nationalities. The principal and spouse held passports from a civil-law jurisdiction with a réserve héréditaire (a forced-heirship rule under which designated heirs – typically children – receive a fixed statutory share of the estate regardless of testamentary wishes). An adult child resided in a third jurisdiction.

The operating entity sat under a BVI holding company. The BVI holding company was owned personally by the principal. No trust or family structure existed. The principal's existing will, drawn under the civil-law jurisdiction's law, apportioned the estate broadly. It did not, however, displace the réserve héréditaire as to assets considered to be situated in that jurisdiction – and the question of whether shares in a BVI company were so situated had never been resolved.

The constraint was a practical one. The UAE operating entity was subject to an ongoing commercial relationship that required local regulatory approval for any ownership change. That approval carried a statutory timeline and an element of counterparty consent. Any restructuring had to work around that window. A hasty transfer at the holding level risked triggering a deemed change of control under the local operating licence.

We were introduced to the matter in early 2026. Our instruction was to assess the succession and asset-protection position and model the structural options across the relevant jurisdictions.

The issue and the route chosen

The structural issue was straightforward to articulate and genuinely difficult to resolve. The family's assets sat in a chain that offered no protection at any layer: UAE opco – BVI holdco – personal ownership – a will subject to forced-heirship override. The principal's intentions for distribution on death would, on the most probable analysis, have been partially overridden by the réserve héréditaire, at least as to the portion of the estate that the civil-law jurisdiction's courts would characterise as situated there.

The UAE dimension added a second problem. The UAE applies Islamic inheritance law, Sharia, by default to the assets of a Muslim national. For non-Muslim foreign nationals, the UAE now permits the registration of a will under the Abu Dhabi Judicial Department or the DIFC Wills Service – a mechanism introduced to allow non-Muslim expatriates to elect a different governing law for their UAE-situated assets. That election is not automatic. It requires registration, and the registration applies only to assets covered by the will as filed. The principal had not registered a UAE will.

Two routes were available.

The first was a simple UAE-will registration, coupled with an amendment to the existing European will. That addressed the immediate UAE exposure but left the holding structure unchanged and the forced-heirship gap open at the BVI layer.

The second – the route chosen – was a layered restructuring: establish a Hong Kong-law discretionary trust above the BVI holdco; transfer the principal's ownership of the BVI holdco to the trust; register a UAE will to cover any remaining UAE-situated assets not held through the chain; and align the European will with the new structure.

The Hong Kong-law trust was the central instrument. Under the Trustee Ordinance as reformed, the trust benefits from statutory protection against forced-heirship claims brought by reference to foreign law. The settlor could reserve certain powers without invalidating the trust. Hong Kong has no forced-heirship regime of its own. The rule against perpetuities (the common-law rule limiting the duration of trusts) was abolished for Hong Kong trusts by the 2013 reform, allowing the trust to operate across generations without a fixed termination date.

The BVI holding entity was retained. Its ownership moved from personal to trustee. That broke the direct line between the principal's personal estate and the operating asset, which is the key move in this category of engagement.

For further background on holding structures used in conjunction with private wealth planning across common-law offshore centres, see our guidance on private trust structures and family assets.

The sequence and the turning point

The engagement ran in five stages, paced to the regulatory constraint around the UAE operating licence.

Stage one was a full review of the existing documents: the principal's passports and residence records, the BVI constitutional documents, the UAE operating licence, the existing European will, and the commercial relationship documentation. The review mapped each asset, identified its probable lex situs, and flagged the forced-heirship exposure jurisdiction by jurisdiction.

Stage two was the trust design. The key decisions were the choice of trustee, the definition of the beneficial class, the reserved powers to be granted to the principal, and the letter of wishes. These are not mechanical decisions. A letter of wishes that is too prescriptive risks being treated as a sham instrument. A beneficial class that is too narrow limits the trustee's ability to respond to changed family circumstances. We worked through each point with the principal and the proposed trustee.

Stage three was the BVI ownership transfer. This required consent from the BVI registered agent and a review of the BVI constitutional documents to confirm that the transfer of shares to a trustee did not trigger any pre-emption or consent mechanism in the existing articles. It did not. The transfer was effected by instrument. The BVI holdco's register of members was updated accordingly.

The turning point came in stage four. At the point of completing the UAE-will registration, the principal received a request from the UAE counterparty for a certificate of the group's beneficial ownership structure. That request was standard and expected under the UAE's Ultimate Beneficial Owner (UBO) regime – a disclosure requirement applying to UAE mainland companies and most free-zone entities. The disclosure requirement meant that the change in the holding structure – from personal ownership to trustee – would be visible to the counterparty. That visibility was not itself a problem. But it needed to be managed in the context of the ongoing commercial relationship and the operating licence approval.

We coordinated with the principal and the locally licensed UAE-law advisers to prepare the UBO disclosure narrative. The disclosure correctly identified the trustee as the registered holder, with the principal identified as the settlor and a named protector. The counterparty accepted the disclosure. The operating licence approval proceeded on the revised timeline. The UAE will was registered under the DIFC Wills Service to cover any assets falling outside the trust chain.

Stage five was alignment of the European will. The existing will was amended to confirm that the principal's personal estate – now substantially reduced in value once the BVI holdco was held by the trust – did not include the shares in any holding entity above the operating assets. This step is frequently overlooked. Where the European forced-heirship rules are based on the value of the estate at the date of death, a reduction in the personal estate directly reduces the réserve héréditaire exposure.

Principals planning across multiple jurisdictions will also benefit from reviewing the source-of-wealth documentation that underpins any new trust structure. Our analysis of source-of-wealth and source-of-funds files for family offices covers the documentation standard in detail.

The qualitative outcome and the transferable lesson

The principal completed the restructuring across three quarters. The Hong Kong-law trust held the BVI holdco at the conclusion of the engagement. The UAE will was registered and operative. The European will had been aligned. The forced-heirship exposure at the holding layer had been substantially addressed – not eliminated in every conceivable scenario, but removed from the most probable analysis.

What does this matter illustrate for a principal in a comparable position?

The transferable lesson is a sequencing lesson. Asset protection across the UAE corridor is not primarily a trust-drafting exercise. It is a jurisdiction-mapping exercise that must be completed before any instrument is drafted. The forced-heirship analysis, the UBO disclosure consequences, the operating-licence change-of-control risk, and the UAE-will registration are four separate regulatory events. Each has its own timing. Each can affect the others. A structure that solves the succession problem but triggers a change-of-control clause in an operating licence has created a new and more immediate problem.

The second lesson is about the BVI layer. A BVI holding company above a UAE operating asset is a common arrangement, and it works well for day-to-day commercial purposes. It does not, by itself, provide asset protection. Personal ownership of the BVI entity means the shares sit in the personal estate and are fully exposed to the principal's succession position. Moving the BVI entity into a trust structure is the step that converts a holding arrangement into a protection arrangement. That step is reversible in principle and takes time in practice – which is precisely why it should be taken before the pressure event, not in response to one.

A third observation: the DIFC Wills Service and the Abu Dhabi Judicial Department wills mechanism are useful instruments and are widely used by non-Muslim foreign nationals with UAE assets. Their scope is defined by what is registered. Where assets are held through a corporate chain, they may fall outside the scope of a UAE-registered will unless the will expressly addresses the shares or the chain is structured such that the top holding entity is itself UAE-situated. A Hong Kong trust does not replace a UAE will; in this engagement, both instruments were used because they address different assets and different legal systems.

For a fuller picture of how private wealth and cross-border structures interact across common-law and civil-law systems, see our private wealth practice overview.

If an earlier structuring attempt has left gaps – an unregistered will, a personally held BVI entity, an unresolved forced-heirship exposure – a second review can identify what is open and the order in which steps should be taken.

For a preliminary read on your position across the Hong Kong–UAE corridor or a comparable multi-system succession structure, email info@lockhartyip.com.

Frequently asked questions

How long does asset protection for a principal with the UAE exposure usually take?

The timeline depends on the complexity of the existing structure, the number of jurisdictions engaged, and whether any regulatory approval – such as an operating-licence change-of-control clearance – sits on the critical path. In our cross-border practice, a full restructuring covering trust establishment, BVI ownership transfer, UAE-will registration, and alignment of an existing European will typically runs across two to four quarters. Each stage has its own dependencies, and the sequencing of those stages is as important as the instruments chosen. Parties should verify the current position in each jurisdiction before acting.

What documents are needed for asset protection for a principal with the UAE exposure?

The document set spans several layers. At the personal level: passports, residence records, and any existing wills or estate-planning instruments. At the corporate level: constitutional documents and the register of members for each holding entity, the UAE operating licence, and any shareholder or counterparty agreements with change-of-control provisions. Where a UAE operating entity is involved, the relevant UBO disclosure filings are also required. A source-of-wealth file supporting the trust settlement is standard. The full set should be assembled at the outset of the review; gaps discovered later typically delay the restructuring. Counsel on our desk regularly see missing corporate documents as the most common cause of delay.

What is the first step in asset protection for a principal with the UAE exposure?

The first step is a jurisdiction-by-jurisdiction asset map: each asset, its probable lex situs, the succession regime that would apply to it, and the forced-heirship exposure in each relevant system. That map drives every structural decision that follows – the choice of governing law for the trust, the scope of the UAE will, the alignment of any European or other will, and the sequencing of the implementation steps. Starting with the instrument rather than the map is the most common error in cross-border succession planning. We begin every engagement of this kind with the mapping exercise, before any drafting is commissioned.

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

Matter note: asset protection for a principal with the UAE exposure