Matter note: a private trust for a family with UAE

A family with principal assets in the UAE and members resident across multiple jurisdictions engaged us to establish a private trust governed by Hong Kong law, using the Trustee Ordinance (Cap. 29) as the governing instrument. The core constraint was a forced-heirship (the mandatory-share rule that certain legal systems impose on inheritance, overriding a testator's wishes) interaction between the UAE's personal-law position and the family's preferred succession plan. The 2013 reform of the Trustee Ordinance, which abolished the rule against perpetuities for Hong Kong trusts and strengthened the trust's resistance to foreign forced-heirship claims, made Hong Kong law the structuring anchor.

This is an anonymised matter note. No client-identifying facts appear below. The sequence, the turning points and the transferable lesson are drawn from work of this kind that counsel on our desk handle regularly.

The situation: a family spread across three jurisdictions

The principals were a founder-generation couple, resident in the UAE, with adult children holding residence in two further jurisdictions – one in Asia, one in Europe. The family's wealth was concentrated in UAE-based operating companies and real property, with a smaller portfolio of liquid assets custodied outside the region.

The founder had already prepared a will under the laws of his personal jurisdiction. That will nominated his children in equal shares. The problem was structural, not documentary. Under the personal-law regime that could apply on his death, certain assets might be subject to a mandatory-share claim by statutory heirs – a claim that could cut across the will's provisions and reach assets the founder had expected to dispose of freely.

A further complication: one of the adult children held a residence and a business interest in a jurisdiction that applies its own forced-heirship analysis to assets physically situated there. The family faced three legal systems pulling in different directions simultaneously. No single instrument answered all three.

What was the issue, and why did a Hong Kong trust matter?

The issue was not the UAE operating companies themselves – those sat inside a jurisdiction-specific corporate structure and were not immediately amenable to restructuring. The issue was the liquid portfolio, the inter-company receivables and the family's future accretions: assets that had no natural jurisdictional home and that could be placed under a governing law of the family's choosing.

Hong Kong law offered two things that the alternatives did not. First, the 2013 reform to the Trustee Ordinance abolished the rule against perpetuities for Hong Kong trusts, permitting a multi-generational structure without a fixed termination date. Second, and more immediately relevant, the same reform introduced a statutory firewall (the provision that prevents a foreign forced-heirship rule from overriding a Hong Kong trust's provisions). Where a settlor's personal law would otherwise impose a mandatory share on the assets transferred into trust, a Hong Kong-law trust can, in appropriate circumstances, resist that claim.

Hong Kong law also has no forced-heirship regime of its own. The trust's provisions govern distribution entirely. That combination – a well-tested firewall, no domestic forced-heirship constraint and a common-law court system familiar with international asset structures – made the jurisdiction the right anchor for this family's plan.

The cross-border question then became: how does a Hong Kong trust interact with UAE-situated assets? The answer involves two separate layers. The trust itself is governed by Hong Kong law. The underlying assets – the UAE companies and property – remain subject to UAE law and jurisdiction for their own purposes. The trust holds economic interests and share-like entitlements; it does not purport to override the UAE's property law. That distinction, clearly documented, is the structural load-bearing point.

The sequence: from diagnosis to execution

The first step was a cross-border diagnostic. We mapped the family members' residences, the asset locations, the personal-law positions of the founder and his spouse, and the jurisdictions whose forced-heirship rules could conceivably be engaged. This produced a matrix – not a guess – of where the exposure actually lay.

The diagnostic identified three risk points. The first was the founder's personal-law position under his nationality. The second was the potential for the European child's jurisdiction to assert a mandatory-share claim against assets held through the trust, on the basis of the child's habitual residence there. The third was the UAEoperating company layer: any restructuring of that layer had to be done within UAE corporate law, not through the trust instrument.

The second step was governing-law selection and trust drafting. The trust deed was prepared under the Trustee Ordinance. The settlor reserved certain limited powers, taking advantage of the Trustee Ordinance's statutory protection that a trust is not invalidated by the settlor reserving those powers. Distribution provisions were drafted to reflect the family's actual intentions across the generations, rather than replicating the will's equal-share formula – which the family agreed was not fit for purpose once a long-term structure was in place.

The third step addressed the UAE layer. We worked alongside advisers admitted in the UAE to confirm how the operating companies could be brought within the trust's economic perimeter without triggering a corporate-law or regulatory restriction on ownership transfer. The outcome of that coordination shaped the final structure: the trust held an intermediate holding entity incorporated in a common-law offshore centre, which in turn held the family's interests in the UAE vehicles. This preserved the UAE layer intact and gave the trust a clean jurisdictional position over the economic value.

The fourth step was the succession documentation. The founder's existing will was reviewed against the trust structure. A will under Hong Kong law was prepared to cover assets that remained outside the trust, and a letter of wishes addressed the trustee's discretion on the assets inside it. The two documents were co-ordinated deliberately: the will does not disturb the trust's assets; the trust does not purport to govern the assets left to the will. Overlap is the source of most administration disputes in structures of this kind, and the drafting addressed each potential overlap point explicitly.

The turning point in the matter came during the governing-law analysis for the European child's jurisdiction. Early in the process, there had been an assumption that the trust's firewall provision would simply block any claim from that jurisdiction. The analysis showed the position was more conditional than that: the firewall provides statutory protection, but the strength of that protection in any given set of facts depends on whether the trust is validly constituted, whether the transfer into trust was a genuine disposition and not a transaction in fraud of creditors, and whether the relevant foreign court would treat the Hong Kong choice of law as effective. None of those conditions presented an actual problem on the facts of this matter – but confirming each one required work, and the trust deed and the transfer documentation were adjusted to put each condition beyond doubt.

The outcome and the transferable lesson

The trust was established and funded in a single sequence over several months. The family had a documented succession plan that covered the liquid portfolio and the intermediate holding layer. The UAE operating companies and property remained subject to UAE law, as they had always been, but the economic value that flowed out of them – dividends, distributions, sale proceeds – was now captured by a structure with a settled governing law, a neutral common-law forum and a clear distribution framework.

No litigation arose. No mandatory-share claim was triggered. Those outcomes are qualitative: they reflect the structure working as intended, not a guarantee that future circumstances cannot change the analysis.

The transferable lesson is this: the strongest private trust is not the one drafted most elaborately. It is the one that is co-ordinated most precisely with the underlying asset layer. A Hong Kong trust that sits on top of UAE assets without engaging UAE corporate law is a structure waiting to fail on administration. A trust that engages that layer – maps it, coordinates with locally qualified advisers on it and documents the boundary between the trust's governance and the asset jurisdiction's rules – is one that can actually do what the family needs it to do.

A second lesson follows from the European child's position. Forced-heirship exposure does not always come from the settlor's jurisdiction. It can come from a beneficiary's jurisdiction, from the jurisdiction where assets are physically situated, or from both. Every family member's residence, every asset's location, and every jurisdiction's conflict-of-laws rule needs to be mapped before the trust instrument is drafted, not after.

In our cross-border private wealth practice, we regularly act on structures of this kind – families with assets in Gulf jurisdictions, members resident across Asia and Europe, and a need for a succession plan that holds together across all of them. The Hong Kong anchor, when correctly deployed, is a well-tested tool for exactly that situation.

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 structured assessment of your cross-border trust position, email us at info@lockhartyip.com.

What foreign advisers get wrong

The most common error we see in structures of this kind is treating the trust as a self-contained instrument that solves the succession problem by its own force. It does not. A trust is a relationship between a settlor, a trustee and beneficiaries, governed by its chosen law. It does not repeal the property law of the jurisdiction where the underlying assets sit. An adviser who tells a family that a Hong Kong trust will protect their UAE property from forced-heirship claims without engaging UAE property law is providing a partial analysis.

The second error is treating the firewall provision as absolute. The Trustee Ordinance's anti-forced-heirship protection is strong and well-tested. But it applies to assets validly transferred into the trust. Assets that remain legally and beneficially with the settlor – or that were transferred in circumstances that could be characterised as a transaction defrauding creditors – are not protected. The timing and documentation of the transfer matter as much as the trust deed itself.

The third error is succession documentation that creates overlap. A will that purports to cover assets inside the trust, or a trust deed that creates ambiguity about what the trustee's powers are in relation to assets also covered by the will, is not a co-ordinated plan. It is two documents competing for authority over the same assets. In that competition, the courts decide – and the family's intentions may not prevail.

If an earlier filing, structure or enforcement attempt produced an adverse or stalled result, a second read can identify the strategic error and the routes still open. Write to info@lockhartyip.com to begin that process.

The Hong Kong anchor in a UAE-facing structure: a decision map

The choice of governing law for a private trust is not a formality. It determines which court has jurisdiction over administration disputes, which firewall (if any) applies, whether perpetuities rules constrain the structure's duration and which forced-heirship protections are available. For families with UAE assets, the relevant comparison is usually between Hong Kong law, English law, BVI law, a Cayman Islands trust statute and the applicable UAE personal law.

Hong Kong law suits a family with an Asia connection – members resident in Asia, business relationships running through Hong Kong, or a preference for a common-law forum that is operationally close to the Greater Bay Area and Mainland China. The Court of First Instance has a developed body of trust administration case law. English is an official working language of the Hong Kong courts. The Trustee Ordinance's 2013 reform, which aligned Hong Kong with the leading offshore trust centres on perpetuities and firewall protections, makes the jurisdiction competitive with the alternatives.

English law suits a family with a European centre of gravity. BVI or Cayman law suits a family that already has holding vehicles in those centres and wants the trust to sit within the same legal ecosystem.

The UAE personal-law position of the settlor and the beneficiaries is a variable that interacts with all of these options. It is not a reason to avoid a common-law trust structure. It is a reason to plan the transfer documentation and the co-ordination with UAE advisers with particular care.

For families where the Asia connection is real and the UAE asset base is the dominant one, Hong Kong law as the trust's governing law – with an intermediate holding entity in an appropriate common-law offshore centre – is a route that our desk has applied and refined across a range of similar structures.

Related practices

Private Wealth – cross-border succession, trust structures and family-office planning
Holding Structures – intermediate holding entities across Hong Kong and offshore centres

Frequently asked questions

What documents are needed for a private trust for a family with assets in the UAE?

A private trust for a family with UAE assets typically requires a trust deed governed by the chosen law (in Hong Kong, the Trustee Ordinance), a letter of wishes addressing trustee discretion, and transfer documentation for each category of asset moved into the trust. Where assets sit inside UAE corporate structures, the transfer documentation must be co-ordinated with UAE corporate law requirements. A co-ordinated will covering assets outside the trust, and a declaration of source of funds, complete the standard set. Parties should verify the current position in the relevant jurisdictions before acting.

How long does a private trust for a family with assets in the UAE usually take?

The timeline depends on the complexity of the asset base and the number of jurisdictions engaged. A straightforward structure – one trust, one intermediate holding entity, a liquid portfolio and a clear family map – can be established in a matter of months from first instruction. Structures involving UAE corporate restructuring, multiple beneficiary jurisdictions or a co-ordination requirement with UAE personal-law advisers take longer. The diagnostic phase, in our experience, is where time is best spent: a thorough cross-border map before drafting avoids revision cycles that extend the overall timeline significantly.

How does the cross-border element affect a private trust for a family with assets in the UAE?

The cross-border element is the central planning challenge. A Hong Kong trust operates under the Trustee Ordinance, which provides a statutory firewall against foreign forced-heirship claims and permits multi-generational structures without a fixed termination date. However, the trust's governing law does not override the property law of the UAE or any other jurisdiction where assets physically sit. The structure must be designed so that the trust governs the economic interests in underlying assets, while UAE law governs the assets themselves. Each beneficiary's residence jurisdiction must also be analysed for its own forced-heirship or conflict-of-laws position before the trust deed is finalised.

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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: a private trust for a family with assets in the UAE