What Is a UAE Foundation?
- A legally incorporated entity combining elements of a company and a trust
- The founder establishes the foundation and transfers assets into it
- Council members manage the assets per the governing documents
- Beneficiaries receive benefits as prescribed — anyone can be a council member
- A foundation can exist and operate perpetually
Key Benefits of a Foundation Structure
Tax Transparency: A foundation with individual beneficiaries may qualify for tax-transparent status, offering tax treatment similar to that of a UAE resident individual.
Ring-Fencing of Assets: Assets transferred to the foundation are generally protected from the founder’s personal liabilities, with potential legal challenges limited to a maximum of three years.
Escape Forced Heirship: Foundations are not bound by forced heirship principles of UAE or other jurisdictions, allowing the founder to allocate assets and benefits to specific individuals as desired.
Avoidance of Probate: Assets held in the foundation bypass the probate process, eliminating associated costs, delays, and legal complexities that would otherwise burden beneficiaries during succession.
Flexibility: The charter and by-laws can be tailored to allow the founder to retain powers, such as modifying or terminating the foundation.
Jurisdictional Override: Foundations in ADGM and DIFC are governed by English common law, with the relevant jurisdiction overriding conflicting foreign laws.
Information Required to Initiate Discussions
To design the right foundation structure, we need to understand your complete picture: a family map with details of all relevant members, business involvement and roles, philanthropic objectives, your primary objective (orderly wealth transfer, multi-generational legacy, or both), and a complete asset mapping including financial assets, immovable properties, business interests, valuables, overseas holdings, and any personal guarantees or security interests.