Trusts in ADGM

What is a Trust?

A Trust is not a separate legal entity, but a legal relationship whereby one party (the Settlor) transfers property or assets to another party (the Trustee), who holds and administers those assets for the benefit of one or more beneficiaries (the Beneficiaries) or for a specified purpose.

An express trust is created intentionally by the Settlor, typically set out in writing (for example, in a trust deed) to clearly record the terms on which the assets are to be held and administered.

In certain circumstances, a trust may also be established without a written instrument, including where it is created orally or inferred from conduct, provided the required legal elements are satisfied.

Overview of a Trust

Purposes for Which Trusts May Be Established

Trusts may only be established in ADGM for lawful purposes, including:

• Wealth and asset structuring – A trust enables the separation of legal ownership (held by the trustee) and beneficial interests, allowing assets to be structured and managed in a controlled manner in accordance with the terms of the trust.
• Succession and estate planning – Assets are vested in the trustee (which may be a corporate trustee), ensuring continuity of ownership and administration beyond the lifetime of the settlor, and enabling assets to be distributed in line with the settlor’s wishes.
• Tax and structuring considerations – Trusts are commonly used as part of broader tax and structuring arrangements (such as reducing inheritance tax burdens), allowing assets and income to be managed and distributed in a flexible and organised way, depending on the applicable legal and tax framework.
• Provision for dependants – Trusts can be used to provide ongoing and tailored financial support for dependants, including through structured or discretionary distributions over time.
• Non-charitable purposes – Trusts may be established for specific, non-charitable purposes, such as the maintenance of property, the care of animals, or commercial arrangements (including orphan structures), with trustees administering the trust in accordance with the defined purpose.

Legal Basis for Trusts in ADGM

In ADGM, the law of trusts is governed by English common law and principles of equity, as applied pursuant to the ADGM Application of English Law Regulations, as well as via the Trusts (Special Provisions) Regulations 2016.

An express trust arises where a settlor intentionally transfers property to a trustee to be held on trust for the benefit of beneficiaries, or where the settlor declares that they hold property as trustee for beneficiaries. An express trust is therefore a legal arrangement, and does not, and cannot, have separate legal personality.

Where a trust is governed by ADGM law and relies on the ADGM Courts for dispute resolution, it is generally preferable that the trustee is located in ADGM or has submitted to the jurisdiction of the ADGM Courts, so that the Court can exercise effective personal jurisdiction and enforce its orders.

Role Holders and the Minimum Legal Requirements to Establish a Trust Under ADGM Law

Under English common law as applied in ADGM, an express trust may come into existence when the “three certainties” exist: the certainty of intention; certainty of subject matter; and certainty of object.

• Certainty of intention: The settlor is the person who establishes the trust by either declaring that they hold assets in trust, or alternatively by transferring the assets to be held in trust to another person that has agreed to hold such assets in trust. Once a trust is declared, the holder of the assets is the trustee. While an express trust may be created orally, ideally a declaration of trust should be written and should clearly establish the intention to create a trust (the certainty of intention). Certain types of trusts may only be established by written instrument, such as where the subject of the trust is land.
• Certainty of subject matter: The declaration of trust must also identify the assets that are held in trust, and, if applicable, any future assets that will be held in trust (the certainty of subject matter). Trust property may include cash, real property, shares, intellectual property, artworks, jewellery, and other forms of property. Transfers of property into a trust may be revocable or irrevocable.
• Certainty of object: Finally, the declaration of trust should identify the trust’s beneficiaries, being those persons, or class of persons, for whom the trust’s assets are being held (the certainty of object). Please note that this requirement may be relaxed in the case of non-charitable purpose trusts.

Additional Features of a Trust Declaration

A declaration of trust should also contain a description of any additional rights and obligations that may apply to the arrangement, including, for example, the duration of the arrangement, the rights of the trustee to exercise specific powers over the assets, and any specific rights of the trust’s beneficiaries.

A settlor may use the declaration of trust to appoint a protector to supervise or restrict the exercise of certain trustee powers in a manner consistent with the terms of the trust and interests of the beneficiaries. Trustees may be required to obtain the consent of a protector before exercising certain powers and protectors may be given powers to:

• Change the governing law or forum of administration for the trust
• Remove or appoint trustees
• Add or exclude beneficiaries
• Approve or veto trustee actions
• Release protector or settlor powers

A settlor may also appoint an enforcer, a person made responsible under the instrument creating the trust for the enforcement of the terms of the trust, with standing to take legal action should the trustee deviate from the trust’s objectives. The appointment of an enforcer is mandatory in the case of a non-charitable purpose trust, as there are no beneficiaries capable of enforcing the terms of the trust. The enforcer must be independent and cannot be a trustee of the trust or have a conflict of interest.

Protection of Trusts from Foreign Law Claims

Under the Trusts (Special Provisions) Regulations 2016, no trust governed by ADGM law, and no disposition of property to be held in trust that is valid under ADGM law, shall be void, voidable, or defective by reference to foreign law.

Foreign laws that do not recognise trusts, or that seek to impose heirship rights or similar claims, do not affect the validity of an ADGM trust, the capacity of the settlor, or the rights of trustees and beneficiaries. Foreign judgments inconsistent with these principles will not be recognised or enforced in ADGM.

In practical terms, this Regulation establishes that:

• A trust otherwise valid under ADGM law may be upheld by the ADGM Court even where the property held in trust is located in a jurisdiction that does not recognise trusts (although enforcement in that jurisdiction may depend on local law).
• Foreign inheritance or forced-heirship rules, including those arising under Islamic law, do not affect the validity of an ADGM trust or the disposition of property to such a trust. However, the ADGM Court retains the ability to decline to uphold arrangements that are fraudulent, sham, or otherwise contrary to ADGM public policy.

Non-Charitable Purpose Trusts

ADGM law permits non-charitable purpose trusts (i.e., trusts without beneficiaries), provided that:

• The purposes are sufficiently certain, lawful, and not contrary to public policy;
• An enforcer is appointed to enforce the trust’s purposes;
• The trust instrument provides for termination of the trust in specific circumstances and the distribution of surplus assets

Enforceability of Foreign Trusts

Foreign trusts are generally interpreted according to their governing law. However, a foreign trust is unenforceable in ADGM to the extent that it contravenes ADGM law or would contravene public policy.

Trustees in ADGM

A trustee may be:

• A natural person
• A corporate trustee
• A Private Trust Company (PTC)

Where a person carries on trust business by way of profession in or from ADGM, they are subject to:

• Licensing and authorisation requirements
• Prudential and conduct standards
• AML/CFT obligations under the Financial Services Regulatory Authority (FSRA) framework.

Trustees’ Duties Under English Common Law

As a general rule, Trustees act as a fiduciary when they agree to act as a trustee. Fiduciary duties arise as a consequence of the level of trust and confidence that a settlor and beneficiary place in the trustee and require the trustee to prioritise their interests over their own interests. Fiduciary duties include the duty to:

• Act in good faith
• Act for proper purposes
• Avoid conflicts of interest
• Not make unauthorised profits

In addition to fiduciary duties, non-fiduciary duties may also apply, including the obligation of a trustee to:

• Exercise reasonable care and skill
• Identify and safeguard trust assets
• Properly administer the trust
• Keep accurate records and accounts
• Provide beneficiaries with information where required

Application requirements

In addition to their common law duties, trustees in the UAE should be aware of the relevant AML/CFT obligations under Federal Decree-Law No. (10) of 2025 (the AML Law) and Cabinet Resolution No. (134) of 2025 (the AML Resolution), which includes the obligation to obtain and maintain accurate information concerning:

• beneficial ownership information in respect of the assets held in trust; and
• basic and beneficial ownership information on any legal entity or arrangement involved

Trustees must disclose their status as trustees, the relevant beneficial owners, and trust asset information when asked by regulatory authorities, financial service providers and non-financial businesses, in compliance with applicable AML legislation.