wealth management UAE

In recent years, the United Arab Emirates has strengthened its position as an international hub for family wealth management and protection. In particular, the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) — the country’s two financial free zones — have developed modern, competitive legislation on trusts and foundations, legal instruments widely used worldwide for asset protection, succession, and estate planning. DIFC and ADGM: The Free Zones for Fiduciary Structures The DIFC and the ADGM are the only jurisdictions in the UAE where it is possible to establish trusts and foundations. Both operate within the Gulf Cooperation Council (GCC) framework but have their own legal systems based on English common law and independent courts. This regulatory autonomy makes them particularly attractive to investors and families with complex, internationally relevant assets. The 2018 DIFC Reforms In March 2018, the DIFC introduced a new Foundations Law (DIFC Law No. 3/2018) and amended its existing Trust Law (DIFC Law No. 4/2018), with the aim of providing greater flexibility to settlors, founders, and beneficiaries. These legislative changes enhance asset protection, introduce the ability to convert foundations into companies, and strengthen fiduciary governance. The following sections examine these three aspects in detail. 1. Stronger Asset Protection Before the reform, transfers of assets to a trust or foundation could be set aside if the settlor was insolvent at the time of transfer or if there was evidence of intent to defraud creditors. Now, however, the burden of proof lies with the creditors, who must demonstrate both that the settlor intended to defraud them and that the transfer caused the insolvency. In addition, a three-year limitation period has been introduced for actions relating to trusts or foundations. Further protection has also been added regarding foreign judgments, which cannot be enforced if inconsistent with DIFC law. This framework positions the DIFC among the world’s most protective jurisdictions for those seeking to shield assets from external risks. 2. Conversion of Foundations into Companies A key innovation is the possibility to convert a foundation into a DIFC company. Previously, only the reverse process — converting a company into a foundation — was permitted. This new flexibility responds to the needs of families and businesses wishing to restructure in line with new wealth or governance strategies. 3. Strengthened Fiduciary Governance The revised rules provide that trustees and officers of a foundation or trust must cease to act if affected by a foreign judgment, thus preventing conflicts that could compromise the entity’s management. Why These Reforms Matter With these reforms, the DIFC confirms its status as a global centre of excellence for international wealth planning, on par with — and in some respects superior to — other top-tier jurisdictions such as the United Kingdom, Jersey, or Singapore. In particular, the DIFC’s so-called “firewall provisions” are among the strongest, allowing powers to be reserved to the settlor without risking challenges to the validity or genuineness of the trust or foundation. Conclusions The reforms introduced in 2018 have consolidated the DIFC’s position as a strategic hub for the management, protection, and transfer of wealth on an international scale. By limiting creditors’ claims, restricting the enforcement of foreign laws, and introducing flexible tools such as the conversion of foundations into companies, the DIFC has become a preferred choice for: -High-net-worth families -Family-owned businesses -International investors seeking legal stability and asset protection The message is clear: the DIFC has adopted forward-looking, sophisticated legislation that can adapt swiftly to the evolving needs of global clients. Chiara Pascale Paolo Gaeta & Associati