The United Arab Emirates (UAE) has embarked on a significant legal transformation with the issuance of Federal Decree-Law No. 31 of 2023, also known as the “New Trust Law,” by His Highness Sheikh Mohammad Bin Zayed Al Nahyan. This landmark legislation ushers in a new era for trust regulation in the UAE, enhancing the legal framework and introducing comprehensive changes that promise to bolster trust governance and administration.

Key Highlights of the New Trust Law

1. Comprehensive Framework: The New Trust Law supersedes the previous trust law (No. 19 of 2020), introducing a robust framework for the creation, registration, and management of trusts within the UAE. This move is a testament to the UAE’s commitment to refining its legal landscape to meet the evolving needs of its citizens and residents.
2. Creation and Registration of Trusts: Establishing a trust now requires a written trust instrument that must be approved and registered by the relevant authority in each emirate. This process ensures clarity regarding the settlor’s intent, the beneficiaries, trust property, its duration, and the appointed trustee, among other essential details.
3. Trust Fund Requirements: The law sets clear criteria for the ownership and transferability of trust funds, emphasizing the need for the settlor’s ownership rights and the specificity of the funds. These provisions aim to safeguard the interests of all parties involved and ensure the trust’s purpose is lawfully and effectively achieved.
4. Roles and Responsibilities: The New Trust Law delineates the roles and responsibilities of the settlor, trustee, beneficiary, and trust protector with precision. It establishes the eligibility criteria for trustees, outlines their duties and liabilities, and emphasizes the importance of acting in the best interest of the trust and its beneficiaries.
5. Legal Recognition and Independence: Trusts are recognized across all Emirates, irrespective of where trust assets are located, affirming their separate legal personalities. This provision guarantees that trusts have the legal capacity to hold assets, further solidifying their role within the UAE’s legal and economic framework.
6. Amendments for Clarity and Practicality: The law introduces amendments to address practical shortcomings and enhance clarity. Notably, it includes a regulatory framework for the administration of trusts at the Emirate level, ensuring a more streamlined and efficient governance structure.

For UAE residents, this law simplifies the process of establishing and managing trusts, providing a secure and efficient means to manage assets. The New Trust Law not only strengthens the legal foundation for trusts but also underscores the UAE’s commitment to creating an inclusive, supportive legal environment for its diverse population.

*Disclaimer: The above information is not conclusive and does not constitute legal advice to any third party; thus, please do not hesitate to get in touch with us should you require further information