- Asset Protection
- Separation of ownership: Assets transferred to the foundation are legally owned by the foundation itself, not the founder. This creates a degree of separation that can protect assets from potential creditors, liabilities, or family disputes.
- Protection from forced heirship: UAE foundations can help individuals navigate forced heirship rules (often based on Sharia law), potentially allowing greater control over how assets are distributed to beneficiaries.
- Privacy & Confidentiality
- Wealth management: The names of beneficiaries in a family foundation can remain confidential, allowing for greater privacy in managing family wealth and reducing unwanted attention.
- Flexibility
- Adaptable to changing needs: The foundation’s charter and regulations can be designed to accommodate a family’s specific circumstances and goals and can be updated over time.
- Jurisdictional diversity: UAE foundations allow families to hold assets internationally, giving flexibility when managing assets across multiple countries and legal systems.
4. Effective Succession Planning
- Control over asset distribution: Foundations provide a structured way to ensure assets are passed down according to the founder’s wishes, even after their passing.
- Avoiding probate: Assets held within a foundation can potentially bypass lengthy and complex probate processes.
5. Better Family Governance
- Formalized decision-making: Foundations establish clear roles and structures for managing the foundation’s assets and activities, improving family communication and reducing potential conflicts.
- Long-term perspective: Foundations promote a long-term view of family wealth, facilitating decisions aimed at ensuring financial stability across generations.
6. Philanthropic Opportunities
- Organized charitable giving: Foundations can serve as dedicated structures for charitable activities, allowing families to pursue their philanthropic interests strategically.
- Legacy in Perpetuity
- Lasting impact: Foundations can be designed to exist in perpetuity, allowing a family’s legacy and values to be preserved for future generations.
Jurisdiction: UAE has several jurisdictions catering to the formation of foundations, including DIFC, ADGM, and RAKICC, each with specific regulations. Corporate Tax applicability on Family Foundation will be discussed in upcoming blogs.
