I am a citizen of a European country. I have been living in the Gulf for many years and have invested in real estate and equities. I also have investments in Europe and the US, mainly in equities. I have small direct investments in a couple of partnership companies in Dubai. I want to create a trust to protect and organise these assets. Is my thinking correct? And, if so, how do I go about doing it?
 
This question raises some very interesting issues that are outside my area of expertise, due to their legal nature. I would recommend seeking specialist advice to make sure you are addressing your needs accurately and efficiently. However, I will try to give you some pointers and general information. The suggestions that I provide below are from a UK standpoint, as this is the trust legislation I am most familiar with. Other countries will, in general, have differing rules and regulations.

In simple terms, yes, a trust can do all of the things you want it to do, but it needs to be written and structured correctly to achieve these aims. If it is not written correctly, it can cause big problems and not protect you in the way you want it to.
Before we go any further, let’s start by reviewing what a trust actually is. In a common law legal system – a system developed by judges through decisions of courts – a trust is an arrangement whereby one’s assets (including real, tangible and intangible) is managed by one person (or persons, or organisations) for the benefit of another.

A trust can be viewed like any other entity, such as a company, in that it has a set of rules and regulations that it must adhere to and will be viewed as such by the country that the trust is set up and administered in.

A trust is created by a settlor, who entrusts some or all of his property to people of his choice, the trustees. The trustees hold legal title to the trust property, but they are obliged to hold the property for the benefit of one or more individuals or organisations – the beneficiaries – who are usually specified by the settlor. The trustees have a duty to the beneficiaries, who are the “beneficial” owners of the trust property.

The trust is governed by the terms of the trust document, which is usually presented in a written format and is governed by local law. The trustee is obliged to administer the trust in accordance with both the terms of the trust document and the governing law.

That is a very brief explanation of the basics of a trust, but how do you actually create a trust? It can be done in one of several ways, but the most efficient is by a written trust document created by the settlor and signed by both the settlor and the trustees. It is worth noting that in some jurisdictions, certain types of assets cannot be the subject of a trust without a written document. Generally, a lawyer who has specialised in trust planning will be able to assist with the actual wording and drafting of the document.

There are a number of other factors to consider before setting up a trust and moving your assets into it. What do you want to protect the assets from? Is it for tax reasons? Is it for inheritance planning? Is it to try and simplify your affairs? Do you want to continue to have control of the assets? All of these questions will have a factor on the type of trust to use and whether it is appropriate for your requirements. For example, if it is for inheritance tax planning, you may have to give up access to the assets. You will have to consider whether this is something you want to do.

Given the different assets that you have, the type of trust would have to be selected carefully. For example, from a UK point of view, it is not advisable to have direct property within a trust due to the taxation of this type of asset within the trust. Other jurisdictions are likely to have other rules that you need to be aware of so you can plan accordingly.

Another factor to consider is the different locations that the assets are in. This issue could cause a problem in terms of the trust being effective across the different locations based on the rules and regulations in those jurisdictions. Do they all recognise each other, and does the trust work effectively in all places?

In summary, while a trust is, in principle, a good idea to protect your assets, there are a lot of issues to be aware of to make sure the planning is effective. It is essential that you seek professional advice so that all of your requirements can be addressed.