Trusts are increasingly being utilized in the United Arab Emirates (UAE) as a tool for asset protection, estate planning, and other purposes. A trust is a legal arrangement where assets are held by a trustee for the benefit of a beneficiary. A professional trustee is a third-party organization or individual appointed to manage and protect these assets on behalf of the beneficiary. In the United Arab Emirates (UAE), the role of professional trustees is becoming increasingly important as more and more people seek to protect their assets and ensure their effective management and distribution.
This article will discuss the pros and cons of having a professional trustee in the UAE.
What is a Professional Trustee?
A professional trustee is an individual or an organization that provides trustee services to individuals and corporations. Professional trustees are typically experienced professionals with expertise in managing trusts, estates, and other assets. They are usually regulated by government bodies to ensure that they provide high-quality services that comply with relevant laws and regulations.
Individuals or corporations can appoint professional trustees to manage their assets. It can include managing trust funds, administering estates, and managing a company’s assets. Professional trustees are usually chosen because they have the skills and expertise to manage complex financial matters and ensure that assets are managed effectively and efficiently.
Types of Trusts Managed by Professional Trustees
Professional trustees in the UAE manage a wide range of trusts, including:
- Living Trusts: Living trusts are trusts that are created during the lifetime of the grantor. These trusts can be revocable or irrevocable and are often used to manage assets for the benefit of the grantor and their beneficiaries.
- Testamentary Trusts: Testamentary trusts are trusts that are created by a will. These trusts come into effect after the death of the grantor and are often used to provide for the needs of beneficiaries who are minors or who have special needs.
- Charitable Trusts: Charitable trusts are trusts that are created for charitable purposes. These trusts are often used to support charitable organizations and causes.
- Asset Protection Trusts: Asset protection trusts are created to protect assets from creditors and legal challenges. These trusts can be established to benefit the grantor or their beneficiaries.
Pros of using a professional trustee in the UAE
- Professional expertise: Professional trustee companies have a team of experienced professionals with the knowledge and expertise to manage trusts effectively. They have experience dealing with complex financial matters, such as tax planning, investment management, and asset protection.
- Objective decision-making: A professional trustee is not emotionally attached to the beneficiaries or their assets. They make decisions based on what is best for the trust and its beneficiaries rather than personal relationships or biases. It can help prevent conflicts of interest and ensure the trust is managed impartially.
- Continuity: Professional trustee companies are established entities likely to outlive individual trustees. It means that the trust can continue to be managed effectively even after the death or resignation of individual trustees.
- Professional network: Professional trustee companies have a network of professional advisors, such as lawyers and accountants, who can provide specialized advice on legal, financial, or tax matters. It can be beneficial for trusts with complex structures or international assets.
- Risk management: Professional trustee companies have risk management procedures to ensure the trust assets are protected. They have the resources to invest in technology and cybersecurity measures, and insurance coverage to protect against losses.
Cons of using a professional trustee in the UAE
- Cost: Professional trustee companies charge fees for their services, which can be substantial. It can be a significant expense for smaller trusts or trusts with limited assets.
- Lack of personal touch: Professional trustee companies are not emotionally invested in the beneficiaries or assets. It means they may not provide the same level of personal attention that a family member or friend would provide.
- Limited flexibility: Professional trustee companies often have standardized processes and procedures that may not be suitable for all trusts. It can limit the flexibility of the trust and may make it difficult to tailor the trust to the needs of the beneficiaries.
- Potential conflicts of interest: Professional trustee companies may have relationships with other parties, such as investment managers or custodians, that could create conflicts of interest. It is essential to ensure that the trustee is always acting in the best interests of the trust and its beneficiaries.
- Lack of control: When using a professional trustee, the settlor (the person who establishes the trust) gives up control over the management of the trust. It can concern some settlors who prefer to retain control over their assets.
Ultimately, the decision to use a professional trustee will depend on the specific needs and circumstances of the trust and its beneficiaries. It is essential to consider the pros and cons carefully and consult with legal advisors before deciding.
If you are looking for a reputable and experienced law firm to act as a professional trustee in the UAE, HHS Lawyers in Dubai is here to help. Our team of skilled and knowledgeable lawyers has extensive experience managing trusts of various sizes and complexities. We are committed to providing the highest level of service to our clients. We understand the importance of preserving and growing your wealth, and we work closely with our clients to ensure that their trust is managed effectively and following their wishes.
With our deep knowledge of UAE laws and regulations, we can help you select a professional trustee, draft the necessary documents, and ensure compliance with legal requirements.
Contact us today to learn how we can help you with your trust management needs.