Succession Planning for a Multi-Generational Family with Aspirations to Follow Shari’a Law

Succession planning for a multi-generational Middle Eastern family with both international and local assets who wanted to adhere to Shari’a Law when it came to distribution requirements and donations to Zakat.

The structure had to be legally recognised in the UAE, (where the assets were located), but also legally recognised in the UK, US and Canada (where some family members were located).

Vistra broke down the challenge as follows:

• What succession planning vehicle was recognised in the UAE that could hold the assets, including the family’s operational and trading businesses, which would also enable the Zakat to be paid?
• Would that vehicle be suitable for the UK, US and Canada and, if not, was there an alternative or a way to expand, amend or ‘add to’ the UAE vehicle?
• Could the governance within the structure ensure the family was able to adhere to Shari’a Law without unnecessary complexities?

Having sought professional advice, Vistra was able to establish a structure that matched the family’s objectives as follows:

1. Establish a Dubai International Finance Centre (“DIFC”) Foundation, which owns the UAE assets. The By-Laws detailed a distribution policy which included the payment of Zakat.
   Establish a Jersey Reserved Powers Trust (“RPT”) that was appointed as a beneficiary of the DIFC Foundation to enable it to receive distributions from the DIFC Foundation.
2. The beneficiaries of the RPT are that of the family members individually residing in the UK, US and Canada where trusts are more commonly recognised and where the Trustee is able to make distributions to them in line with Shari’a principles.

This is subject to UAE Corporation Tax and specific wording drafted in the By-Laws.

The family were able to achieve its succession planning objectives while ensuring their Shari’a Law requirements were met and the structure was legally recognised in the UAE, Canada, the UK and the US.