DIFC Foundation: A Versatile Solution for Wealth Management and Legacy Planning

The Dubai International Financial Centre (DIFC) continues to distinguish itself as a global leader in providing sophisticated legal frameworks for wealth management, succession planning, and asset protection. Among its most notable innovations is the DIFC Foundation, a unique structure that combines the operational flexibility of a trust with the legal standing of a company, offering an unrivalled tool for wealth management.

What is a DIFC Foundation?

A DIFC Foundation is an independent legal entity governed by the DIFC Foundations Law No. 3 of 2018. It stands apart from traditional trust structures by offering the benefits of perpetual existence and direct ownership of assets while being detached from individual stakeholders. This 'orphan' structure ensures that assets are protected, liabilities are separated, and wealth is safeguarded across generations.

Unlike a trust, where assets are held by trustees on behalf of beneficiaries, a foundation owns its assets outright. Its operations are governed by a charter and by-laws, giving founders the flexibility to set clear directives on how their wealth is to be managed and distributed. Foundations can serve multiple purposes, from preserving family wealth and ensuring business continuity to supporting philanthropic endeavours.

Key Features and Benefits of DIFC Foundations

1. Asset Protection

Assets transferred into a DIFC Foundation are legally separated from the personal holdings of the founder, shielding them from legal claims, creditors, and disputes. The DIFC Foundations Law includes robust 'firewall' provisions, widely regarded as among the best globally, to protect assets from foreign judgments that conflict with DIFC regulations.

2. Legacy Planning

DIFC Foundations are particularly effective for families aiming to ensure smooth succession planning. By clearly defining governance structures and distribution protocols, founders can maintain control over their wealth while minimizing the risk of disputes among heirs. Foundations also provide a platform to instill family values, foster unity, and engage future generations in wealth stewardship.

3. Privacy and Confidentiality

Operating within a jurisdiction known for its commitment to privacy, DIFC Foundations benefit from non-public registers and strong data protection laws. Sensitive information, such as beneficiary identities and asset details, is shielded from public access, ensuring a high level of confidentiality.

4. Philanthropy and Purpose-Specific Structures

A DIFC Foundation can be established for charitable purposes, making it an ideal vehicle for those seeking to support social causes while maintaining control over how funds are allocated and managed. It can also be structured for mixed purposes, such as combining family wealth management with philanthropic goals.

5. Taxation

DIFC operates as a tax-neutral jurisdiction, meaning that foundations are exempt from income tax, capital gains tax, and withholding tax. This allows for seamless growth and reinvestment of wealth, making it an attractive choice for HNWIs and families.

6. Flexibility and Control

Founders retain significant control over the foundation’s governance. By serving on the foundation council or appointing trusted advisors, founders can actively guide the management and distribution of assets, ensuring alignment with their vision and goals.

How DIFC Foundations Compare to Trusts

While both DIFC Foundations and DIFC Trusts serve similar purposes, their structures and applications differ. The choice between a trust and a foundation depends on specific needs. Trusts may offer simplicity for straightforward estate planning, but foundations provide greater flexibility, privacy, and legal separation for more complex arrangements.

Feature	DIFC Trust	DIFC Foundation
Legal Status	Relationship-based, not a legal entity	Independent legal entity
Asset Ownership	Held by trustees for beneficiaries	Owned directly by the foundation
Governance	Managed by trustees	Managed by a council
Privacy	Highly private	Confidential but with structured oversight
Purpose	Benefiting specific individuals	Flexible (family, business, or philanthropic)

 

Conclusion

A DIFC Foundation is more than a legal structure – it is a strategic tool for wealth preservation, succession planning, and philanthropic impact. Its unique blend of flexibility, legal separation, and privacy positions it as an essential component of any wealth management strategy.

Whether you are looking to safeguard your assets, plan for the future, or leave a lasting legacy, a DIFC Foundation offers a robust, globally recognized solution.

How ATG Corporate Services Can Support You in DIFC

At ATG Corporate Services, we bring decades of expertise in wealth preservation, structuring, and governance to provide tailored solutions for individuals, families, and businesses navigating the complexities of setting up and managing DIFC Foundations.

Our comprehensive services include:

Foundation Setup and Structuring

We assist with drafting charters and by-laws, ensuring alignment with your unique goals. Our team also advises on integrating your existing wealth holding structure and the efficient transfer of assets into your DIFC foundation, considering tax and regulatory implications to safeguard your wealth from legal claims and liabilities.

Governance and Compliance

We support the appointment of council members, guardians, and other key roles, creating governance structures that balance transparency with privacy. Our ongoing compliance management ensures that your foundation adheres to all DIFC regulatory requirements, protecting its reputation and assets.

Ongoing Administration and Reporting

Our services extend to the ongoing management of your foundation’s operations, including accounting, reporting, and liaison with key stakeholders like banks, legal advisors, and beneficiaries. By maintaining a seamless flow of communication and documentation, we ensure the foundation operates effectively and efficiently.

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With a track record of managing trusts and foundations in multiple jurisdictions, ATG offers a holistic approach to wealth structuring. We emphasize privacy, asset protection, and succession planning, empowering clients to safeguard their legacy across generations.

Additional Resources 

For additional resources and publications on this subject, please consult:

• DIFC Laws, Regulations, and Resources for Private and Family Wealth
• DIFC Family Wealth Centre

Contact Us

This publication should be used as a source of general information only. It is not intended to give a definitive statement of the law. For a FREE Initial Consultation to discuss the specifics of your enquiry please contact Andreas Athinodorou on + 357 22 057 560 or andreas.athinodorou@atgcorporate.com.