logo lid blue

DIFC Trust: Everything You Need to Know

Contact Our Best Lawyers in Dubai. Book Your Appointment Today!

Introduction to the DIFC Trust

The Dubai International Financial Centre (DIFC) is a separate territorial jurisdiction within Dubai that has its law authority and is a part of Dubai. The DIFC Courts are not only an essential part of the Dubai Courts but also an aspect of the UAE’s federal legal system and Dubai Lawyers.

Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai, adopted the Trust Law DIFC Law No.4 of 2018 on March 21, 2018, succeeding Law No. 11 of 2005. This law lays out a clear framework for the legal creation and maintenance of trusts. The trustee has legal custody of the trust property, and the beneficiaries have beneficial ownership. 1 The main goal of trust law is to align DIFC trust law with worldwide standards by adopting the US universal trust code and the UK Common Law Trust model. Many revisions were made in terms of jurisdictions. As well as revised legislation on a variety of concerns.

DIFC Trust was established.

The DIFC trust is established if its objective is feasible, lawful, and consistent with DIFC’s public policy. DIFC Trust’s terms and conditions are determined by the advantages received by its beneficiaries. The DIFC trust can be terminated at any time if it no longer serves the trust’s purpose. Trusts provide legal protection for trustees’ assets while also reducing bureaucratic and time-consuming state taxes and procedures. 2 Establishment of the DIFC Trust

When the settlor’s property is conveyed during his or her lifetime, or when the settlor dies, any other establishment, variation, or translation of holdings from one source to another is required, the DIFC trust is formed.

Requirements for Establishing the DIFC Trust

The settlor’s competence and adequacy are required for the trust to be established. The settlor demonstrates his desire to build trust. It may be examined to see if the trust contains the following characteristics:-

  • A certain recipient
  • The trustee has some legal rights and responsibilities to carry out the trustee’s specified objectives as a separate body.
  • A trust’s legality and invalidity

Articles 37(2) and (3) of the Valid Trust Act state that a trust may be projected to be valid and applicable by its particulars if its terms and conditions are met, as follows:

  • A settlor is a person who is in charge of establishing
  • Intention to establish trust for a lawful and genuine reason
  • Unreliable Trust

If a trust is meant to conduct something immoral, unethical, or against the DIFC Law, it is considered invalid. Scams, fraud, misleading statements, pressure, or misinformation from any source should be avoided by the trust. It should not be against public policy, ordinances, laws, and regulations, and it should be kept to a minimum.

Non-charitable trusts and charitable trusts are two types of trusts.

Trusts for charitable purposes

The Charitable Trust was established to aid public organizations and enterprises, such as educational, religious, health, art, and environmental initiatives, as well as any other common or broad special purpose.

Non-charitable trusts and purpose trusts are two types of trusts.

There is no beneficiary in a non-charitable trust; instead, it serves specific goals. It is precisely delivering neither profit to an individual nor a group of people, but rather allowing the enforcer to supervise. The enforcer could be a trustee with a unique perspective on how to carry out the Trust’s functions under specified terms and conditions. If a non-charitable trust has no enforcer, the trustee has the authority to take whatever steps are necessary at the moment.

If the trustee determines that the enforcer is unwilling and unfit, he may request that the enforcer be replaced by the Court. The court may give the enforcer thirty days to act and work appropriately. A fine of 10% of the value of the trust property is imposed by the court.

Changes to the trust’s termination in the DIFC

  • If a trust is unendorsed or expires, the court may terminate it.
  • If the trust’s purpose has been fulfilled or if it is no longer acceptable to continue, it should be terminated.

The court has the authority to terminate a trust if the settler does not agree with the circumstances. If the value of the trust property is less than the cost, the court may terminate the trust.

A trust’s variation

When trust varies according to the needs of the hour, it is considered adequate.

Trust functions as a safeguard for assets. The trustee is in legal possession of the trust property, which may be governed by Trust Acts with unique conditions, durations, and beneficiaries.


  • https://www.difc.ae/references Law No. 4 of 2018 in the DIFC
  • “The Story of the DIFC Courts,” by Krishnan and Jayanth K. [The year 2018] The Indiana Journal of Legal Studies (IJLS) is a publication that publishes
  • “Building Competence in DIFC Law in the Member States,” GieselaRühl. [2015] The Journal of Business and Operations Research (JBOR) is a publication dedicated to the study of
  • Marta Requejo, “International Commercial Courts in the UAE Litigation Market,” in “International Commercial Courts in the UAE Litigation Market,” in “International Commercial Courts in the UAE Litigation Market,” [2019] Electronic Journal SSRN Pamela Bookman’s “The Adjudication Business in the UAE” [2019] 227 Yale Journal of International Law (Yale Journal of International Law)
  • “The Benefits and Drawbacks of the Law on the Expansion of the DIFC Court’s Jurisdiction” by Al-Tawil, Gantasala, and Younies.
  • [2018] International Journal of Law and Management 221 is a journal dedicated to the study of law and management.
Scroll to Top
Scan the code