Foundations – a Trust Alternative

The ADGM has been promoting foundations as a vehicle for wealth and estate planning. Many people think of foundations as philanthropic organizations. However, ADGM foundations have great utility as a vehicle for private family wealth and especially family offices. ADGM foundations combine characteristics of trusts and corporations – assets are managed by directors of the foundation who have a fiduciary duty similar to that of a trustee; but like a corporation, the foundation is a legal person with perpetual existence. ADGM foundations are also governed by a specific statute that aims for simplified governance and protection of foundation assets (and therefore its beneficiaries) from claims in the event of bankruptcy or divorce claims or forced heirship rules. The DIFC also has its own foundations statute similar to ADGM.