Both a DIFC Trust and a DIFC Foundation can be used for succession planning and family wealth structures, but they operate differently.
| Trust | Foundation |
Who establishes it? | Settlor | Founder |
How is it established? | A contract entered into between the Settlor and Trustee. Trust is not registered. | Registration application submitted to the Registrar. |
Who manages it? | Trustee | Council |
Who is the legal owner of the assets? | Trustee holds legal title to assets | Foundation owns the assets |
Who benefits economically? | Beneficiaries | Beneficiaries or specified purposes |
Does the person establishing it retain ownership? | No - Settlor transfers assets to Trustee who owns the assets on trust for beneficiaries. | No - Founder transfers assets to the Foundation who owns assets. |
Does it exist perpetually? | Trust continues according to its terms and applicable law. | Yes - subject to continued registration. |
How is it governed? | According to Trust deed and applicable law | According to Charter, By-laws and applicable law |
Does it have separate legal personality? | No | Yes |
Official evidence | Registrar certification may be available for specified trust information | Certificate of registration provided |
A DIFC trust may be attractive where the family wants a flexible fiduciary structure and the detailed reserved-powers regime available under the Trust Law. A DIFC Foundation may be preferable where the family wants the wealth-holding vehicle itself to have separate legal personality, direct ownership of assets and a formal Council-based governance structure.
The choice should be made by reference to the family’s governance objectives, the location and nature of the assets, tax considerations and the regulatory requirements applying to the proposed Trustee or service providers.