In the United Arab Emirates (UAE), establishing trust is becoming increasingly popular among families and high-net-worth individuals (HNWIs) to manage and protect their assets. Many families in the UAE opt to appoint a family trustee or a professional trustee to manage their assets and affairs. This allows them to ensure that their wealth and legacy are protected and passed down to future generations. When creating a trust, one of the most critical decisions is whether to appoint a family or a professional trustee. In this article, we will discuss the differences between these two types of trustees and the benefits of each.
Family Trustee vs Professional Trustee
Families can choose from two types of trustees: a family trustee and a professional trustee. While both types of trustees have advantages and disadvantages, the choice ultimately depends on the needs and preferences of the family.
A family trustee is someone who is appointed from within the family. They may be a family member or a close friend who profoundly understands the family’s values and goals. They are often chosen because the family trusts them and has a vested interest in the family’s success. On the other hand, a professional trustee is someone who is hired to manage the family’s assets and affairs. They are often experts in their field and may have a team of professionals working with them. They are typically chosen for their expertise and ability to provide unbiased advice and guidance.
What is a Family Trustee?
A family trustee is an individual who is appointed by the settlor (the person who creates the trust) to manage the trust assets on behalf of the beneficiaries (the individuals or entities who will benefit from the trust). In most cases, a family trustee is a member of the settlor’s family, such as a spouse, child, sibling, or close friend.
Benefits of a Family Trustee
There are several benefits to appointing a family trustee:
- Knowledge of Family Dynamics: A family trustee is likely to have an intimate knowledge of the family dynamics and the needs and aspirations of the beneficiaries. It can help ensure that the trust is managed to align with the family’s values and goals.
- Greater Flexibility: A family trustee is more likely to be flexible in managing the trust assets, as they are not bound by the same regulatory requirements as professional trustees. It can allow for a more personalized approach to trust management.
- Cost Savings: Appointing a family trustee can be more cost-effective than hiring a professional trustee, as there may be little or no need to pay for their services.
What is a Professional Trustee?
A professional trustee is a licensed and regulated entity specializing in managing trusts on behalf of their clients. Professional trustees can be individuals or companies, and they must have extensive knowledge of trust law and best practices.
Benefits of a Professional Trustee
There are several benefits to appointing a professional trustee:
- Expertise and Experience: Professional trustees have extensive knowledge and experience in trust law and best practices. It can help ensure that the trust is managed in a way that is legally compliant and maximizes the benefits to the beneficiaries.
- Objectivity and Independence: A professional trustee is likely to be more objective and independent than a family trustee, as they are not emotionally invested in the family dynamics. It can help ensure that the trust is managed in the best interests of the beneficiaries.
- Continuity of Service: Professional trustees are typically set up as long-term entities and can provide continuity of service even in the event of the death or incapacity of the settlor or family trustee.
Choosing the Right Trustee
Choosing the right trustee for your trust is a critical decision that requires careful consideration. Some factors to consider when making this decision include the following:
- Trust Purpose: The purpose of the trust can help determine whether a family or professional trustee is more suitable. For example, a family trustee may be more appropriate if the trust is set up primarily to manage family wealth and provide for the beneficiaries. However, a professional trustee may be more suitable if the trust is set up to manage complex assets or investments.
- Trust Size and Complexity: The size and complexity of the trust can also help determine whether a family or professional trustee is more appropriate. For example, a family trustee may be sufficient if the trust assets are relatively simple and straightforward. However, a professional trustee may be necessary if the trust assets are complex and require specialized knowledge and expertise.
- Trustee Qualifications and Expertise: When choosing a trustee, it is essential to consider their qualifications and expertise. For example, if you choose a family trustee, ensure they have the knowledge and experience to manage the trust assets effectively. If you choose a professional trustee, ensure they have the necessary licenses and regulatory approvals to operate in the UAE.
- Trustee Fees: Trustee fees can vary widely between family and professional trustees. When choosing a trustee, it is crucial to consider the fees they charge and whether they are reasonable for their services.
- Choose someone who shares your values: Whether you choose a family or a professional trustee, it’s essential to choose someone who shares your family’s values and vision. It will help ensure that your legacy is protected and passed down in a way that aligns with your values.
- Availability and accessibility: Choose a trustee who is available and accessible to manage the trust. They should be able to handle the administrative duties and respond to the beneficiaries’ needs.
HHS lawyers in Dubai can provide valuable assistance with trust services in the UAE. Our professional lawyers can guide the various types of trusts available in the UAE and help clients choose the most suitable one for their needs. In addition, HHS lawyers can serve as trustees themselves, providing impartial management of the trust and ensuring that the interests of all beneficiaries are protected. By working with an HHS lawyer, clients can have peace of mind knowing that their trust is being managed competently and in compliance with local laws and regulations. Overall, trust services in the UAE can help you achieve your financial and personal goals, while providing security for your loved ones. With the right trust service provider, you can rest assured that your assets and legacy are in safe hands.
