Understanding UAE Foundations: Beyond the Hype

UAE foundations are an excellent structure — but not a panacea. Separate legal status and orphan-structure features can also be achieved by trusts plus companies[1].

Why Foundations? A Critical Look

Foundations have separate legal status — but so do companies. Foundations are orphan structures with no stakeholders — but trusts have the same feature. Foundations combine features of a trust and a company — but a trust holding a company can achieve similar outcomes[1]. The KCM guide asks what the real shortcomings are once these parallels are recognised.

The Recognition Problem

In most common law countries, trusts — not foundations — are recognised. The US, India, and UK all recognise trusts[1]. Both India and the US recognise even foreign trusts. Transfer to a family trust in India is exempt (subject to conditions). A similar exemption can be claimed in the US for revocable (grantor) trusts. Such exemptions are not granted to foreign companies or foundations[1]. Due to lack of recognition, foundations are likely to be treated as foreign companies in these jurisdictions[1].

The Way Forward

It is better to follow a country-specific structure rather than a central structure: UAE foundations (DIFC/ADGM) are ideal for UAE assets and assets in most EU nations, while Indian/US/overseas trusts can be used for Indian/US assets[1]. The right answer depends on where assets are located and which jurisdictions’ laws will govern their treatment.

References

1. KCM Consultants, Understanding UAE Foundations: Beyond the Hype (20 June 2026).