Trusts and Middle East connections

The Middle East and trusts: a growing interest

The Middle East is undergoing a profound transformation in family wealth management. Gulf families, who have built considerable fortunes in one or two generations, face succession, governance and diversification challenges that increasingly lead them to explore trust structures.

At the same time, regional financial centres such as the DIFC in Dubai and ADGM in Abu Dhabi have developed sophisticated legal frameworks recognising trusts, creating a bridge between the common law tradition and local realities.

The specific needs of Middle Eastern families

Wealthy families from the region share characteristics that influence trust structuring:

• Extended families: family structures in the Middle East often include a large number of potential beneficiaries, making trust governance particularly important. Discretionary trusts with clear distribution criteria are often preferred.
• Concentrated wealth: wealth is frequently concentrated in real estate, family businesses and participations in strategic sectors (energy, construction, trade). The trust must manage this concentration while encouraging diversification.
• Sharia compliance: many families wish the trust structure to be compatible with Islamic finance principles. This concerns notably the prohibition of interest (riba), speculation (maysir) and investment in certain sectors (haram).
• Confidentiality: discretion is a fundamental cultural value. A trust administered in Switzerland provides a higher level of confidentiality than local structures.
• Generational transition: the first or second generation is often confronted with the need to prepare the next, in a context where traditional and religious succession rules may be in tension with modern economic realities.

Structures adapted to the Middle East

Several structural approaches are commonly used for families from the region:

• Family trust with Swiss trustee: a trust established in a common law jurisdiction (Jersey, Guernsey, New Zealand) and administered by a FINMA-licensed Swiss trustee. Assets are geographically diversified, with bank accounts in Switzerland and in the region.
• Foundation plus trust: some families combine a foundation (in the DIFC or ADGM) with a foreign trust. The foundation holds local assets while the trust manages international assets.
• Sharia-compliant trust: structured with input from Islamic law scholars, this type of trust respects Islamic finance principles in its investment policy and distribution rules.
• Private Trust Company (PTC): particularly suited to large Gulf families, a PTC allows family involvement in governance while benefiting from the structural protection of a trust.

The Geneva-Middle East axis

The ties between Geneva and the Middle East in wealth management are historical and deep. Geneva has welcomed Gulf families for decades for the management of their assets, offering political stability, neutrality, financial expertise and an attractive living environment.

Swiss Trustee builds on this heritage by providing a service that combines Swiss regulatory rigour with a nuanced understanding of the expectations and cultural sensitivities of families from the region. Our team includes professionals familiar with Middle Eastern realities, capable of engaging with local advisers and navigating between common law, civil law and Islamic law systems.

Compliance and information exchange

Gulf countries are progressively strengthening their compliance frameworks and participating in the automatic exchange of information (CRS). The Swiss trustee must integrate these developments into trust administration, ensuring reporting that complies with the requirements of tax authorities in each jurisdiction involved. Swiss Trustee implements tailored due diligence processes and ongoing monitoring of regulatory obligations in the region.