Trusts explained for internationally mobile families

The structure has to fit where the family is going, not only where it is today. Here is what a trust is, why families use one, and what to think about if your family lives, or may one day live, in more than one country.

What a trust is

A trust is an arrangement in which one person, the settlor, transfers assets to trustees, who hold and manage them for the benefit of others, the beneficiaries. The trustees are the legal owners, but they must act in the beneficiaries’ interests and in line with the trust’s terms.

The settlor often writes a letter of wishes to guide the trustees, for example on when children should receive money or how the family business should be run.

Why families use them

• Control: assets can be passed on gradually, rather than all at once to a young beneficiary.
• Continuity: a trust does not die, so assets need not go through probate in each country where they are held.
• Protection: assets can be kept separate from a beneficiary’s divorce, debts or poor decisions.
• Tax planning: in some countries and circumstances, a trust can reduce inheritance or other taxes. This depends heavily on where the settlor and beneficiaries live.

Common types

Where the trust lives matters

Trusts come from common law. They are well understood in the UK, Jersey, Guernsey, Singapore and similar jurisdictions. Many civil law countries, in continental Europe and elsewhere, do not recognise trusts in the same way, and their tax treatment can be unpredictable or punitive.

In the UAE, trusts can be established under the laws of the DIFC and ADGM. Both centres also offer foundations, which some families prefer because a foundation is a legal entity in its own right and is easier to explain in civil law countries.

Moving countries changes everything

A trust that works well while a family lives in the UAE can be taxed very differently once the settlor or beneficiaries move.

The structure has to fit where the family is going, not only where it is today.

The UK is a good example. Since 6 April 2025, whether non-UK assets in a trust fall within UK inheritance tax has depended largely on whether the settlor is a long-term UK resident, meaning UK resident for at least 10 of the previous 20 tax years. Trusts that were outside UK inheritance tax under the old domicile rules may now be inside it, and families who return to the UK need to plan for this before they arrive. The Autumn Budget 2025 capped the ten-year and exit charges at £5 million for certain trusts that were outside UK inheritance tax before 30 October 2024, which helps larger trusts but does not remove the need to plan.

Beneficiaries’ countries matter too. The United States, for example, has complex rules for US beneficiaries of foreign trusts, and distributions can be taxed heavily if the trust is not set up with this in mind.

Questions to ask before setting one up

1. Where do I, and each beneficiary, expect to live in ten years’ time?
2. Which countries’ tax rules could apply to the trust, the settlor and the beneficiaries?
3. Who should the trustees be, and how will they be replaced over time?
4. How much control do I want to keep, and how much am I prepared to give up?
5. What will it cost to set up and run each year, and is that justified by what it achieves?

Getting it right

Trusts are powerful but they are not a product to be bought off the shelf. The best ones are designed around the family, with specialist legal and tax advice in each country that matters, and reviewed whenever the family moves or the rules change.

We work alongside our clients’ lawyers and tax advisers to make sure the investment and insurance side of a trust fits the overall plan.

Sources: Saffery: inheritance tax reforms for non-doms · Boodle Hatfield: long-term residence and inheritance tax · Withers: estate planning in the UAE · Stephenson Harwood: Autumn Budget 2025 · GOV.UK: inheritance tax for long-term UK residents