United Arab Emirates: The Hague Convention And Living Trust

Last Updated: 3 August 2018
Article by STA Law Firm
Most Popular Article in United Arab Emirates, August 2018

Testamentary Vs. Living Trust

Time is an unchanging constant throughout our world. Forever moving in one direction, pushing us all into the hazy future. There is little exact certainty in what we plan for in the longer term, and nowhere is this more apparent in law than in living trusts and testamentary trusts. These laws exist precisely to assure individuals in this uncertain world. No one is aware of when their time will come, and once they are gone, there is very little they can do to impact the world and carry out their final wishes. However, Living Trusts and Testamentary trusts are two such things that will stand beyond an individual's passing.

Overview of living and testamentary trusts

In the case of living trusts, these allow for individuals to plan for their futures, and also the prospects of those who remain when they are gone, while testamentary trusts do not concern themselves with the individuals' future, but rather where and how their estates will be divided when the time and need arises. Living trusts bring to fruition during an individual's life. Their estate is defined, and they can make use of what they wish from their estate. It is in opposition to testamentary trusts which only deal with the issue of the splitting of an estate after death. In general, both of these allow for some level of certainty and assurance in this one aspect of our lives. It can be quite a comforting idea when one thinks about it.

Testamentary trusts are applicable when an individual wish to leave others certain assets, though the time they wish to transfer assets has not yet arrived. Instead, it is often after the individuals' death when their estate will undergo division among the successors. Testamentary trusts are irrevocable, which means that one cannot alter them without the permission of the testator. It also implies that after the death of the testator, there can be no alteration of the testamentary trust. The testator begins the process by first producing their last will. In this document, they will include the fact that upon their death, they would want the trust to be set up. There are three parties involved in a testamentary trust. These are as follows:

  • The grantor/trustor (an individual is also known as the testator in the case of a testamentary trust)
  • The trustee
  • The beneficiary

In this arrangement, the testator is the producer of the trust. As previously mentioned, they begin by producing their last will, which would therein outline the beneficiary party. The trustee is the individual appointed by the testator to proceed with the processes required to set up the trust, and the beneficiary is the individual or individuals who will be receiving benefits from the trust. Itself consists of the estate of the testator, and the trustee, who may or may not have its name in the testators will, shall be responsible for managing that trust up until a time when they are no longer required (when the beneficiary can take over the trust). The trustee can choose to execute the will in what manner they deem to be appropriate, though some jurisdictions allow for more specific instructions from the testator to be issued. However, the general idea is that the trustee must watch over the trust and the last will of the testator. While specific countries will have their requirements for a will to be produced and different laws that dictate testamentary trusts, (such as the UK Trustee law of 1925. It dictates what a trustee can and cannot do) the original basis for the idea of testamentary trusts comes from the English common law system and the concept of equity.

Equity involves the holding of goods for another until both the products and the benefactor are ready to be united. Due to the concept being one that originates from the universal law system, it is one which has not found its way to civil law jurisdictions. Of late some European countries have adopted the concept of trusts and these including the likes of Italy, Malta, and Luxemburg to name a few.

The Hague Trust Convention

An essential piece of legislation about trusts is the Hague Trust Convention. There is a total of 14 signatories of this convention, including the US, Canada, UK, the aforementioned European countries, Australia and more. This convention provides power to a trust produced within a nation that approves of the practice and ensured that the nation interprets it as it was initially meant to be construed in its country of origin by both signatories and non-signatories of the convention. Coincidentally to this point, the agreement also pushed to the forefront, the idea of trusts, to a significant number of (particularly civil law) countries to whom the concept would have been a foreign one. The introduction of The Hague Trust Convention has meant that civil law countries will now at the very least, be able to recognize the concept when they see it in action. A straight rejection will be very unlikely, and with the idea now being more widespread, the plan may stick and be adopted by some of those countries themselves, as was seen with the case of Italy and Malta.

The convention does specify certain aspects of a trust, such as the fact that for it to receive recognition, it must be produced voluntarily and must present in writing, as per Article 3 of the convention. Beyond this, according to Section 4, the agreement does not encapsulate validity of wills and their production, as this is seen as a preliminary issue to trust itself, and also the matter of intentions themselves are a separate topic, governed by their different laws and conventions.

Chapter three of the convention relates entirely to the recognition of trusts. Article 12 confirms that a trustee may do with trust as he is entitled to do so under the laws of the state the trust started under, and Section 11 is a general overview of the idea that trusts should receive recognition as under the jurisdictions.

Chapter 4 concerns general clauses of the convention and Article 15 lays out a few exceptions to the issues and matters at hand. The limitations involve other laws which may impact the validity of what is mentioned in a trust. It includes, as indicated in the article, trust issues regarding minors, who may not be capable of receiving what is for them in a trust, issues regarding succession and marriages, and more.

Beyond this, Chapter 5 discusses some of the final clauses of the convention. Among these clauses are Articles 26-29 explain that it will be possible for any member of the Hague Conference regarding Private International Law, to become signatories of the convention if they should so, please. It is under discussion that the processes required should a party decide to denounce the meeting. However, the agreement is not one which concerns itself with an overly complicated or controversial matter, and as such, the clause is likely only present for the sake of it being present as it would likely be in any convention. It provides freedom to states that agree, should they then find flaws or disagreements with the matters and the way we deal with these conventions.

Once again and most importantly though, the beneficiary, as the individual who is to receive from the trust, will be the end goal for the trustee. There may be occasions when the recipient is very young or is not in a state to be able to receive from the trust. If this is ever the case, it is the responsibility of the trustee to ensure the trust is secure, and in time, when it is possible, to pass on the trust to the beneficiary.

Comparing the trusts

A living trust is also famous as Inter vivos trusts. These are trusts that are made during an individual life and allow for assets to be built up in the individual's estate. The individual can access this trust throughout their life and use what they want to or need to. However, upon the individuals' death, the trust will be split between those mentioned. This form of trust is similar to testamentary trusts in that they take full effect upon the end of an individual. Generally, the same laws and legislation apply to living trusts that apply to testamentary trusts, as they are both defined as trusts. The Hague Trust Convention and the idea of recognition being given to these trusts as they would be within their original country of origin still applies to living trusts, and the more specific legislation regarding wills and trusts are within their country of origin. However, there are most definitely differences between the two types of trusts in the way the trust built and split. Some of those differences will now discuss in more depth.

One difference is that a living trust can be revocable, unlike a testamentary trust. As such, it can change the testator sees fit during their lives. However, it is important to note that whether a living trust is revocable or not depends on what the testator wishes for it to be. However, the flexibility that this offer is something that a testamentary trust cannot provide.

One stage that a testamentary trust passes through during the process of an estate division is known as the probate. The probate stage occurs after the individuals' death when the will must go through the probate court proceeding. This court proceeding is one which can be quite lengthy and can take between six to nine months to complete the operations. The process is intended to ensure the validity of the will before the estate is divided. A living trust is not needed to go through the probate stage for the estate. It saves time for all of the parties involved and can look upon as a significant advantage to forming a living trust. However, some may see it as making a living trust less secure than a testamentary one, though this will more often than not be false.

One interesting point that one may consider the matter of trusts is the privacy of the case. A testamentary trust is, of course, based on the last will of the testator. Once the individual has passed away, the intention is to be made public and the assets split. There is no privacy in this form of trust, as the law stipulates that it will be made public. It is both a good thing and a bad thing. On the one hand, once a will is open and has been through probate, there can be no denying the facts of the will. However, with it going public, other issues may arise, since all those who will be receiving assets will know what all others will be obtaining.

Now while this may be irrelevant from a legal standpoint and may seem like something more fitting of a TV drama show, it is still a factor which we should consider. It is because the privacy issue is only an issue for testamentary trusts. Living trusts though are not made public, and this can and will be seen by many as the ideal path to take. It is important to realize that when a will goes public, it will be a public document that any will be able to view. It includes both those included within the will, and also the general public. Here is where the more significant issue will likely arise for most, as the will produced by a recently deceased may not be a document that one would want to share.


As a whole though, the primary international rules regarding trusts, both testamentary and living, are the same for both cases. The Hague trust convention is this legislation, and it pushes primarily for the recognition of trusts by a more substantial number of nations, as it is an English common law and equity law principle which will be entirely foreign to civil law countries. Beyond this law, trusts under the governance of rules of the nations of the creation of trusts. For example, the aforementioned, UK Trustee Law of 1925 is UK specific, and no international laws are covering the matter. Testamentary and living trusts, while similar, have their apparent differences. They both have their benefits and disadvantages, but in the end, they share the same goal of distributing the assets of a departed individual. Both achieve this, though their means may vary slightly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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