Decree Law No.23 of 2016 on Trusts, or simply the Trust Act, is the main legal framework to cover the creation of trusts in Bahrain. It provides for its method of establishment and registration, the participants, and the purpose of trusts. Below, our company formation agents in Bahrain explain how to open a trust in this country. We can assist with the execution and registration of the trust deed.
Table of Contents
Definition and elements of a trust in Bahrain
The law does not refer to a trust as a legal entity, but as a legal relationship between a settlor and a trustee. This means that to open a trust in Bahrain a deed must be drafted in which various information must be found.
The parties in a trust, who must also be appointed in the trust deed, are:
- the settlor who is the creator of the trust and whose wishes are written in the trust document;
- the trustee who is a person or agent carrying out to term the desires of the settlor during his/her lifetime or even after death;
- the beneficiary or beneficiaries who are the parties entitled to the assets held in the trust.
To be valid, a trust deed must contain the following information:
- the identity of each party;
- the rights and obligations of the trustee;
- the assets to be held in trust;
- the purpose of the trust;
- the duration of the trust.
Also, such legal arrangements can have various purposes. Some of the most common are charitable work and estate planning. With respect to the assets that can be placed in a trust, they can be personal belongings or business assets, including company shares.
If you decide to open a trust, you can rely on our lawyers in Bahrain who can draft the deed.
Types of trusts in Bahrain
If you want to open a trust in Bahrain, you can set up:
- family trusts, often used as inheritance tools;
- financial trusts for various purposes, including estate planning.
In addition to this, financial trusts can also be set up by foreigners. Both the settlor and beneficiaries can be foreign citizens. They are not required to file for residency in Bahrain, but they can do so if they want. Moreover, this type of trust can also hold assets located in other countries, such is the case of real estate property.
Feel free to rely on our Bahraini company formation specialists for support with the establishment of a trust.
Registered trustees in Bahrain
While there are several advantages to setting up a trust in Bahrain, one of the most important refers to having the possibility of working with the registered trustees. They are enrolled with the Register of Financial Trusts administered by the Bahraini Central Bank. This enhances credibility among settlors and trustees, enabling the former to rest assured that their assets are administered accordingly.
Why set up a trust in Bahrain?
With the new Trust Law, opening a trust in Bahrain comes with various benefits. Some of the most important are:
- the settlor can decide whose jurisdiction the trust falls under;
- full foreign ownership of the trust;
- no taxes on the trust.
Other information on opening a trust in Bahrain
Here are some important aspects to consider if you want to create a trust in Bahrain:
- the trust must be registered with the Register of Financial Trusts no later than 30 days from creation;
- there is no minimum duration of a Bahraini trust, but the maximum one is limited to 100 years.
Our local specialists are at your service with various services. Among them, we want to mention support if you plan to incorporate a company in Bahrain and assistance if you decide to immigrate to Bahrain.
Feel free to contact us and let us know how we can help you!