Angela Calnan notes that many modern Middle Eastern
families are looking offshore to avoid the forced-heirship
provisions of Shari'a law
Having lived and worked in the UAE for a number of years and now
back practising in Guernsey, Collas Crill's Angela Calnan has
significant experience in assisting Middle Eastern families with
succession planning in the Channel Islands.
Here she talks about the spectrum of attitudes to compliance
with Shari'a law and the use of Guernsey's anti-forced
heirship provisions to assist Muslim clients who require flexible
The Shari'a-compliant trust
The majority of new client meetings involving Muslim families in
the UAE, and, indeed, the wider Gulf region – whether led by
the family, their private banker or the family office – begin
by considering a Shari'a-compliant trust when discussions turn
to asset protection and succession planning.
However, in the vast majority of cases, it quickly becomes clear
that the family requires something more flexible than the strict
Shari'a inheritance provisions and investment policy hardwired
into the trust or foundation documents.
That is not to say that Shari'a compliant trusts are never
adopted but, from experience, they are increasingly the exception
and not the rule for the modern entrepreneurial family.
Trust structures for Middle Eastern families in Guernsey span a
broad spectrum in terms of Shari'a compliance, as follows:
Strict compliance, involving rigid adherence to the
settlor's school, and with scholar sign-off and often very
The middle ground, usually involving a flexible discretionary
trust with a letter of wishes that the trustee should follow
Shari'a principles when investing and distributing. This allows
the trustee some flexibility to adapt to changing family
circumstances during the structure's life.
Fully flexible, where the patriarch wishes to entirely
ring-fence assets outside of the Islamic world, with a view to
departing from the application of Shari'a law to a proportion
of his wealth.
The last case is usually brought into play to rebalance the
distribution of wealth between male and female heirs.
Increasingly, modern families will have daughters at university
in London or the US who will return to the Middle East and North
Africa region and play a key role in the often substantial family
enterprise. In such cases, the patriarch may be keen to ensure that
his daughters are provided for in the same way as his sons, and
this can be achieved by putting assets offshore outside of the
Islamic world, Guernsey being one such suitable jurisdiction.
Section 14 of the Trusts (Guernsey) Law, 2007 provides a useful
anti-forced heirship measure to protect assets held in Guernsey
trusts from attacks by the Shari'a courts. This legislative
firewall was stress-tested in the Guernsey case of Rothschild Trust
Guernsey Ltd v Pateras in 2011 and the legislation was found to be
Similarly, robust firewall provisions are also contained in s37
of the Foundations (Guernsey) Law, 2012, and these provisions are
likely to be equally as effective.
The key point when dealing with succession planning and asset
protection for Muslim families is obvious but still often
overlooked: take the time to fully explore the family's
objectives. The family will often seek advice and request a
Shari'a-compliant structure initially, but it is important to
explore the patriarch's precise attitude to Shari'a
compliance in order to deliver a structure that meets his
This is a subtle process and can be difficult to handle without
being culturally insensitive or confusing the client. However, when
done properly, it is hugely satisfying.
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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