aving lived and
worked in the
UAE for a
years and now
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 succession planning.
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 o ce –
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’acompliant
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 signo
and often very bespoke drafting.
• 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 oshore 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
“The key point is to take time to fully
explore the objectives of Muslim families”
Ltd v Pateras in 2011 and the legislation was
found to be robust.
Similarly, robust firewall provisions are
also contained in s37 of the Foundations
(Guernsey) Law, 2012, and these provisions
are likely to be equally as eective.
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 needs.
This is a subtle process and can
be di cult to handle without being
culturally insensitive or confusing the
client. However, when done properly,
it is hugely satisfying.
Angela Calnan notes that many modern Middle Eastern families are looking
o shore to avoid the forced-heirship provisions of Shari’a law
Angela is a Partner and the head of
Collas Crill’s award-winning fiduciary
team in Guernsey. Recently described
as ‘a force to be reckoned with’ in The
Legal 500 and a ‘prominent figure’ by
Citywealth, Angela has been at the
forefront of driving fiduciary law in
Guernsey since she returned to the
island in 2012. She has particular
expertise in drafting trust and
foundation structures for Middle
Eastern families, and often travels to
Dubai and Abu Dhabi.
If you would like to speak to
Angela about the contents of this
article or for help in working with
Middle Eastern families, please ring her
on +44 (0)1481 723191.