LEGAL PERSPECTIVE: Beneficiaries in Trust by Dr AbdelGadir Warsama, Legal Counsel

Dr AbdelGadir Warsama, Legal Counsel

The Trust Law in Bahrain provides, a “Trust” shall be recognized by the law of Bahrain as valid and enforceable. Based on this, a person can make a trust for certain beneficiaries. This person, “settler” appoints a qualified person, “trustee” to take care of the trust as agreed upon in the “trust instrument”. Trustee shall be a licensed person or body by CBB, which supervises the whole issue of trust.

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An important pillar of the “trust” is the beneficiary of the “trust”. A beneficiary shall be identifiable by name or ascertainable by reference to either a class or a relationship to another person whether or not living at the time of the creation of the trust or at the time which under the terms of the trust is the time by reference to which, under the terms of the trust, members of a class are to be determined. If there are no beneficiaries identifiable or ascertainable as provided for in the law, the trust shall fail unless it is a “Purpose Trust” i.e., a charitable or non-charitable trust.

However, the terms of a trust may provide for addition of a person(s) as a beneficiary or the exclusion of a beneficiary from benefit either revocably or irrevocably and from time to time. Moreover, the terms of a trust may impose upon a beneficiary an obligation as a condition for benefit. A “settler” or a “trustee” of a trust may also be a beneficiary of the trust. The interest of a beneficiary under a trust shall be deemed to be movable property.

A beneficiary may disclaim all or part of his interest in the trust. Such disclaimer shall be in writing, irrevocable, subject to the terms of the trust and shall be exercisable in the manner and under the circumstances expressed therein. A disclaimer, given by the beneficiary, shall not be effective until received by the trustee. Moreover, subject to the terms of a trust, a beneficiary may sell, charge, transfer or otherwise deal with his interest in any manner. The terms of a trust may make the interest of a beneficiary subject to a restriction in dealing in that interest or termination as in the event of beneficiary bankruptcy.

We reiterate, to achieve the purpose and spirit of this special law, beneficiaries and other related parties shall be guided accordingly and cooperate positively.

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