Cayman Islands Trusts in 2023
Since 2003, Healy Consultants Group PLC assists multi-national Clients with registration of Trusts in every country on the planet. This web page will help you understand the benefits of the Caymans Islands Trust:
- Individuals can create a range of structures to hold and protect their wealth and to control succession. The most common structures in the Cayman Islands are i) ordinary discretionary trusts and ii) “STAR” trusts created pursuant to Part VIII of the Trusts Act (2021 Revision); and
- Cayman Islands trusts are created by a trust deed and the transfer of the initial trust property. For STAR trusts, there must be an ‘enforcer’ and at least one of the trustees must be a Cayman Islands licensed trust corporation; and
- Ordinary and STAR trusts are not subject to any registration requirements however the Trusts Act (2021 Revision) requires that a Cayman Islands ‘exempted’ trust (being a trust without Cayman Islands beneficiaries) must be registered with and provide certain information to the Registrar of Trusts which may share that information with other competent authorities; and
- Cayman expressly permits trusts to be created containing powers over the trust and its administration reserved to someone other than the trustee. Often reserved powers are used to allow the settlor of the trust to retain control over how the trust assets are invested. For example, if a trust is to be used to hold cryptocurrencies, the settlor of the assets could retain the power to direct the trustee as to whether and when it should dispose of the cryptocurrencies held on trust; and
- For certain trusts, information in relation to parties connected with trusts may need to be disclosed to the Cayman Islands tax authority pursuant to the Common Reporting Standard (CRS); and
- Cayman’s “firewall legislation means that the Cayman court will generally not recognize any foreign order made in respect of a Cayman trust which conflicts with Cayman law. For example, an order by a civil law court that the Cayman trust is not valid would not normally be recognized by the Cayman court; and
- More generally, the ‘firewall’ provisions contained in the Trusts Act (2021 Revision) provide that a Cayman Islands trust will not be void or liable to be set aside by reason that it defeats the rights of any person by virtue of their relationship to the settlor or a beneficiary. Care is however needed when the trust assets are subject to the jurisdiction of a foreign court, particularly a foreign court which may not be familiar with trusts; and
- Cayman Islands trusts can be an effective tool for asset protection provided they are not established with a view to putting assets out of reach of existing creditors. The Fraudulent Dispositions Act (1996 Revision) provides that every disposition of property made with intent to defraud and at an undervalue shall be voidable at the instance of a creditor thereby prejudiced.
- Care must be taken in establishing trusts to ensure that they meet the requirements of the Trusts Act (2021 Revision). While the Cayman Islands provides a statutory basis for reserved powers pursuant to section 14 of the Trusts Act (2021 Revision), it is important that any powers reserved are not so extensive as to render the trust invalid or a ‘sham’.