Cayman Islands

Country code – KY

Legal basis – Common law

Legal framework – Trusts Law

Formal name –Trust

Settlor – The settlor is the person who establishes and whose assets are put into the trust. The settlor of a Trust in the Cayman Islands, may also be the beneficiary of those assets and may, subject to certain provisions, retain control of the trust. There is no protection from a subsequent settlor’s bankruptcy after assets are gifted to the trust

Trustee – Trustees are natural or legal persons who hold the title to the assets and manage the trust, but they cannot benefit from it. There is no need for the trustee to be a Cayman resident.

Custodian trustees are not permitted.

Beneficiaries – Beneficiaries are those who get benefit from the trust.

There are specific provisions to prevent beneficiaries from draining the trust of its assets and spending in a thrifty way. International Trusts allows avoiding both probate and forced heirship rules.

Protector – A settlor may appoint a protector. The function of a protector is usually to provide some indirect control over the trustee, particularly where the settlor has accepted advice that he should not attempt to exercise control himself.

Trust deed – The private document on which the trust is drafted is not needed to be filed with the Registrar.

Disclosure - The details of a trust will remain confidential, subject only to disclosure as may be required by an order of the Cayman Islands courts, or under a Tax Information Exchange Agreement, properly invoked in accordance with its terms.

Protection from foreign judgements – The law is unclear regarding ignoring and not enforcing foreign judgments. The Hague Convention on Trusts does not apply in the Cayman Islands.

Protection from creditors – The Trust law repeals the Statute of Elizabeth, so transfers by the settlor to the trust may not be set aside if the settlor transferred the property before the debt arose. The creditor must prove the fraudulent transfer of assets to the trust, of which its definition is not clear in the law. Creditor claims are separated and cannot be brought jointly. If a fraudulent transfer is proven, trust may be declared invalid. There is a statue of limitations of 6 years on the fraudulent transfer.

Protection for immigrant trusts – Trusts that migrate from other jurisdictions do not benefit from retroactive protection.

Community property – Community properties transferred to a Cayman STAR Trust may not retain its community property character.

Exclusion of foreign law – There are limited specific exclusions in the legislation to be able to exclude foreign law.

Choice of law – The choice of law of Cayman Islands to govern the trust or a particular aspect of that trust, is valid, effective and conclusive regardless of any other circumstances.

Duration – Trusts may be limited to a maximum duration of 150 years.

Compliance –  The trustee of a trust is required to keep in its Cayman Islands office, a documentary record of the terms of the trust, the identity of the trustee and the enforcer(s), all settlements of the property upon trust and the identity of the settlor(s), the property subject to the trust at the end of each of its accounting years, and all distributions or applications of the trust property.

There is no provision in the law for the formal registration of an Ordinary Trust. Exempted trusts are required to be registered with the Registrar of Trusts.