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.
- Settlor as a beneficiary
- Bankruptcy protection
- Ignore foreign judgements
- Hague convention on trusts
- Choice of law is binding
- Protection from immigrant trusts
- Community property provisions
- Custodian trustee permitted
- Rule against perpetuities (years)
- Limited Specific exclusion of foreign law
- Subject to CL rules Settlor can retain control
Protection of Settlor
Protection from foreign judgements
- Avoidance of forced heirship
- Spendthrift provisions
- Exclusion of Statute of Elizabeth laws
- Trust invalid if transfer fraudulent
- Creditor must prove fraudulent transfer
- Clear definition of fraudulent transfers
- Separation of creditor claims
- Statutory limitation on fraudulent transfer
Protection of Beneficiary
A trust established in the Cayman Islands may not be subject to local taxes applicable to the assets and income of the trust.
It must be noted that the choice of law of the trust would not be applicable to tax matters, which would be governed by the respective jurisdiction where the settlor, beneficiaries, assets or trustee are located, as applicable.
You should consult with your tax advisor or accountant to know the tax implications in your jurisdiction of residence when establishing a trust in the Cayman Islands, transfer assets to it and receive profits from said assets.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- - Offshore Income Tax Rate
- - Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 0 Losses carryforward (years)
- 0% Personal Income Tax Rate
- 0% VAT Rate
- 0 Tax Treaties
The Cayman Islands is a British Overseas Territory dependent on the United Kingdom and located northwest of Jamaica between the island of Cuba and the coast of Honduras in the waters of the Caribbean Sea. The Cayman Islands is a member of the CARICOM single market.
The 264-square-kilometer (102-square-mile) territory comprises three islands, Grand Cayman, Cayman Brac and Little Cayman, where about 69,000 people live, 55,000 of which live in its capital, George Town (Grand Cayman).
Its official currency is the Cayman Islands Dollar (KYD), pegged to the US dollar at a 1,227:1 ratio.
The Cayman Islands are a British overseas territory, designated by the UN Decolonization Committee as one of the last Non-Self-Governing Territories. The fifteen representatives who compose the Legislative Assembly are elected by the people every four years, they are in charge of managing the internal affairs. Of the elected members of the Legislative Assembly, five are elected to serve as ministers in a Cabinet headed by the Governor. The head of government is the Prime Minister.
The governor is appointed by the King/Queen of the United Kingdom on the advice of the British Government to represent the monarch.
The Cayman Islands has a solid economy, with one of the highest per capita income worldwide. Being also one of the most expensive places to live, since most products are imported and are subject to high tariffs.
Its main sectors are luxury tourism for its pristine beaches, scuba diving and high-end gastronomy, and offshore financial and insurance services, with hundreds of licensed banks, which handle about $500 billion in assets.
The Cayman Islands is one of the 5 largest financial centers in the world by deposits and the world’s largest financial center for investment funds, with the presence of the global largest financial institutions.
Main financial services available in the territory are private banking, hedge fund formation, and investment, trust services, structured finance and securitization, captive insurance, and international business company services.
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