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We provide advice on all trusts and fiduciary matters with specialisation in establishing private,commercial, charitable and non-charitable purpose trust structures, including setting up private trust companies; ongoing advice to trustees, settlors, beneficiaries, protectors and other fiduciaries; effecting required changes over the life of trusts; and advice and litigation in contentious trust matters.

 

We are committed to standards of excellence and our Trusts Group is able to provide high levels of service and advice to clients interested in trusts in the Cayman Islands.

 

The Trusts Jurisdiction of Choice

 

The Cayman Islands is one of the top 10 international financial centres in the world with over 40 of the top 50 banks holding licences here. Over 160 trust companies are registered in the Cayman Islands (namely companies which provide trustee, executor or administrator services for trusts).This means that world class trust services are available from a wide array of regulated service providers.The Cayman Islands have long been the jurisdiction of choice for international high net worth individuals seeking to protect and manage their wealth, as well as commercial enterprises looking to structure their affairs efficiently. The common requirement is high quality service and advice from service providers based in a developed offshore jurisdiction.


There are many practical advantages of establishing a trust under Cayman Islands law as described below:

 

Taxation

 

There is no income, capital or other direct taxation imposed by the Cayman tax authorities on assets or cash held subject to a Cayman Islands trust. Payments made from a Cayman Trust, whether of principal or interest, are not subject to any Cayman Islands exit or other withholding tax.

 

Legal and Regulatory Framework

 

Unlike many onshore jurisdictions, the Cayman Islands has fully regulated trust companies both affiliates of leading international financial institutions, and boutique service providers.The Cayman Islands legal system is largely based on English law, although the Cayman authorities have encouraged a specific legal environment to facilitate the effective establishment and running of modern trust-based structures.

 

Modern Trusts Law

 

Cayman Islands trust law strikes the right balance between the solid foundations of centuries-old English common law and a modern and innovative outlook reflecting the commercial realities and practical requirements of trusts in the 21st century. The Cayman Islands has a record of pioneering the development of modern trust legislation which is subsequently imitated or adopted by other jurisdictions.

 

Professional Expertise

 

The Cayman Islands boasts leading trustees, administrators, accountants and lawyers with experience in providing trust services second to none.

 

Areas of Expertise

 

We have experience in advising on all aspects of trusts law including private, commercial, charitable and non-charitable purpose trusts, private trust companies, and other fiduciary arrangements.We are able to advise settlors, beneficiaries, trustees, protectors, enforcers, and onshore legal and financial advisers on the structuring, establishment and ongoing operation of all forms of trusts in the Cayman Islands. We are also able to advise on and litigate in contentious trust matters.

 

The services that we offer include the provision of advice in relation to the following types of arrangements, as well as the provision of general advice on the regulation and operation of trusts in the Cayman Islands.

 

  • Estate planning vehicles
  • Trusts to hold family businesses/succession planning
  • Settlor-reserved powers trusts
  • Legitimate asset protection arrangements
  • Charitable trusts
  • Dynasty trusts
  • Anti-forced heirship gifts
  • Non-charitable purpose trusts (STAR trusts)
  • Orphaning vehicles for commercial purposes
  • Private Trust Companies

 

We have an in-depth understanding of the drivers behind the establishment of trust relationships.They are committed to providing clear, quality advice, reviewing and producing necessary trust documentation efficiently, and generally being responsive and available to our clients’ needs.In addition, we bring extensive experience of court work, whether appearing in person or working closely with leading Counsel in the most complex international cases.Our experience includes:

 

  • Applications on behalf of trustees for the advice, opinion or direction of the court in connection with the administration of trusts;
  • Advising in connection with disclosure of trust information requested by beneficiaries;
  • Litigating on the construction of specific provisions within trust deeds;
  • Acting in significant and complex breach of trust claims;

 

Specific Benefits of Cayman Trusts Legislation

 

Trusts Law

 

Cayman Islands trusts law originates from that of English law but has been substantially modernised and developed through specific legislation as well as precedent. The starting point is the Trusts Law (broadly, the equivalent of the English law Trustee Act 1925) though this has been revised and consolidated to include what were previously specific enactments, such as those set out below.

 

STAR Trusts

 

Cayman introduced non-charitable purpose trusts in 1997 through the Special Trusts (Alternative Regime) Law, the terms of which are now incorporated within Part VIII of the Trusts Law.These STAR trusts are exceptionally flexible structures, used widely in both private and commercial contexts. Some examples of benefits are:-

 

  • The non-application of perpetuity rules, allowing for dynasty trusts.
  • Allowing philanthropic purposes that do not fall within the technical definition of ‘charity’.
  • Allowing a combination of commercial purposes and beneficiaries, making them suitable for estate and succession planning, particularly where there is a family business.
  • Restricting and/or preventing beneficiaries’ ability to challenge the trust.
  • Providing an arrangement to hold ‘difficult’ or risky assets that is acceptable to trustees, including, for example trading companies, works of art, yachts, etc.
  • Providing a holding structure for private trust companies.
  • The ability to ‘orphan’ assets in commercial transactions, e.g., ‘share trusts’ in structured finance, ‘note trusts’ in securitisations etc.

 

Reserved Powers Trusts

 

Part III of Trusts Law contains important provisions introduced in 1998 which reduce the risk of a trust being successfully attacked on the basis of sham, and enable greater comfort for settlors who wish to have the benefits of a trust arrangement without giving up total control. (The sham doctrine applies where a settlor is considered to have so much power or control over the trust that it cannot properly be viewed as a valid trust at all, and the resulting legal and financial consequences can be dire.) The Reserved Powers provisions raise a presumption of validity and sets out the specific powers and rights that can be retained by the settlor without compromising the structure. This is particularly useful, for example, for settlors wishing to make gifts which come into effect after their lifetime without falling within the Wills regime (with the consequential possibilities of death duties or challenges to the Will); and for those wishing to control the investment of trust assets.

 

Fraudulent Dispositions Law

 

It is possible to achieve legitimate asset protection planning through the effective ringfencing of assets that a trust structure can create. The Fraudulent Dispositions Law seeks to provide a fair balance between protecting the rights of creditors on a settlor’s bankruptcy with those of the beneficiaries of a previously settled trust.

 

Private Trust Companies

 

Where there are a number of family trusts, a settlor may wish to establish a private trust company to act as trustee rather than employing the services of an independent trust company directly.The Banks and Trust Companies Law creates an efficient mechanism for setting up a licensed trust company to act in such circumstances.

 

Our affiliated entity, Circumference FS (Cayman) Ltd. is a fully licensed trust company in the Cayman Islands.


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