As a global centre of excellence for trusts, the Cayman Islands financial sector has serviced international clients for decades with what is the most flexible instrument for wealth structuring and estate planning.
The Cayman Islands trust law is derived from an amalgamation of common law and equity, English statutes and local statutes that have become a blueprint for trust law in many other jurisdictions. Trust legislation is supported by a strong and highly regarded local and independent judiciary, court system and legal community. Public and private sectors are continuously reviewing and updating key legislation so that it remains current, viable and relevant in a global context, and also creating new legislation to meet ongoing needs.
The Cayman Islands Law Reform Commission conducted a review of the Trusts Law and the subsequent recommendations. This work was largely the basis for the Trusts (Amendment) Law (2019). The amended Law enhances the competitiveness of the jurisdiction’s trust framework by empowering the Cayman court to set aside the mistaken exercise of a fiduciary power and to approve compromises in trust litigation. The Court is also provided with powers to vary trusts where there would be no detriment to that beneficiary, and inserts a new provision to allow the Grand Court to make rules to give effect to provisions within the Law. The amended Law also bolsters the protection of Cayman trusts under the existing “firewall” provision by including a provision that beneficiaries of Cayman trusts are excluded from being deprived of rights under the Cayman trust by virtue of a foreign law.
Another important part of the jurisdiction’s trust framework is the Banks and Trust Companies Law (2020 Revision). This Law was amended in 2019 (the ‘Amendment’) to give the Cayman Islands Monetary Authority (CIMA) more responsibility and control in the regulation of the trust industry. The Amendment requires more frequent reporting by licencees to CIMA, and gives CIMA the power to reject licence applications that do not fulfill requirements. The Amendment also requires the regulation of the licencee’s minimum net worth to ensure that it is maintained on both a solo and consolidated basis, and that the capital and other prudential requirements are met. Other provisions to modernise and strengthen Cayman’s position as a leading trust jurisdiction were made in the context of a continued focus on compliance in the world of finance.
With steady and dependable growth, trusts remain an important component of the financial services industry in Cayman. According to CIMA, as of 30th June 2020, there were 147 Active Trust Licences, of which 58 were Full Trust Licences, 59 were Restricted Trust Licences and 30 were Nominee (Trust) Licences.