There is no inheritance tax in the Cayman Islands. The Succession Law (2016) Revision implements freedom of disposition, believing that you can dispose of your assets as you please. This makes it very hard to contest legal Cayman wills, and so it is imperative that you have an understanding of the legal process and an up-to-date will.
Post-death, the law requires a grant of probate or letters of administration be obtained from the Grand Court of the Cayman Islands to enable personal representatives (usually those persons nominated as executors in the will) to administer the deceased’s Cayman Islands estate. Court fees of around CI$250 are payable to the Cayman Court, excluding legal fees (if applicable) to prepare the application. The application for probate must be filed within six months of the date of death, otherwise an additional application has to be made to the Grand Court for special leave. When probate or letters of administration are granted it empowers the personal representatives to deal with the deceased’s Cayman Islands assets. It is advisable to obtain multiple copies of the grant of probate or letters of administration if there are multiple assets to administer. It can take several weeks to several months to obtain a grant of probate or letters of administration from the Grand Court.
It is important to note that under the Succession Law (2006 Revision), executors are only entitled to very modest remuneration. However, the will may allow more generous remuneration.
The Formal Validity of Wills (Persons Dying Abroad) Law (2018) prescribes that a Cayman Islands will is considered valid if it conforms with foreign or Cayman Islands execution formalities. This law also applies to wills created before this law came into force in 2018.
A 2020 amendment to the Succession Law (2006 Revision) and the Wills Law (2020 Revision) has introduced provisions for civil partners to be considered equal to married persons as a matter of Cayman Islands law.
Foreign probates or letters of administration (with certificated translations, if necessary) can be re-sealed by the Cayman Probate Court at which point such re-sealed foreign legal documents will be effective to administer any Cayman Islands assets.
Dying intestate (i.e. without making a will) can sometimes make matters more complicated. If a Cayman-domiciled person dies intestate, a closely connected person, such as a surviving spouse or surviving adult child, must apply to the Grand Court for letters of administration. Once obtained, this legal document empowers them to deal with the deceased’s assets in accordance with the Succession Law (2006 Revision). Many people attempt to take on the responsibility of acting as a representative of an intestate estate, and then immediately find themselves overwhelmed. In order to navigate this complicated process, it is advisable to seek advice from a duly qualified attorney-at-law. The benefit of having a local representative who is familiar with the Cayman Islands legal system cannot be overstated. Their familiarity with the rules could save your estate from significant expense, not to mention alleviate the stress placed on bereaved loved ones who may otherwise find themselves having to negotiate the requirements of a country and legal system they may not be familiar with.
Drafting a Will
Although anyone can draft their own will, there are certain legal requirements that must be met in order for it to be valid. Take advice from an attorney to make sure your will:
- Is unambiguous
- Clearly sets out your wishes
- Meets legal requirements.
Attorneys can also provide additional services such as the retention of your will.
You will also need to ensure your will is valid. A will can be handwritten, typewritten, or prepared on a computer. If handwriting your own will, it is important that you ensure it meets appropriate legal requirements. As requirements for wills vary internationally depending on your location, it is necessary to seek legal advice when drafting your will.
Letters of Wishes
Often accompanying a will is a letter of wishes setting out additional, non-binding requests. Such letters can be a great comfort to family members who find themselves unsure about where to begin when dealing with your final wishes.
Simple instructions include where your life insurance policies, annuities and pension plans are held. Also included are: your bank account details, your electricity, water, internet account numbers, your computer password, a list of your fixed assets, the names of your attorney, accountant, doctor, and generally all of those items that only the individual may know.
Setting this out in a letter of wishes will save your representative hours of digging through papers and making telephone calls trying to determine where your assets are held. Giving precise details can save your estate from potential losses due to unidentified assets. Your attorney will ask you to fill out an instruction sheet with the following information:
- What is your full name, date of birth and home address? What is the full name of your spouse, their date of birth and address? Full names, dates of birth and current ages of your children? Were there any previous marriages? If so, were there any children from that previous marriage? What are their names and ages?
Key Roles in your Will
- Names and addresses of your proposed executors: maybe a trusted friend as one and a trusted family member as the other. You need to explain your relationship to these people.
- Name and address of guardians to your children, although this is only relevant if your children are young.
- Pecuniary bequests – These are legacies of cash that you may want to leave to someone.
- Legacies of property – You will need to identify the specific item/property that you want to leave someone.
- Beneficiaries of the rest of your estate – This is whatever is remaining in your estate and can be given to one person, or it can be divided equally, or unequally, between several people. It is called the ‘residue’ of your estate.
- Substitute beneficiaries of your estate – In this section you need to name a substitute to inherit your estate should the named beneficiaries die before the estate can be given to them.
- Age of inheritance – You will be asked if you want to specify an age when your beneficiaries inherit the residue of your estate. This is only relevant if your beneficiaries are very young at the time of you writing your will.
- ‘Worst case scenario’ gift – You need to name a charity, family member or friend who will inherit your estate if everyone you have named in your will dies and cannot inherit it.
Assets & Liabilities List
The final portion of the will requires you to list your assets, liabilities (mortgages and outstanding debts), as well as any life insurance policies you may have and the details of your pension plan. HSM Attorneys-at-Law can assist you in writing a will and Letter of Wishes or advise on probate, alternatively refer to the Working in Cayman chapter for a list of law firms who will also be able to help.
Inheritance Tax & Domicile
For foreign residents, inheritance tax may still be due in their country of domicile. Your lawyer will be able to determine whether or not you are domiciled in Cayman, or advise you on the steps you should take to change your domicile to Cayman. Purchasing a grave plot or vault in the Cayman Islands and purchasing insurance which pays for your mortal remains to be repatriated to Cayman are two ways to prove your domicile is in Cayman. For more information on this subject please refer to the Immigration page.