The treatment of trusts in divorce proceedings has become
increasingly important since the landmark decision of the House of
Lords in White v White 1 All ER 1.
Since the White decision, there has been an emphasis on the
'equality' of the division of assets rather than providing
for the reasonable needs of the spouse. Courts in some
jurisdictions, such as Hong Kong and England, have broad
discretionary powers to impose tailor-made outcomes in divorce
proceedings and to divide assets including those held in trust.
As a result, Cayman trusts have become increasingly embroiled in
foreign divorce proceedings and trustees have been asked to either
submit to the foreign proceedings, to disclose trust information or
to vary the terms of the trust. Before acceding to these requests
from the foreign courts, trustees must bear in mind the
Firstly, the trustee owes fiduciary obligations to the
beneficiaries not to divulge confidential information except in
accordance with Cayman law which governs the trust. Trustees are
not permitted to disclose confidential information relating to a
trust even where ordered by a foreign court unless released in
accordance with section 3 of The Confidential Relationships
(Preservation) Law ("CRPL"). Confidential information may
be disclosed if the Grand Court of Cayman makes such an order or
the principal of the confidential information consents to its
disclosure. Section 4 of the CRPL provides that whenever a person
intends or is required to give evidence on or in connection with
any proceeding by any court, tribunal or other authority, whether
within Cayman or otherwise, relating to any confidential
information, he shall before doing so apply for directions from the
Grand Court. Even where the principal consents, the trustee may be
well advised to seek an order of the Cayman Grand Court as it is
now settled law that an acquiescence, non-objection or expressed
consent, if given under pain of penalty may not be accepted by the
Cayman courts as valid consent or authorization. In Re ABC Ltd
[1984–85] CILR 130 and Re H CILR
The Courts in considering an application for disclosure pursuant
to foreign proceedings will consider matters of public policy and
the interests of the beneficiaries, particularly, the interests of
innocent third party beneficiaries.
Secondly, it would generally not be recommended for a trustee to
submit to the jurisdiction of a foreign court in matrimonial
proceedings in which one or both spouses were beneficiaries under
the trust. This could put the trustee in a situation in which its
duty as a trustee to act in the best interest of all beneficiaries
is in conflict with an obligation to obey a foreign court order.
Furthermore, if it were to submit to the foreign court
jurisdiction, a foreign court order relating to the trust, would
under the rules of private international law, potentially be
enforceable in the Islands without reconsideration by the Cayman
court. In the Matter of the B Trust RBS Coutts (Cayman) Limited
v. W and others  (2) CILR 348.
Conversely, if the trustee were not to submit to the foreign
jurisdiction, any foreign order made would not be enforceable
against the trustee. The trustee would not be bound to follow the
guidance of the foreign court, since that court would not have the
jurisdiction to direct the exercise of the trustee's power. On
a subsequent application to the Cayman court, the court would have
the discretion to consider the matter and to act in the
beneficiaries' best interest.
Finally, the trustee has a duty to carry out the trust according
to its terms, unless deviation from those terms was sanctioned by
the Cayman court. A trust in the Cayman Islands can only be varied
in accordance with the law of the Cayman Islands and only by a
court of the Cayman Islands.(Trusts Law (2011 Revision)).
Therefore, an order of a foreign court varying the terms of the
trust pursuant to divorce proceedings will have no effect until
sanctioned by the Cayman courts.
In light of the increase in orders relating to trust property
being made in foreign court proceedings, trustees must be mindful
of the above principles as it may be in breach of trust and/or the
Cayman laws if it complies with the foreign court orders or accedes
to the foreign court jurisdiction.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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My friend was married to a Muslim man and they had a daughter together before he divorced her. He recently passed away, leaving another daughter from his first wife, whom he divorced before marrying my friend.
On 12 April 2016 the States of Jersey voted to update the Island's customary law and statutory rules governing the administration of property belonging to children.
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