Cayman Islands: Trusts

Last Updated: 28 May 2008


Trusts in the Cayman Islands may be established by persons in any part of the world with property or investments in any part of the world and in any currency. There is no limit on accumulating the income from the corpus of the trust for up to the length of the period of the trust. This firm will be pleased to assist in the establishment of trusts and in selecting a suitable trustee.

The establishment of trusts in these Islands is governed by The Trusts Law (as amended), The Trusts (Foreign Element) Law, 1987 (now contained in Part VII of the Trust Law (as amended)), The Fraudulent Dispositions Law (as amended) and the Perpetuities Law (as amended) of the Cayman Islands. This legislation, in particular the Fraudulent Dispositions Law, makes the Cayman Islands a most suitable jurisdiction in which to establish asset protection trusts. For settlors from Civil Law countries with requirements of forced heirship, The Trusts (Foreign Element) Law is of great value in that it provides that Cayman Law overrides the law of the settlor's jurisdiction. The old common law rule against perpetuities was superseded by the Perpetuities Law, 1995 (now the Perpetuities Law (as amended)) which extended the common law period of "lives in being plus 21 years" to a fixed period of 150 years in most cases.


There are two basic types of trusts in the Cayman Islands: ordinary and exempted.

Exempted trust

The special features of an exempted trust are as set out below.

  1. The trust receives a tax free guarantee from the Government for up to 50 years. It is normal practice for the Government to grant tax exemption for the full 50 years.

  2. If the trust is also a discretionary trust, any right or remedy which would otherwise be vested in one or more of the beneficiaries is vested in and exercisable by the Registrar of Trusts.

  3. An exempted trust must be registered with the Registrar of Trusts and pay a registration fee and annual fees.


The trust deed must set out in detail the provisions of the trust. While there are a number of standard provisions which are normally included (as discussed below), the bulk of the trust provisions vary widely depending on circumstances and must be specially drafted.

The following are the main points on which we require the instructions of the settlor (or the provider of the funds if there is no settlor):

Ordinary or exempt trust

Will the trust be ordinary or exempted?

Settlor or declaration of trust

Will the trust be established by a settlor (grantor) settling funds or by declaration of trust on the part of the trustee?

Specific or discretionary?

Will the trust will be specific or discretionary? If specific, the trust deed must specify not only the names and addresses of the beneficiaries but their interests and time and method of benefiting under the trust. If discretionary, the trust will only list the names and addresses of the beneficiaries and leave all matters concerning payment to the beneficiaries to the discretion of the trustee.


What is the period of the trust?. This may be fixed for any period desired providing it does not exceed the time allowed under The Perpetuities Law of one hundred and fifty in the case of an ordinary trust or exempted trust.


What is the amount of the settled sum? This may be small, with further funds (or other assets) being added to the trust at a later date.

Revocable or irrevocable

Is the trust is to be:

  1. irrevocable; or

  2. revocable for a period of years (or during the life of a particular individual), then irrevocable and, if so, revocable by whom or under what circumstances (a trust can also be irrevocable at first and then become revocable); or

  3. revocable at any time and if so by whom or under what circumstances?

Identification of trustee

What is the name and address of the trustee? The trustee should be in the Cayman Islands and we normally advise a trust company (which must be licensed under the Banks and Trust Companies Law - see below).

Name of trust

Will the trust have a name? What is it?

Appointment of trustees

How will new trustees be appointed? These may be appointed in many different ways, including by the retiring trustee or certain or all of the beneficiaries or by the protector if there is such a person.


In what type of investments can the trustee invest? Are the investments to be unlimited or limited and, if the latter, what are the limitations?

Identification of investment adviser

What is the name and address of the investment adviser, if there is to be one? What are the provisions for appointing a successor investment adviser?

Specific features

Are there any special features of the trust (see below)?


There are two special features (among many others) which a settlor may wish to consider in establishing a Cayman Islands trust:

Appointing a protector to the trust

Such a person should preferably have no beneficial interest under the trust and is often completely unconnected with the settlor (although it is possible for the protector to be the settlor during his lifetime). The protector might be appointed to assist the trustee in the exercise of its discretion or to perform other functions in relation to the administration of the trust or may be given specific powers which the protector can exercise to protect the interests of the beneficiaries (particularly the power to replace the trustee). If a protector is appointed his duties must be clearly set out in the deed. If required, provisions may be made for one or more successor protectors.

Memorandum of Wishes

If the trust is discretionary, it is usual for the settlor, or if there is no settlor, the main provider of funds, to express wishes to the trustee in relation to the exercise of certain of the trustee's discretions under the trust. Such an expression of wishes must be clearly stated that it is not and is not intended to be legally binding and may be disregarded by the trustee. In addition, it may be amended or cancelled by the maker at any time.


There are a number of trust companies licensed to carry on business in the Cayman Islands. All these conform to strict Government regulations, maintain a required amount of minimum capital and file financial statements with the Government each year. It is recommended that one of these trust companies be appointed as trustee. There is no restriction on the appointment of individual trustees but this is not normally recommended in the Cayman Islands. In addition, if an individual trustee stays outside the Cayman Islands for more than twelve months continuously he may be removed from the trusteeship.

Cayman Islands

Grant Stein, Partner

Andrew Miller, Partner

Anthony Partridge, Associate<

Garry Mason, Associate


Peter Harris, Partner

David Pytches, Associate

British Virgin Islands

Christopher McKenzie, Partner

Hong Kong

Carol Hall, Partner


Rod Palmer, Partner


David Whittome, Partner

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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