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Cayman Islands: The Power Of Revocation Of A Settlor Of A Discretionary Trust, May Be Considered As A Property Right, Available To A Single Creditor, By Way Of Equitable Execution.
In the TASSARRUF MEVDUATI SEGORTA FONU -v- MERRIL LYNCH
BANK AND TRUST COMPANY (CAYMAN) LTD & OTHERS (2011) UKPC
17, the Privy Council, permitted the appointment of an
equitable receiver, to exercise the power of revocation of a
settlor of a Cayman discretionary trust, so to enable a creditor to
procure the execution of such power, and to recover all the settled
assets, to satisfy his judgment debt.
Under the trust deed establishing the Cayman trust, the judgment
debtor/settlor of the trust, had a power of revocation, which
stated:
" This Trust may be revoked, amended, varied, or
altered in any manner, whatsoever from time to time, and at any
time, by the Settlor by deed and delivered to the Trustees,
provided always that no such revocation, amendment, variation or
alteration shall take effect, until actual receipt of such
instrument by the Trustees, or with the written consent of the
Trustees thereto, if such revocation, amendment, variation or
alternation would increase or extend the obligations, liabilities
or responsibilities of the Trustees".
The Privy Council held that:
The powers of revocation of a settlor of a discretionary trust,
are such, that in equity, in the circumstances of a case like the
one under consideration, the settlor/judgment debtor, can be
regarded as having rights tantamount to ownership.
The interests of justice require that an order be made in order
to make effective the judgment of the Cayman Court, recognizing and
enforcing the Turkish judgment.
NOTE: If the settlor has been made bankrupt,
the power of revocation of the trust, will automatically vest in
the trustee in bankruptcy.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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