A Trust is a fiduciary relationship with respect to property, imposing on the trustee an obligation to deal with the trust property for the benefit of specified persons. The Trusts Law of the Cayman Islands is derived from the English Law of Trusts but is subject to somewhat different statutory modifications.

The Trust (Foreign Element) Law 1987 addresses various conflict of law difficulties as they relate to trusts. First, it has strengthened the validity and recognition of the selection of Cayman Islands Law as a proper law governing Cayman Islands Trusts and matters relating thereto. Secondly, it gives statutory recognition to the concept of importation of trusts to and exportation of trusts from the Cayman Islands and a resultant change of governing law. Thirdly, it provides the questions as to matters such as the capacity of a set law, validity and administration of a trust are to be determined solely according to the laws of the Cayman Islands, if selected as a governing law. Fourthly, it prohibits the avoidance of, or the enforcement of a foreign judgement with respect to a Cayman Islands trust on the basis it contravenes foreign forced heirship or similar laws or because the trust concept is not recognised in a particular foreign jurisdiction.

The Fraudulent Dispositions Law 1989 strengthens the integrity of a Cayman Islands Trust and, in the absence of a Cayman Islands bankruptcy of the settlor, will protect it against successful attack by future creditors of the settlor.

The Perpetuities Law 1985, in respect of new trusts, abolished the old common law rule which invalidated any disposition unless invested within a period of lives in-being plus twenty one years and introduced a new perpetuity period of one hundred and fifty years. This law also introduced a new "wait and see" rule whereby a disposition (or power) will only fail if it falls outside the new perpetuity period.

Trust deeds may provide for fixed or discretionary interests. Frequently, provision is also made for the appointment of a protector. There is no requirement for public recording or registration of a trust deed.


The Trusts Law provides for the registration of exempted trusts. All the trust documents must be delivered to the Registrar of Trusts. The Registrar maintains the original and issues a certificate of registration.

The main advantage conferred on an exempted trust is a fifty year undertaking from the Governor to the Trustees that no law subsequently enacted "imposing any tax or duty to be leveled on income or on capital assets gains or appreciation or any tax in the nature of estate duty or inheritance tax shall apply to any property comprised in or any income arising under such exempted trust or to the trustees or the beneficiaries thereof in respect of any such property or income".

Exempted or ordinary non resident Cayman Islands companies may, with limited exceptions, qualify as beneficiaries of exempted trusts.

Any company which provides trust services must first obtain a license under the Banks & Trust Companies Law, although individuals are not so required. In practice, the majority of trusts are administered by commercial trust companies located in the Cayman Islands.

This information provides an introduction to aspects of establishing business in the Cayman Islands for the benefit of clients who may be considering using the Islands as an offshore domicile. It is not exhaustive and is merely intended to give a broad indication of possible courses of action.

Before taking action on any business or other decisions related to the Cayman Islands, specific and particular advice should be sought from domestic taxation, legal, accountancy and other relevant professional advisers.

The information provided reflects the laws and regulations existing at December 31, 1996, but later developments have been noted where possible.

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.