December 7, 2021

Improvements to the Cayman Islands Trust Law

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conyers_dill__pearman_logoBy Robert Lindley Conyers Dill & Pearman From Mondaq

On 24 October 2016, the Trusts (Amendment) Law, 2016 and the Property (Miscellaneous Provisions) (Amendment) Law, 2016 came into force in the Cayman Islands.

The Trusts (Amendment) Law, 2016

The key amendments, which mainly modernise and correct certain deficiencies and technical issues in the Trust Law (2011 Revision) (the “Trusts Law”), are as follows:

Trustees

The original provision of the Trusts Law, which allowed for the removal of a trustee who has left the Cayman Islands for more than 12 months, has been repealed. Many Cayman Islands trusts are administered by non-resident trustees, so this amendment reflects the modern Cayman Islands trust industry.

An amendment to the Trusts Law in 1998 created a conflicting transitional provision with regard to trusts created on, or after, 11 May 1998 relating to the discharge of a retiring trustee. Section 6(c) has been amended to specifically refer to trusts created on, or after, 11 May 1998 in order to tidy up and provide certainty in respect of this issue, which will be a significant improvement to the legislation for trust practitioners.

Section 8 of the Trusts Law has been amended to exempt the requirement that, in order for the retiring trustee to be discharged, at least two individuals or a trust corporation must remain as trustee(s) if only one trustee was originally appointed or if a contrary intention is expressed in the trust deed.
Trustees of STAR Trusts

The Trustee of a STAR trust must be, or include, a Cayman Islands licensed trust company or private trust company. This provision has been amended to now allow for controlled subsidiaries of Cayman Islands licensed trust companies to act as the trustee of a STAR trust.
Reserved Powers

A Settlor may grant or reserve the power to appoint either income or capital, or both from the trust. Previously, the Trusts Law was unclear as to whether or not a Settlor was able to appoint income or capital. This will apply to all trusts whenever created.

For more on this story go to: http://www.mondaq.com/caymanislands/x/549674/wealth+management/Improvements+To+The+Cayman+Islands+Trusts+Law

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