Trusts

Exempted Trusts

Trust law in the Cayman Islands is based on English law, subject to some statutory modifications. There are no restrictions on the accumulation of income. Trust deeds can allow for fixed or discretionary interests.

There are no taxes on trust in the Cayman Islands. There are three types of trusts - the ordinary trust; the exempted trust and the alternative regime, STAR.

Trust law provisions relating to exempted trusts require that a trust deed be delivered to the Registrar of Trusts. The filed trust documents are open to inspection by the trustee and any other person authorized by the trust, but they are not open for public inspection.

All rights and remedies with respect to a discretionary trust are vested in the Registrar of Trusts and not the beneficiaries.

The Special Trusts (Alternative Regime) Law

The Special Trusts (Alternative Regime) Law (“STAR”) complements the preexisting traditional trust framework and is Cayman’s response to the popular demand for non-charitable purpose trusts. STAR permits the creation of trusts for any object, whether persons, purposes or both, provided they are lawful and not contrary to public policy.

Features of STAR trusts include the following:

• STAR applies to a trust only if this intent is specifically mentioned in the trust instrument.
• STAR is highly flexible, allowing for trusts of all kinds to be created.
• Enforcers must be designated.
• One of the trustees must be a Caymanlicensed trust company.
• STAR trusts are exempt from the rule against perpetuities.
• STAR trusts must not include land in the Cayman Islands.

Last Updated: 2011-12-30