Government is planning to amend the Trusts Law and related regulations this year, Minister for Financial Services Tara Rivers announced at the STEP Cayman Conference on Thursday.
Cayman’s appeal for private client professionals is the long-standing strength of the financial services industry and the ability to attract business-based, robust commercial legislation and adherence to global regulatory standards, she said at the annual event of the local chapter of the Society of Trust and Estate Practitioners.
“Commercially we have made legislative amendments to support your work,” she told the 260 delegates at the Kimpton Seafire hotel. Last year, government passed a bill that provided the industry with greater certainty and clarity with regard to wills in cases where a testator dies outside of the Cayman Islands.
This year, the minister said, “Further legislative developments are on the horizon with enhancements to the Trusts Law, new regulations for private trust companies, which have now been passed by Cabinet, and the commencement of the Limited Liability Partnership Law and related regulations.”
In his keynote address, Grand Court Justice Ian Kawaley said a consultation draft of a trust amendment bill is currently being circulated among industry practitioners.
In April 2017, the Cayman Islands Law Reform Commission published a discussion paper on trust law reform, which suggested the implementation of several innovations in local legislation, Mr. Kawaley noted.
They include empowering the court to give relief for mistakes made by trustees without having to find that a breach of fiduciary duty has occurred. This follows the general approach taken first by Jersey, and then by Bermuda and the Bahamas.
The amendments would also confer on the court a more flexible power to vary trusts, replacing the existing requirement that an arrangement must be shown to be for the benefit of minors and unborn with the less onerous requirement of establishing “no detriment.” This more “modern approach” has been taken by the British Virgin Islands and the Bahamas, Mr. Kawaley said.
Another proposal would extend the definition of a trust corporation with regard to STAR trusts to all trusts for the purpose of discharging a retiring trustee.
And a final point would address the question of whether Section 91 of the Trusts Law is still adequate. The section is designed to exclude the adverse impact of some foreign law, which is historically linked to the settlor of a trust.
The currently circulated consultation draft of a Trusts Law Amendment Bill may result in these changes being enacted later this year, Justice Kawaley said.
“In addition, the exclusion of foreign law provisions of Section 91b of the law may be extended to apply to a foreign law, which is linked not just to the settlor but also to any beneficiary, whether discretionary or otherwise.”
The 2019 International Wealth Structuring Forum continues Friday. It is the second time that STEP Cayman is hosting the annual international private client conference. The event addresses issues affecting the trust industry, with a special focus on wealth structuring. The two-day event features more than 40 speakers and international trust experts.