Lawmakers passed amendments to the Trusts Bill on Wednesday. The changes will “enhance and modernise the legislation to ensure the continued viability of trusts as a financial services product in the Cayman Islands”, Minister of Financial Services Tara Rivers said.
Trusts are widely used for estate planning purposes and form an important part of Cayman’s financial services offering.
To remain competitive as a jurisdiction, the Law Reform Commission in 2017 reviewed the Trusts Law and compared it with corresponding legislation in the UK, Jersey, Guernsey, Bermuda, the British Virgin Islands and the Bahamas. After consulting with the Cayman Island Society of Trusts and Estate Practitioners, the former Cayman Bar Association, the former Cayman Islands Law Society and the chief justice, the commission made several recommendations for legislative changes.
The minister said the amendments contained in the bill were “eagerly anticipated by local practitioners” and would improve the operations of the law and possibly the use of Cayman Islands trusts.
The changes will provide clarity and certainty to clients by expanding the powers of the Grand Court to set aside mistakes by trustees without having to find a breach of fiduciary duty.
They also give more flexibility to the court to make changes to a trust. Until now, a court could not vary a trust on behalf of minors until it was established that it was for their benefit. This was replaced with the less onerous requirement of establishing no detriment.
The amendments extend the definition of a trust corporation with regard to STAR trusts to all trusts for the purpose of discharging a retiring trustee. The new clauses also provide more protection against the adverse impact of foreign law by applying the provisions of the Trusts Law to a foreign law that is linked not only to the settlor but also the beneficiary.