- within Accounting and Audit, Immigration and Insurance topic(s)
Key Takeways
- Welcome statutory reform to Cayman's perpetuity law
- Cayman trusts can now exist indefinitely
New (amending) legislation has been passed in the Cayman Islands which disapplies the rule against perpetuities for Cayman Islands law ordinary trusts, with the effect that such trusts can now last indefinitely. Cayman Islands STAR trusts were already not subject to the rule.
Previously, ordinary trusts established under Cayman Islands law were subject to the rule against perpetuities. This means such trusts were required to vest within a perpetuity period of 150 years, at which point the trust property was required to be distributed in accordance with the terms of the trust.
The Perpetuities (Amendment) Act, 2024 (the "Act") (which is not yet in force) abolishes the mandatory 150-year perpetuity period for trusts established after the Act comes into force (except in relation to trusts holding land or interests in land situated in the Cayman Islands).
Whilst the Act does not automatically apply to trusts that were established before the Act comes into force, it is possible for trustees, settlors and enforcers of existing trusts (among others) to apply to the Grand Court to disapply the rule against perpetuities so that such trusts can last indefinitely.
The Act also allows for the governing law of foreign law trusts of unlimited duration to be changed to the laws of the Cayman Islands and to continue to be of unlimited duration.
The removal of the 150-year perpetuity period reflects a continuation of the enhancement of Cayman Islands law, with the broader aim of ensuring that the jurisdiction is constantly evolving to meet the needs of a global client base. Specifically, this new legislation will be welcome news for individuals and families who are looking at structuring trusts for dynastic succession planning purposes.
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.
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