The Perpetuities (Amendment) Act, 2024 (the Act) has now been in effect for just over a year marking a significant evolution in the Cayman Islands trust law framework. This legislative reform allows for the disapplication of the traditional rule against perpetuities in respect of new ordinary trusts in the Cayman Islands. The amendment marks a significant shift in flexibility and certainty for trust structures — a change with particular resonance for clients from the Middle East and other jurisdictions where enduring asset-holding vehicles have long been familiar.
Previously, the position in the Cayman Islands was:
- Ordinary trusts established on or after 1 August 1995 were subject to a statutory maximum perpetuity period of 150 years plus a "wait and see" period, whereby the rule does not affect an interest in property unless and until it becomes certain the interest will not vest within the perpetuity period (i.e. the trust will not fail because it neglected to specify an appropriate perpetuity period);
- STAR trusts (a special statutory non-charitable purpose trust unique to the Cayman Islands) are not subject to any rule against perpetuities and so can exist in perpetuity; and
- Charitable trusts and pension funds were also not subject to any rule against perpetuities.
Under the new regime a settlor may now elect that the rule against perpetuities does not apply to a newly established Cayman ordinary trust (provided it does not hold Cayman real property). If that election is made, the trust can in principle exist indefinitely, without being time-limited by the traditional perpetuity rules. If no express election is made, the prior framework remains in place. Pre-existing trusts are not automatically converted; however, trustees, enforcers, or settlors can apply to the Grand Court to remove the perpetuity restriction for those trusts. The Act also ensures that if a foreign trust changes its governing law to Cayman (when the perpetuity rule was not previously applicable), it will not be subject to the rule going forward.
These amendments align the Cayman Islands with other leading trust jurisdictions that already permit dynastic or perpetual trusts.
Why This Matters for Middle Eastern Clients
Families and wealth owners in the Middle East (as in many jurisdictions outside the common law tradition) are often more accustomed to asset-holding vehicles such as foundations or companies — structures which may, in many systems, exist indefinitely or for very long durations. The concept of a trust that must "expire" under a perpetuity rule can appear foreign or restrictive. In that context, the reform is likely to be particularly well received in the Gulf and broader Middle Eastern region.
By allowing indefinite duration (if chosen), the Cayman regime now presents a structure more comparable to those familiar models. Middle Eastern clients may take comfort in the idea that a trust can now mirror the long lifespan of a foundation or corporate vehicle, while still enjoying the benefits and flexibility of a trust. This enhanced flexibility aligns closely with the objectives of Gulf-based family offices seeking to consolidate cross-border assets, preserve inter-generational wealth, and maintain confidentiality under a stable and well-regulated framework.
For Middle Eastern clients who may be less familiar with the trust concept but more comfortable with enduring structures, this reform offers a compelling bridge: a trust that can last indefinitely, yet can be tailored with modern trust protections, oversight mechanisms, and succession flexibility, blending the strength of common-law trust principles with the continuity traditionally associated with foundations and companies.
Wealth advisors, family offices, and private clients in the region may wish to review existing or proposed structures to determine whether this new option could enhance long-term asset protection, governance stability, and inter-generational transfer planning.
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.
