Estate Planning in the Cayman Islands
As the Cayman Islands continues to operate as a jurisdiction of choice in many respects, Nicholas Holland and Myles Chingara consider the following aspects of Cayman Islands law that have bolstered its attractiveness to High-Net-Worth and Ultra-High-Net-Worth individuals alike for estate planning and business continuity.
- Published
- in Analysis & Insights
Cayman Islands Wills
While the Cayman Islands permits the disposition of Cayman Islands assets via foreign Wills (for which advice is always necessary) and generally allows the resealing of foreign grants of representation, the process for obtaining an initial grant of representation elsewhere may be lengthy. For this reason, it is common to dispose of Cayman Islands assets via a separate Cayman Islands law-governed Will. It is important to note that except in relation to Cayman Islands real property, succession of all other Cayman Islands assets (including Cayman Islands shares) is governed by the laws of the testator’s domicile.
Prior to administering the estate of a deceased testator, a grant of probate must be obtained from the Cayman Islands Law Courts. This may be unfavourable to persons who wish to ensure business continuity without delay in the event of their death or have concerns including, but not limited, to the implications of forced heirship. As a result, they may consider alternative estate planning options such as the use of a Cayman Islands trust.
Cayman Islands Trusts
Trusts remain a useful estate planning tool for the circumvention of probate requirements as the settlor will have divested themselves of the trust assets prior to their death having transferred the same to a trustee to be held upon the terms of the relevant trust instrument. Additionally, the conflict of laws rules set out in Part VII of the Trusts Act, provide that the operation of foreign law as it concerns foreign matrimonial and forced heirship claims is to some extent expressly excluded which makes such trusts attractive to persons domiciled in jurisdictions where such rules apply.
Trusts created pursuant to Part VIII of the Trusts Act (STAR Trusts) which enable the creation of trusts for the furtherance of purposes (charitable and / or non-charitable) and / or for the benefit of persons remain appealing to persons establishing trusts for both business continuity or succession planning more generally. Notably, clarity has been provided regarding how STAR Trusts may be enforced by the Cayman Islands Grand Court (as observed in the recent case of AA v JTC (Cayman) Limited (FSD 12 of 2024 (IKJ) which reaffirms that an enforcer of a STAR trust is the relevant party with standing to enforce the terms of the trust), which has added to their attractiveness estate planning solution.
Perpetuities Act
Finally, it is important to note that all Cayman Islands law-governed trusts are in theory capable of existing perpetually. The Perpetuities Act (2025 revision) provides that the perpetuity period of 150 years shall not apply to trusts created after 22 August 2024 (the “Effective Date”) where the trust instrument expressly states that it should be disapplied. Conversely, the perpetuity period that applies to trusts pre-dating the Effective Date can be disapplied by the Grand Court following an application submitted by a person permitted to do so in accordance with the Perpetuities Act (2025 Revision). The decision to disapply the perpetuity period is a serious one for a number of reasons and advice should be taken before doing so.
