Key provisions

The Trusts (Amendment) Law 2016, gazetted on November 23 2016, has amended and modernised the existing Cayman Islands Trusts Law (2011 Revision). Along with provisions addressing certain powers and the appointment and discharge of trustees, the amendment law introduces a number of retrospective provisions with the objective of correcting technical issues in the original legislation.

Key provisions

Under the existing law, a trustee who is absent from the Cayman Islands for more than 12 months may be discharged and replaced. The amendment law removes this provision. This will be welcomed by the industry, given that many trustees of Cayman law trusts are based in other financial centres, such as Switzerland, Singapore and Hong Kong.

Additionally, the amendment law addresses technical issues concerning the proper discharge of trustees which arose as a result of transitional provisions from 1998. Those provisions applied to trusts created on or after May 11 1998, or if the specific section had been applied to a trust by express extension by the trustee. The consolidating legislation after 1998 did not preserve the pre/post May 11 1998 distinction; the amendment law has corrected this issue by amending Section 6(c) to contain specific reference to trusts established on or after May 11 1998.

Section 8 of the Trusts Law has also been amended to cover the position where there is a retirement of a trustee with no simultaneous appointment of a new trustee. The position is therefore the same irrespective of whether a new trustee takes office on the retirement of an incumbent trustee.

STAR trusts
The amendment law clarifies that controlled subsidiaries (under Section 5 of the Banks and Trust Companies Law (2013 Revision)) can be trustees of Special Trust Alternative Regime (STAR) trusts and that this has been the case since August 7 2008. Accordingly, to satisfy one of the conditions of the STAR regime, one of the trustees must be a Cayman licensed trust company, a Cayman private trust company or a controlled subsidiary.

Reserved powers
Section 14 of the Trusts Law now allows a settlor to reserve – to himself or herself, or to a third party – the power to appoint both capital and income from a trust. This power can be included in any Cayman trust, irrespective of when it was established, and will add flexibility to settlors who wish to retain strategic control over distributions from a trust.

Other trustee powers
The amendment law has extended the adverse events against which a trustee is authorised to insure trust property.

Charitable purposes
The scope of the objects of charitable trusts has been extended by the amendment law. This amendment is retroactive and so applies to all charitable trusts whenever they were created.


The amendment law is not a significant departure from the existing trusts law in Cayman and does not introduce any new types of structure as such. Nonetheless, it will positively affect the Cayman trust industry and will ensure that it remains a leading jurisdiction for all forms of trust structures, in both the private client and commercial contexts.

For further information on this topic please contact Henry Mander at Harneys by telephone (+1 284 494 2233) or email ([email protected]). The Harneys website can be accessed at