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Trusts, foundations and charities


Are trusts legally recognised in your jurisdiction? If so, what types are available and most commonly used?

The Cayman Islands is one of the leading jurisdictions for the establishment and management of trusts. The most common types of trust are:

  • discretionary trusts;
  • strict settlements;
  • charitable trusts; and
  • reserved powers trusts, where powers are reserved to the settlor or conferred on the protector or other person.

The Cayman Islands also provides for ‘STAR trusts’ (based on the Special Trusts (Alternative Regime) Law 1997), which are a type of statutory trust that may be used for mixed purposes, charitable and non-charitable. The statute allows the settlor to repose in an enforcer certain duties and powers that at common law are exercised by trustees. Another feature of a STAR trust is that it restricts the right to information which beneficiaries of a non-STAR trust would otherwise be able to access.

Private trust companies (PTCs) are increasingly being used by high-net-worth private clients as part of their succession planning and wealth structuring. A PTC can be formed to act as trustee of one or more family trusts. The board of directors of the PTC may be composed of family members, professional independent advisers or a combination thereof.  By way of a PTC, the settlor may retain as much or as little control and involvement without prejudicing the legal validity of the trust structure.

What rules and procedures govern the establishment and maintenance of trusts?

Trusts can be established:

  • at common law by a unilateral declaration of trust by the trustee;
  • by a deed of settlement between a settlor and trustee; and
  • pursuant to the requirements of statutory trusts, as set out in the Trusts Law.

Trusts are subject to English common law (except where statutory provisions override common law rules) and the decisions of the Cayman Islands courts. Also relevant are the Fraudulent Dispositions Law (1996 revision) and the Perpetuities Law (1999 revision).

How are trusts taxed in your jurisdiction?

There is no direct taxation in the Cayman Islands. A trust deed will attract a nominal stamp duty of CI$40 (approximately US$50).

Foundations and charities

Are foundations and charities legally recognised in your jurisdiction? If so, what forms can they take?

Yes, both foundations and charities are legally recognised in the Cayman Islands.

Foundation companies may be incorporated in the Cayman Islands pursuant to the Foundations Companies Law 2017. The law is drafted to allow the foundation company to be rooted in Cayman Islands company law, but to function like a civil law foundation.

Charities are registered pursuant to the Non-profit Organisations Law 2017.

What rules and procedures govern the establishment and maintenance of foundations and charities?

Foundation companies that are incorporated in the Cayman Islands are governed by the Foundations Companies Law and the Cayman Islands Companies Law (2018 revision), except to the extent modified by the company’s articles and by-laws.

Charities are governed by the Non-profit Organisations Law and the Companies Law.

How are foundations and charities taxed?

There is no direct taxation in the Cayman Islands.

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