Trust Cayman issue 04

INVESTING IN THE FUTURE

NEW OPPORTUNITIES

Swift. E cient. Global.

Welcome

n behalf of STEP Cayman Islands welcome to the fourth 2022/2023 edition of the STEP Cayman magazine. Welcome indeed, to what seems a new world order since our last issue, and we are so excited to mention here a return to normal with our upcoming STEP Cayman International Wealth Structuring Forum being held on

From recovering from the COVID-19 pandemic, regulations and sanctions, to welcoming the return of global travel and experiencing a heightened focus on regional and global matters, the past year has been quite the whirlwind. The financial services industry and more specifically the trust industry in the Cayman Islands has demonstrated its continued resilience, longevity and

Our focus throughout this issue is to showcase the continued evolution of the trust industry in the Cayman Islands. We’re shining a light on the range of offerings by expert architects and facilitators of sophisticated structures, and other key stakeholders which facilitate the jurisdiction remaining at the forefront for innovation. Given the broad and sophisticated Cayman Islands offering, the magazine covers topical stakeholder thoughts on immigration, the global regulatory environment, sophisticated structuring, cross-border initiatives, commercial use of trusts, planning for the vulnerable and protection for the incapacitated, modern assets inclusive of the luxury sector, and current considerations such as

The strong partnership between the Cayman Islands Government, the Cayman Islands Monetary Authority and Financial Services Firms, has meant that Cayman’s trust and financial services

offerings navigate their way through the rough waters and are as buoyant as ever.

STEP globally continues to provide educational support, maintain professional standards, create an effective network and contribute to evolving public policy matters in a way that ensures that the industry continues to develop and remain well served. We are fortunate to have had our former Cayman Islands Branch Chair, Mr. Alan Milgate, TEP serving on STEP Council since 2017 and the Board of Directors since 2021.

With the past three years certainly making their mark on history, and reflecting on the items mentioned before, we are pleased more than ever that STEP Cayman was able to adapt throughout the period by facilitating online webinars, then later hybrid events, local in-person events such as the magazine launch earlier this year as well as the launch of an annual scholarship programme, monthly lectures, and the current planned return of the STEP Cayman Wealth Structuring Forum 2023. We truly hope that you will enjoy reading this issue of the STEP Cayman Magazine and will be able to join us for the upcoming conference.

TAMARA CORBIN Chair,

STEP Cayman

stepcayman.ky

General enquiries: Bernadette Carey +1 345 749 2025 bernadette.carey@careyolsen.com

emma@sidekick.ky sidekick.ky +44 7743 910 347

chris@allies-group.com allies-group.com +44 191 500 7860

Photography: Thomas Williamson thomaswphoto.com Guy Waller guywaller.com

All contents copyright ©2022 STEP Cayman All rights reserved.

While every effort is made to ensure accuracy, no responsibility can be accepted for inaccuracies, howsoever caused. No liability can be accepted for illustrations, photographs, artwork or advertising materials while in transmission or with the publisher or their agents. Reproduction in whole or in part is strictly prohibited without written permission from the publisher. All information is correct at time of going to print December 2022.

This publication and its content is paid for and controlled by STEP Cayman Islands. STEP’s editorial team, including the STEP Journal Editorial Board, has not been involved in the production of this publication. The views expressed in this publication are not necessarily those of STEP and readers should seek the guidance of a suitably qualified professional before taking any action or entering into any agreement in reliance upon the information contained in this publication. Whilst the publishers have taken every care in compiling the content to ensure accuracy at the time of going to press, neither they, nor STEP accept liability or responsibility for any loss caused by any reliance on the content of any such advertisement.

ISSN 2633-3015

The evolution of the Cayman Islands

STEP Cayman Islands

Published by Sidekick Business Development Limited and Allies Group on behalf of STEP Cayman

The evolution of the Cayman Islands

Since the pandemic in 2020, there has been a definite shift in trends, behaviours, regulations and reputations - some of which will be echoed elsewhere in the world, while others are unique to the jurisdiction and the way in which it has evolved.

“This time last year, as the global economy was rebounding, nobody expected to see the state of the macroeconomy we see today. Now the borders have fully reopened, there’s a real buzz around Cayman,” says Henry Mander.

Not only are the next generation tech savvy, but they’re also interested in the long-lasting reputation of their family. Reputation is more important than ever, and these wealthy families have a certain responsibility when it comes to championing philanthropy, charities or ESG movements.

The roles of trustees, attorneys and bankers are changing as a result, particularly when it comes to understanding priorities and responding to changes when setting up structures. We are seeing more global families and assets than ever before, so, as advisors, it is important to group together in different disciplines. A strong team of advisors across the board is key when it comes to

reviewing and reacting to changes as they happen.

There has been an increased growth in trust-related business and families have become more involved in getting their affairs in order and structuring their trusts accordingly.

There are certain cultural sensitivities when it comes to wealth and the handing over of wealth, particularly when a client is operating a business across multiple generations. Advisors must gain the trust of, not only the patriarch, the matriarch or the principle, but also the next generation coming through with different ideas and priorities. Advisors have become the sounding board so that the wishes of the next generation can be filtered through to the older generation.

When there is continuity and trust in a structure, it helps the family flourish and thrive in the long term, therefore it is important that an advisor or a trustee can transcend the generations.

As structures cross generations and adapt to the current climate, they can often become more complex. There is a desire for things

Tamara Corbin (Rawlinson & Hunter), Henry Mander (Harneys) and Regina Oliver (Cayman National) discuss the trends that have been contributing to the evolution of the Cayman Islands.

“We are seeing a huge increase in the importance of social responsibility. Not only are the next generation tech savvy, but they are also interested in the long-lasting reputation of their family.”

Henry Mander

to be more straightforward, but as the world is becoming more and more complicated, families are going global and international laws are becoming more complex. The key is to be flexible and able to evolve as times change.

Transparency is more important than ever. Trustees have difficult decisions to make, but giving family members stakeholder rights within a structure means that everyone is more in tune with what is going on. Clients are becoming very focused on looking at what they can do to transfer to the next generation.

We continue to work with European and North America based clients, but the reason Cayman has always been so successful in the private wealth sector is because it has never focused on one demographic and also has a great brand in Asia and the Far East - and is growing in popularity when it comes to the market in the Middle East.

Historically, the Channel Islands had dominated that market because a lot of the clients were within the ‘Non-Dom’ regime in the UK, but as things become more complicated, the connection with London for that region seems to have fallen away slightly. We expect that the increased regulatory and reputational scrutiny will continue as global laws and regulations change, but because of that, we are seeing more ultra high-net-worth clients because of the rise in costs.

With challenging factors like the pandemic and economic uncertainty, people are looking for jurisdictions they can trust. With

a track record of 50 years in trusts, a strong court and legislation, Cayman is more appealing than ever.

There’s so much at the forefront of play, and there’s so much happening globally, but we’re certain these trends will continue. As a jurisdiction, we are constantly modernising and looking forward. Covid was something nobody saw coming and its impact will be long lasting, but what it did do was fast forward a lot of trends in terms of technology, flexibility with working and people’s attitudes to environmental issues - everything that comes with wealth and the responsibility of being a wealthy person.

It’s important that Cayman stays relevant and cutting edge. There’s a great dialogue between the private sector and government and everyone continues to pull in the same direction because we all benefit from Cayman being the jurisdiction for these structures and these families. That is why we are strong.

Regina Oliver

Tamara Corbin

Join the Largest Technology & Innovation Ecosystem in the Region

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Why Choose Cayman Tech City for your Digital/Technology Project?

Cayman Tech City is a special economic zone by Cayman Enterprise City that paves the way for early stage start-ups, growth stage enterprises, unicorns, and large tech firms to accelerate success This vibrant community of innovative companies from across the globe has rapidly grown into a significant tech cluster, which houses some of the world’s leading Blockchain and FinTech companies

A big part of the allure is a fast-track system that features an expedited business licensing regime that can have companies fully established within four to six weeks As part of Cayman Tech City you have the ability to generate an active business income offshore in the Cayman Islands and benefit from operating from a tax-exempt jurisdiction.

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Trusted transparency

There is a very robust regulatory environment in the Cayman Islands and it is very much in line with international standards. It strikes a balance between protecting FSPs and clients, while not being prohibitive and encouraging business in the jurisdiction.

The regulatory environment is supported by a strong infrastructure of government, local regulators and leading lawyers, practitioners and compliance-related professionals; and even though the regulatory environment is robust, the government is pro-business, so keen to take a commercial approach where possible.

Cayman has developed a strong body of legislation around ES/TT/ BO. This has also been supported by other areas such as FATCA/ CRS, AML and Private Funds Law. The increased international

regulatory scrutiny has meant that Cayman is constantly reviewing its regulatory environment and adapting to change, in some cases, quicker than in other jurisdictions, which has positioned the jurisdiction with a ‘gold standard’ regulatory framework.

Because of its ‘gold standard’ position, Cayman has sought to continually update and improve the regulatory environment with a number of different arms. The main focus has been on the fight against financial crime and false perceptions of Cayman, finding the balance between satisfying international standards with the appropriate level of disclosure, without being burdensome to the FSP and clients to the point of being prohibitive to Cayman’s continued position as a leading financial services jurisdiction.

Cayman has also focused on the accountability and standards of FSPs with inspections and enforcement.

Robert Lindley (Conyers) and Lee Hart (Genesis Trust & Corporate Services Ltd. as part

of the HIGHVERN group), discuss the ways in which Cayman plays its part in the global regulatory environment when it comes to economic substance, tax transparency and beneficial ownership.

Lee Hart

Robert Lindley

Cayman has a longstanding reputation as a leader of regulatory change internationally, often being at the forefront of legislative development and moving before other jurisdictions both onshore and offshore. With that, Cayman has shown a willingness to gather and take on board feedback, continually enhancing and updating above and beyond requirements for the protection of the jurisdiction as a whole. This has been recognised internationally in feedback from FATF and other relevant bodies. Cayman is also widely regarded for its strength and depth in FSPs, positioning the jurisdiction with one of the leading trust and corporate service provider sectors. Other industries, such as fintech, reinsurance and funds, have resulted in new regulations being put in place, which has encouraged more diversity and has had a knock on effect on private wealth, with some key players in these sectors setting up structures in Cayman.

Cayman has cooperated and arguably caught up with the US and the EU in the development of the regulatory framework which exists today. FATCA (US) and CRS (EU and rest of the world) has been a large part of the jurisdiction’s annual reporting procedures since 2015 and Cayman is committed to legitimate transparency.

Regulations will continue to evolve in the next five years, with a number of imminent changes clients should be aware of in order to ensure a smooth transition. Cayman has experienced a period of significant growth in many aspects, and there is an extensive network of legislation and regulations in effect. The next phase will be to work with international bodies and local FSPs to engage in a period of enforcement to determine how changes and efficiencies can be made within the existing frameworks for the benefit of the jurisdiction and the fight against financial crime.

Appleby’s Private Client & Trusts team provides a seamless private wealth service for clients looking to achieve their wealth structuring goals. With one of the most experienced and respected offshore private client, trusts and litigation teams, we are able to deliver specialist advice through global experience and local knowledge in our clients’ time zones. Visit applebyglobal.com to learn more.

CARLOS DE SERPA PIMENTEL

ESMOND

Focus on the future

Where is Cayman heading next? Bernadette Carey (Carey Olsen), Maxine Bodden (IMG Trust) and James Long (Summit Trust) discuss immigration, new structures, teambased advice and cross-border initiatives.

The Cayman Islands is an innovative jurisdiction that always has one eye on the future and has positioned itself on the global stage as a leader in private wealth structuring, cross-border planning and dispute resolution. Where other international financial centres may have reached the limits of their ability to service international clients or even stalled in their growth or development for any number of reasons, the Cayman Islands, as a jurisdiction, continues to grow and expand with a focus on adapting and evolving within an ever-changing global landscape.

There are a number of factors that place the Cayman Islands as a leading international financial centre. Importantly, the financial sector is incredibly prosperous in Cayman and is supported by highly experienced service providers and a wide range of trusted

James Long , Bernadette Carey and Maxine Bodden

fiduciary businesses that employ skilled and knowledgeable advisors and managers. The jurisdiction's professional talent pool supports a range of high-net-worth individuals and their families, as well as institutional and private clients from a variety of different jurisdictions. Working in a highly regulated environment, and collaborating regularly with industry peers and government representatives, service providers are at the forefront of industry developments and liaise closely with the jurisdiction's client base to ensure changes and challenges are addressed quickly and effectively.

On the structuring side, the Cayman Islands has shown great innovation through its introduction of structures that are modern, flexible, and work well for global families. Special purpose trusts, reserved powers trusts, the ability to establish private trust companies, and the introduction of foundation companies, are all examples of the vehicles used by international families and businesses with a connection to the jurisdiction. The Cayman Islands' trusts remain the structure of choice for private clients and for good reason; they are tried and tested, robust, and supported by a fully developed body of case law. However, foundation companies have grown in popularity and have proven to be a well-used entity in a variety of structures because they can be tailored to meet clients' changing needs.

A core component of a trusted international financial centre is of course its ability to assist with the clarification of legislation and the resolution of disputes involving private client structures. The Cayman Islands' court system is a robust one, supported by a highly respected judiciary that routinely issues judgments of significance to the wider common law community. Disputes concerning Cayman trusts, estates, and other family structures are heard quickly and with confidence, and cross-border disputes are managed with judicial comity where appropriate. Signalling the high regard in which our courts are held, in November 2022, the Judicial Committee of the Privy Council sat in the Cayman Islands - the first time that the JCPC has sat in an Overseas Territory of the United Kingdom.

Importantly for the jurisdiction as a whole, Cayman continues to evolve and presents itself as a very attractive place for international families to live, work and invest. The strong education and healthcare sectors - some of the most important factors that families are looking for when they relocate - are managed and maintained at a level that is often unobtainable in other jurisdictions of a similar size or profile. Cayman has also adopted an approach to immigration and residency that is designed to allow families and investors to explore the jurisdiction in the first instance, through the Global Citizen Concierge Program that was introduced in response to the pandemic situation in 2020, but ultimately to encourage investment in and commitment to the Islands in the longer term through the established citizenship by investment programmes. Population numbers continue to grow, as does the development and infrastructure required to support a growing community.

In terms of what lays ahead, and building on the solid foundations described above, the Cayman Islands' trusts industry will continue to focus on exceptional client service, good governance, adhering to international standards, cross-border collaboration, and of course adaptability - both to a changing world and an evolving client base.

The future, both for industry and for the jurisdiction as whole, is undoubtedly a bright one.

“On the structuring side, the Cayman Islands has shown great innovation through its introduction of structures that are modern, flexible, and work well for global families.”

Cayman: A leading unit trusts jurisdiction

The Cayman Islands unit trust is one of the most popular investment vehicles used by Japanese institutional investors to invest in global assets. In this article, Michael Diamond (Brown Brothers Harriman) and Monique Bhullar (Walkers) discuss the historical reasons for this compatibility and the key trends and socioeconomic factors that have accelerated the growth of this market.

Michael Diamond and Monique Bhullar

CAYMAN ISLANDS UNIT TRUSTS

A unit trust is a special kind of trust which, in addition to being subject to the laws governing trusts, is also subject in the Cayman Islands to the laws governing mutual funds and private funds. A unit trust is a type of mutual fund or private fund in which a trustee, for valuable consideration, issues trust units in profits or gains arising from the acquisition, holding, management or disposal of investments to investors (who become the unitholders).

The Cayman Islands unit trust industry has historically been and remains largely comprised of single investor hedge funds (similar to a managed account) typically offering daily liquidity. However, the last few years have seen increased interest in an establishment of closed-ended unit trusts investing in private equity or alternative investments. One of the drivers of this shift has been a change in the investment strategy of many Japanese institutional investors seeking higher returns through investments managed by US-based investment managers.

FAMILIARITY

A common domestic structure in Japan for investing capital is the Japanese investment trust, due to its established and reliable framework and its easy accessibility through banks and even the post office. The Cayman unit trust is an offshore vehicle with a similar operational structure and benefits to those of the Japanese investment trust, so is a familiar and appealing construct for the Japanese investor. Accordingly, Japanese financial institutions including institutional investors, investment managers and other service providers, as well as the Financial Services Agency of Japan, are highly accustomed to Cayman unit trusts and are familiar with their legal and regulatory status in Cayman and Japan.

FLEXIBILITY

A fund structured as a unit trust can offer a great deal of flexibility compared to a corporate fund. Units, representing proprietary interests in the underlying investments of the unit trust, can be issued to investors across multi-currency unit classes, and distributions of income and/or capital can be made to unitholders without being subject to statutory restrictions. Cayman unit trusts can be structured as open-ended or closed-ended funds and as stand-alone funds or umbrella funds with multiple sub-trusts, with each sub-trust constituting a separate investment fund in its own right. This flexibility is attractive to an institutional Japanese investor seeking to establish a fund of one to invest in multiple asset classes, utilising multiple investment managers employing different investment strategies.

EXPERIENCED SERVICE PROVIDERS AND REGULATORS

Offering best in class service providers (including law firms and trust companies), a robust regulatory regime, along with legal, political and economic stability, Cayman remains the jurisdiction of choice for Japanese based investors valuing this certainty, regulation and stability.

TRENDS LEADING TO GROWTH

Two key themes in Japan have resulted in the continued growth of the unit trusts industry in Cayman: Inbound - the economic situation in Japan (in particular low interest rates, a weak currency and a shift in appetite to invest rather than save) is making the market attractive for international asset managers who are looking to establish or expand their footprint in Japan; and Outbound - Japanese institutional investors are looking to increase allocations to alternative assets outside of Japan. These mandates into alternative investments are typically structured using Cayman unit trusts; this is not a new trend, but is becoming more active again.

A number of socioeconomic trends in Japan are triggering a ‘thirst for yield’, resulting in a shift in Japanese investors' appetite for higher yield investments through traditional structures such as unit trusts. One such factor is Japan's aging population. With a median age of 48.4 years, Japan’s population is currently the world’s oldest. The government of Japan projects that there will be almost one elderly person (65 years or older) for each two persons of working age by 2036. Accelerated aging has broad microeconomic implications, including increased savings for retirement leading to pressure for lower rates, resulting in a natural draw towards investments in riskier assets with higher returns; pension funds seeking to invest in a manner that compensates for greater pension obligations; and an increase age-related expenditures such as healthcare, coupled with a shrinking tax base from retirees, throwing monetary budgeting out of balance. These socioeconomic trends have led to a gradual shift in investment behaviour within Japan. Many institutional investors are now seeking to invest in a more diversified range of higher yield international investments, often through US managers, with such investments structured using a Cayman unit trust.

With Cayman’s strong global brand and long-standing commitment to the financial services industry coupled with a shift in Japanese based investor behaviours, we anticipate continued opportunities to service Japanese based investment via the Cayman unit trust structure.

“Offering best in class service providers, a robust regulatory regime, along with legal, political and economic stability, Cayman remains the jurisdiction of choice for Japanese based investors valuing this certainty, regulation and stability.”

Member of CIREBA

A bright future

The ‘First Step’ scholarship programme is designed to introduce the trusts industry to interested and eligible candidates in the Cayman Islands. After the success of last year’s programme, we are delighted to announce that it has been renewed for a second year.

In 2021, The STEP Cayman Islands Council announced the creation of a new scholarship programme. Known as ‘First Step’, it was designed to facilitate an introduction for interested and eligible candidates to the trusts industry in the Cayman Islands.

Due to the success of the programme, the STEP Cayman Islands Council is pleased to bring it back for a second year, giving new opportunities to those looking to secure a future within the trusts industry.

The programme, created to facilitate an introduction to the fiduciary services industry, will provide full funding for three students studying for the STEP Entry Level Certificate. The certificate is the first ‘step’ towards obtaining a full Trust and Estate Practitioner (TEP) designation, which is the 'gold standard' within the global trusts industry.

The programme is open to Caymanians, Cayman status holders, or permanent residents of the Cayman Islands. It will be administered by CLT International London and consists of a series of online

lessons focused on trust law and trust administration, concluding with a formal examination. In October, current and prospective students were invited to a STEP Education event where they listened to presentations by current council members Lee Hart (CA, TII, TEP) and Anthony Partridge, as well as STEP’s 2022 Student of the Year, Alistair Mills. Also present was The Honorable Minister of Financial Services & Commerce, Andre Ebanks.

Speakers shared their inspiring stories and details of their STEP qualification journey, offering insight into the modules and the types of trust jobs available following the scholarship. A network event followed, which was a fantastic opportunity for members to meet, celebrate and look ahead to a very bright future for the programme. Robert Mack, Head of the Sponsorship Sub-Committee, said: “We are delighted to extend the programme and provide a new cohort of candidates with an incredible opportunity to gain career enhancing, professional qualifications - and receive industry and peer group recognition.”

ISLANDS

LEADING TOGETHER

At the forefront of legislative reform

Anthony Partridge (Ogier) and Robert Madden (Alexandria Bancorp) discuss new enduring powers of attorney law, considerations for ESG provisions in statute and collaboration between STEP and the legislature.

DESCRIBE STEP CAYMAN'S INVOLVEMENT IN LEGISLATIVE INNOVATION IN CAYMAN - HOW IS THIS ACHIEVED?

We have a STEP legislative drafting subcommittee that several members of the STEP Cayman Council are part of. We discuss areas for improvement and innovation in Cayman Island law and look at what needs to be improved. We meet regularly, usually once a month, with a running agenda on topical items for discussion. That agenda is pretty fluid, but is always changing depending on what is going on in the financial services industry. Historically, there has been a close connection between the branches of government that deal with the making of laws in industry, and that has really helped the jurisdiction respond to changes.

WHAT IS THE BACKGROUND AND SCOPE OF THE NEW ENDURING POWERS OF ATTORNEY LAW? HOW WILL IT BENEFIT

THOSE IN THE JURISDICTION?

Currently, the Cayman Islands has a Powers of Attorney Act which is limited by the fact that it only applies where a person has capacity to make decisions. Where an individual loses capacity, the power of attorney becomes null and void. The scope of the new enduring powers of attorney law will make it possible for ensuring powers to come into effect and become valid, even if a person loses capacity to make decisions for themselves. In terms of benefiting those in the jurisdiction, it means that the law will be brought into line with any other jurisdictions that have introduced enduring powers of attorney law, thus competing with other jurisdictions in a commercial perspective.

Anthony Partridge and Robert Madden

IS CAYMAN CONSIDERING INCORPORATING ESG PROVISIONS IN STATUTE?

There is not currently any legislative reform on the horizon for ESG provisions in the trust act and we are not considering putting anything in our trust statute presently. We don’t see a need to modify the local law in order to enable that, as we already have that flexibility within the current framework.

HOW IS THE LOCAL STEP COUNCIL WORKING WITH THE LOCAL LEGISLATURE TO ENSURE CONTINUED INNOVATION AND EVOLUTION OF CAYMAN'S PRIVATE WEALTH PRODUCT?

The STEP Council has an excellent working relationship with the Ministry. There is always a very welcome dialogue between Council and the Ministry when it comes to talking about innovation, evolution and any changes happening within the financial services industry. We hope that that dialogue will continue.

WHAT OTHER LEGISLATIVE CHANGES ARE ON THE HORIZON FOR PRIVATE CLIENTS?

Changes to the trust act are currently before the Ministry. The STEP Legislative Drafting Committee are considering potential amendments to the success act, the wills act and also further amendments to the foundation companies act.

“There is always a very welcome dialogue between Council and the Ministry when it comes to talking about innovation, evolution and any changes happening within the financial services industry.”

Routes to living in Cayman

Certificate of permanent residence for persons of independent means Requirements

• Applicant must have a minimum of CI$2,000,000 (US$2,400,000) invested in developed real estate; and

Certificate of direct investment Requirements

• At least CI$1,000,000 (US$1,200,000) invested in an employment generating business (which includes the ability to exercise substantial management control of the business, and requires at least 30% of the

• employees to be Caymanian unless overriding circumstances); and

• Sufficient financial resources to maintain themselves and their dependants

• Note that the applicant must also show that he or she has a substantial business track record or an entrepreneurial background including specific professional, technical and other knowledge relevant and necessary to run the relevant business.

• Must be physically present in the Cayman Islands for a minimum of 90 days in aggregate in a calendar year.

Residential certificate for a person of independent means* Requirements

• Investment of CI$1,000,000 (US$1,200,000.00) (at least half of which is in developed real estate) plus one of the following:

º Either a continuous source of annual income of CI$120,000 (US$146,341.46) without being employed in the Cayman Islands; or

º A minimum balance must be maintined in a Cayman Islands licensed institution of CI$400,000 (US$487,804.18).

• The residential certificate does not allow the holder to work in the Cayman Islands. However, it is possible for the holder to start a company engaged in exempt business (for example as an agent for overseas operations) and then hire himself or herself out as principal on a separate work permit held by the company, which gives the added benefit of permitting the applicant to work.

• Must be resident in the Cayman Islands for a minimum of 30 days in aggregate per calendar year.

• Sufficient financial resources to maintain themselves and their dependants

• Must be resident in the Cayman Islands at least one day per calendar year**

• Residency is granted without the right to work. However, the holder may subsequently apply to vary the certificate to allow employment for any employer, limited to occupations as specified by the department of immigration.

Residency certificate (substantial business presence) Requirements

• Ownership of at least 10% of an approved category of business*** (with a substantial presence in the Cayman Islands, being a business with a physical presence in the island, business premises, and at least four full time employees who are legally and ordinarily resident in the island for a minimum of nine months in any calendar year); or

• Employed in a senior management capacity of an approved business; and

• The applicant must exercise, or intend to exercise, substantial management control over the business and have a substantial business track record; and

• Must be resident in the Cayman Islands for a minimum of 90 days in a calendar year.

* Note that the financial requirements listed are for Grand Cayman – the requirements for Cayman Brac or Little Cayman are in a lesser amount (with an annual income requirement of CI$75,000 and a minimum investment of CI$500,000, half of which must be in developed real estate).

** Where the applicant intends qualify for naturalisation as a BOTC, the minimum number of days they must be resident in the Cayman Islands on an annual basis increases.

*** Approved categories of business include fund administration, brokerage services, investment management services, family office, and hedgefund incubation.

Kindly provided by Carey Olsen. Read the full article here.

For persons looking to obtain permanent residence in Cayman (outside of an employment related work permit).

Groundbreaking healthcare

The Cayman Islands is about to welcome a brand-new, groundbreaking addition to its healthcare system.

Health City Cayman Islands, which already features a 110-bed hospital in East End, Grand Cayman, has announced new and exciting plans which are set to change the future of Cayman’s health sector.

Located on the outskirts of the capital of George Town, the new hospital, Health City Camana Bay, will bring revolutionary changes to the Cayman Islands. The hospital, which is being built at a cost of US$100 million, will include several medical specialities which aren’t currently available in the Cayman Islands.

In the past, citizens who received diagnoses of certain medical conditions or required a particular treatment, would have to leave the island and seek medical attention elsewhere. This brand-new initiative means that more lives will be saved, no Caribbean citizen needs to go elsewhere for any advanced care and families won’t have to be separated. It instils trust that planning for the long term and investing in innovation and infrastructure will improve the lives of current and future generations.

Health City Cayman Islands was born from the vision of internationally-renowned heart surgeon and humanitarian Dr. Devi Shetty and is supported by Narayana Health Group of Hospitals. One of the key features of this groundbreaking project is the introduction of a Cancer Care Centre with comprehensive and advanced oncology offerings, a neonatal intensive care unit (NICU), an emergency pavilion and critical care unit, and a robust multispecialty program which includes robotic surgery.

Health City Camana Bay is scheduled to take 12 to 18 months to complete. However, the hospital’s radiotherapy services will be available within the first nine months. Upon completion, it will feature an advanced oncology department which will include medical oncology, hemato-oncology, surgical oncology, and radiation oncology with a medical linear accelerator.

The hospital’s specialised neonatal intensive care unit will be the only of its kind in the Caribbean, where NICU specialists will work closely with other Health City specialists who will all be available to consult on-site, as well as with the high-quality unit at the Cayman Islands Government Health Services Authority (HSA) to ensure no patient requiring neonatal care would be forced to go overseas to get this specialist treatment. With the construction of the new hospital, Health City has ensured that all existing major medicalcare gaps are covered to safeguard the ongoing health and safety of the Cayman Islands population.

Health City Cayman Islands Chief Business Officer, Mr. Shomari Scott, noted that the new hospital is being located closer to where the majority of the population live and work, which means more lives saved and a better quality of life for many who will benefit from the high-quality of care that will be extended from Health City’s original hospital in East End to the new convenient location in Camana Bay.

With work already in progress, Health City Camana Bay is scheduled to be fully operational in 2023.

Health City Cayman Islands new project will see a 70,000 sq ft, modern, state-of-the-art medical facility built on three acres of land to the south of Camana Bay.

“Health City Cayman instils trust that planning for the long term and investing in innovation and infrastructure will improve the lives of current and future generations.”

Making way for modern assets

The types of assets held in Cayman structures has significantly changed in recent years, and much of this is down to new investments in assets such as crypto. “10 years ago, the typical structure would have been a bank account, an investment account and perhaps some realty,” says Andrew Miller.

“What we are now seeing is the introduction of crypto. Our traditional clients are holding small proportions of it, but at the other end of the spectrum, our new, much younger clients, are 100% invested in crypto. We’ve also seen enquiries for nonfungible tokens in respect of art,” he adds.

As these alternative modern assets increase in popularity and as we see more of it in our structures both new and old, we, as trustees and advisors, need to make sure we understand how these things operate as an asset.

As part of that process, we need the backing and support of regulators as they bring in new legislation to support and encourage newer asset classes such as these. Cayman finds itself at the forefront of developing virtual asset service provider legislation.

For providers and advisors such as Ocorian and Bedell Cristin, regulation brings certainty to the market and reduces the opportunity for speculators to operate.

“It is very important that, as lawyers and trustees, we handle these new assets correctly,” says Conrad Proud.

“For us, a considered approach is key. It is possible some firms may have been in such a rush to get involved that they suddenly find themselves holding assets with a higher risk profile than they would prefer, depending on where the regulators set the bar.”

We still do an awful lot of work with traditional family trusts and purpose trusts for philanthropic purposes, but we are definitely seeing a lot more foundation companies that hold crypto assets.

Generally speaking, younger investors are more willing to embrace new ideas like foundation companies, segregated cell portfolio companies and exempted limited partnerships.

“We are used to holding such a wide class of assets - whether it is yachts, aeroplanes, stocks or companies - and crypto shares carry those same principles with the same questions; can we successfully manage it and is it something we can do in compliance with

regulations?” says Conrad.

“A trustee would want to ensure they can see the money coming in and out of the asset class and trace any conversions through the various exchanges. If not, it brings on a whole new risk profile and we would therefore have to consider carefully if it is something we can be involved in,” he adds.

Sometimes, it is vital that we call on experts and specialists within the luxury investment sector. When something is new and evolving at such a fast pace, we have to be very cautious when we are seeking out ‘expert’ advice. We do look for help, but it is important

Andrew Miller (Bedell Cristin) and Conrad Proud (Ocorian) explore how clients with investments in the luxury sector are shaping the future when it comes to investing in trusts and structures.

Andrew Miller

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that we do our homework and get the right advice from the right person from the outset.

“When dealing with younger clients who have made their money through crypto, we have to recognise that they are probably more educated on the subject than we are,” says Andrew.

“Traditionally, it was the other way around. The reality is that we all have a good understanding of global economics and what effect that will have on share prices, but with crypto, we have to acknowledge the fact that, in terms of their investment class, they may be more clued up than we are.”

We are living through cycles where we are beginning to acknowledge and understand these new assets and how they are affected by cyclical trends. If there was another Brexit or Covid-19 pandemic, we might have a better understanding of how these assets react to unpredictable events having seen how these things played out the first time. It’s about reacting and evolving as times change.

“The general direction is that more and more people are investing in modern asset classes, and even the most conservative trustee must acknowledge that they’re going to have to deal with this as part of an investment strategy,” says Conrad.

All of the changes in modern assets mentioned above have indeed affected our roles as trustees and private client advisors. These things are always a team effort and it means that organisations have to lean on internal or trusted external experts.

We are seeing so much wealth generated by young entrepreneurs globally, and trends are constantly shifting, meaning we have to ensure we are proactive and knowledgeable. Crypto is the main driver in terms of new types of investment at the moment, but you never know what is going to come through the door - we are also

seeing a big increase in acquisitions of private jets and super yachts. Seeing new money and younger investors is really encouraging when it comes to the long term sustainability of the industry. Crypto is going to become more and more important and these modern assets are increasingly a key component in trusts and structures.

Conrad Proud

Planning for vulnerability

There are a number of issues trustees need to consider when vulnerable clients appear, or are already in, a trust structure. One of the areas to be very mindful of is the potential for undue influence to arise.

“Vulnerability can arise as a result of age, mental impairment or physical impairment, to name the most obvious,” says Andrew Leggatt.

“But there is also a need to ensure that any vulnerable person is not put in a disadvantageous position simply because of a vulnerability,” he adds.

“A vulnerable person needs to be able to rely on those around them to ensure that resources that are intended to assist them are not diverted away.”

“With early identification of vulnerability, consideration must be placed on the understanding that common law advance directives are very difficult to implement,” Dr. Marc Lockhart adds.

“This is commonly the case because the person making the

advanced directive might not have access to the extensive knowledge that they may require to make an informed decision, or they may not have considered the current advances of medical treatment and what may be available for their particular illness or disorder.

“Therefore, understanding the laws in a particular jurisdiction relating to capacity is extremely important. Advising clients on this and continually assessing their knowledge is advised.”

There are ways in which experts can help to protect the integrity of the trust and the interests of the beneficiaries in these circumstances. Having a professional trustee at the helm is paramount when it comes to mitigating the issues that may arise. “Having a protector can assist in ensuring that all are treated evenly and properly looked after, and the courts can be useful in ensuring appropriate and timely decisions are actionable,” says Andrew.

“It has been my experience that people have been identified to

Dr. Marc Lockhart and Andrew Leggatt (Butterfield) discuss the role of trustees when it comes to vulnerable clients and how Cayman can assist in the planning and procedures.

act as a protector but as time moves on, they themselves might encounter certain challenges that limit their ability to perform that duty,” Dr. Lockhart adds.

“It is essential that an ongoing assessment of what is legally required, who could provide what is required, and any changes in medical treatment or local loss, be a consistent component of the overall planning process.”

MANAGING CAPACITY ISSUES

“As a trustee, one needs to be neutral, treating all parties equally and as intended. This is greatly helped by the overall depth of the relationship with all parties to the structure ,” says Andrew.

“From a medical perspective, I would suggest that trustees are informed that protocols and approaches to assessing cognitive and decision-making challenges of their vulnerabilities does exist,” Dr. Lockhart adds.

“In the Cayman Islands, for example, we have a Health Care Decisions Law (2019) that is very specific in terms of clarifying and addressing decisions and requests. There is also a Mental Health

Act, recently updated in 2022, which has clear mechanisms for addressing compromises in capacity. There are also other approaches using psychiatric and psychological assessments to have interested parties petition the courts for other legal instruments such as guardianship.”

“We are fortunate to have a cadre of professionals that have the medical and legal background to guide loved ones with preparation and management in situations where a client is no longer able to make an informed decision.”

Andrew Leggatt and Dr. Marc Lockhart

PLANNING FOR VULNERABLE CLIENTS

Cayman structures can assist with planning for vulnerable clients, and it is key there is flexibility to adapt and react to situations as and when they arise.

“Being consciously aware early on, especially in situations of vulnerability, that there is an existing legal framework such as the advanced directives law, the mental health law together with knowledgeable clinical providers, can assist those with established or perceived vulnerabilities,” says Dr. Lockhart.

“Vulnerability can come into play at any age or time in a person’s life, so having the tools in place to deal with vulnerability, should it arise, is very helpful and goes some way to lessen any diminishment in the quality of life experienced and at the very least appropriate structuring allows for continuity of care and base need satisfaction,” Andrew adds.

There are unique tools built into Cayman structures when it comes to assisting in circumstances where a private client loses capacity.

“The most obvious tools being Advanced Health Care Directives and STAR trusts, which can be tailored to make protection of vulnerable beneficiaries the purpose of the trust. The courts are also always available, ensuring that a private client who has lost capacity, without appropriate planning, has the legal framework put in place to allow for appropriate and proper care or management as needed,” says Andrew.

“In the Cayman Islands, we are fortunate to have a cadre of professionals that have the medical and legal background to guide loved ones with preparation and management in situations where a client is no longer able to make an informed decision,” Dr. Lockhart adds.

With clear communication and thorough planning, trustees can

help protect clients against future vulnerabilities in terms of wills, trusts, POAs and Advanced Healthcare Directives.

“Planning is vital and should include all aspects of what we describe as psychiatry as your personal information,” says Dr. Lockhart.

“This would include, not just your will, but an advanced directive including a comprehensive list of your assets. You should also include insurance information and a complete record of your medical history with a list of which physicians you have seen in the past so that there can be a collection of medications taken or treatments provided. These records should be accessible if required, since this can be critical for clinicians trying to assess vulnerability and capacity.”

“The big thing about vulnerability, unless one is born with a vulnerability, is that it can happen at any time and at any stage in a person’s life,” Andrew adds.

“A trust can be helpful in allowing a person to have planned the means of supporting and caring for a vulnerable person after the natural primary guardian or care provider has passed on.”

“With clear communication and thorough planning, trustees can help protect clients against vulnerabilities in terms of wills, trusts, POAs and Advanced Healthcare Directives.”

To make a difference, we think differently.

STEP Student of the Year

transactional nature you have in larger jurisdictions.”

The calibre of professionals in the financial services industry is incredible in the Cayman Islands and it is why the jurisdiction continues to be a global leader. On top of that, it is a wonderful place to live, with great weather, a safe and clean environment and fantastic bars and restaurants.

With encouragement from his executive coach, Alistair decided to study for the STEP qualification, and he has never looked back.

“I only discovered the trusts industry when I moved to Cayman and grew more and more fascinated with it,” he says.

“The clients I worked with, and people I met in the industry, were so passionate about it and it captivated me. I’m delighted that I made the jump. It’s just the beginning for me and it’s an industry I hope I can continue working alongside, or in, for years to come.”

The STEP certification is not only well regarded in Cayman, but it is an internationally recognised qualification that sets down solid groundwork for a successful career in the trusts industry. Introducing STEP’s Student of the Year, Alistair Mills.

Alistair, originally from Scotland, moved to the Cayman Islands in 2017 after a stint in Edinburgh as an international recruiter assisting accountants moving to over 30 countries around the world.

He currently works with SteppingStones Recruitment and focuses on the financial services market in Cayman.

Alistair was looking at an international career move and explored various locations before settling on the Cayman Islands.

“I had recruited several audit professionals into the island, and the more I researched, the more I knew it was the right place for me,” he says.

“The Cayman Islands boasts an incredible financial services industry, and as a recruiter it gives me the chance to build s trong relationships with my clients as opposed to the more

Not working within the trust industry while studying for the qualification has been a challenge for Alistair, but the online classes, e-learning and support networks available through the CLT have been paramount in his success.

“As I move on into the more complex exams, it is more challenging without the day-to-day experience. I should say, however, that I do have the benefit of the society in Cayman being so welcoming and several people have been incredibly helpful when I have been studying. It’s a big commitment, but it’s worth it.”

The STEP qualification is highly relevant and well regarded in the industry and many of the premier firms on the island are looking for the certification.

“Not having it won’t stop you getting into the industry, but in my opinion, without it you’ll eventually hit a ceiling. It is one of the qualifications that I deal with across all industries that truly holds the most weight as it is so relevant to the day-to-day role,” says Alistair.

“The biggest benefit is it will allow you to take your career to the next level,” he adds.

When asked what he would say to someone looking to obtain their STEP qualification, Alistair said:

“You can expect a challenging, fascinating and rewarding journey. It’s a qualification that has allowed me to be better in my role and challenged me to improve as a professional. The STEP network in Cayman is incredible. It is very welcoming and has some of the best professionals in the industry globally.”

STEP Cayman is proud to announce Alistair Mills as this year’s STEP Student of the Year.

Alistair Mills

Alan Milgate Senior Partner AMilgate@RHTrust.ky

Philippa Stokes Partner PStokes@RHTrust.ky

Tamara Corbin Partner TCorbin@RHTrust.ky

Amanda Bako Partner ABako@RHTrust.ky

A fond farewell

In the last quarter of 2022, the Cayman Islands legal community extended their best wishes to Sir Anthony Smellie KC who retired after almost a quarter of a century as Chief Justice of the Grand Court of the Cayman Islands. Originally from Jamaica, the Hon. Chief Justice has had almost four decades of legal experience in the Cayman Islands. He began his career in Cayman as Principal Crown Counsel and Solicitor General from 1983 to 1992 and served as Acting Attorney General from January to November 1992. He was appointed as a Judge of the Grand Court where he served from January 1993 to June 1998 when he was appointed Honourable Chief Justice. Development of the jurisdiction Throughout his time at the bench, Chief Justice Smellie presided over a period of almost constant legislative innovation of Cayman Islands trusts law including - among other things - the introduction of statutory provisions for reserved powers; for protection of Cayman Islands trusts from attacks by foreign elements; and for statutory validation of non-charitable purpose trusts, among other advances. All of these have since been adopted as common features of the other leading offshore jurisdictions. The facilitative

legislative framework within the Cayman Islands presents the offshore judges with a unique challenge - that of having to examine the validity of these new and exciting ways of using trusts, while retaining the ‘irreducible core’ of the trust concept and the flexibility of the court’s supervisory jurisdiction in relation to trusts. It is a challenge that the Chief Justice has noted: "requires the judges to keep pace with the rapid development of the complicated structures

IMPORTANT JUDGMENTS

Under the Chief Justice's stewardship, the judiciary has not only kept pace but has often led the way in developing important principles of trust law that are frequently followed around the trust world. While the highly regarded and carefully considered judgments delivered by the Chief Justice during his time at the bench are numerous, the following are some of the highlights for the jurisdiction given their importance to the clarification and development of trust law concepts within the Cayman Islands and elsewhere:

Shân Warnock-Smith KC (ICT Chambers) and Bernadette Carey (Carey Olsen) reflect on a successful quarter of a century on the bench for Sir Anthony Smellie KC, who has recently retired as Chief Justice of the Grand Court of the Cayman Islands.

which emerge from the fertile soil of the offshore trust world."

In Lemos v Coutts, the Chief Justice held that discretionary beneficiaries had the right to invoke the court's inherent jurisdiction to supervise the administration of the trust, and it was not necessary for them to show a proprietary interest in the trust property in doing so.

AN v Barclays Private Bank & Trust (Cayman) Ltd, is the first reported case in the Cayman Islands in which the court was asked to consider the validity and construction of a ‘no-contest’ provision in a discretionary family trust. The Chief Justice held that the clause in question was valid within defined limits that protect complaining beneficiaries from automatic exclusion if their claim is found not to be frivolous or vexatious and had probable cause even if it is not ultimately successful. That judgement is typical of the careful balance Chief Justice Smellie sought to strike between the competing interests of parties to a trust arrangement.

In MEP v Rothschild, the Chief Justice held that the Grand Court may authorise acts by a trustee, even if the trustee does not otherwise have a power within the relevant trust deed to act, if it is expedient to do so and provided that the predominant purpose of the action is trust administration (even if there may be an unintended, incidental change to beneficial entitlements).

In CIBC Bank & Trust Co (Cayman) Ltd v T & S, the Chief Justice considered an application to reform two STAR trusts in reliance on the cy-près doctrine and on the grounds of obsolescence of the manner of their execution. Noting that the proposed reforms to the trusts were far-reaching and transformative, the Chief Justice was satisfied that they nonetheless remained within the basic intention underlying the spirit of the settlor's gifts to the beneficiaries.

A NEW ERA

His Excellency the Governor, Martyn Roper, OBE recently said of the departing Chief Justice: “The quality and impact of his legal judgments and his commitment to justice has made an exceptional contribution towards building the Cayman Islands' strong reputation for good governance as a highly respected legal jurisdiction, underpinning a major financial services centre of great importance to the local economy.”

The STEP Cayman Islands Branch can only agree and extend its gratitude to the Chief Justice for the important part he has played

the development of what is now an extraordinarily comprehensive body of trusts and estates law within the jurisdiction that is admired and often followed internationally. While bidding this fond farewell, the STEP Branch of the Cayman Islands also extends a warm welcome to the Hon. Margaret Ramsay-Hale who was sworn in as the first female Chief Justice of the Cayman Islands on 25 October 2022 and will undoubtedly offer a similarly admirable contribution in the years to come.

“Under the Chief Justice’s stewardship, the judiciary has not only kept pace but has often led the way in developing important principles of trust law that are frequently followed around the trust world.”

in

Cayman property update

Home grown Sales Associate, Bianca Alberga (RE/MAX Cayman Islands (Alberga & Claassens Team)) gives us an update on the Cayman property market, how it continues to grow, upcoming developments that are leading the way, and what is in store for 2023.

HOW IS THE PROPERTY MARKET CURRENTLY LOOKING IN CAYMAN?

It is clear that Cayman continues to be the beneficiary from structural changes worldwide. Even though we are insulated as a jurisdiction, we are not fully immune from the global economic trends.

Historically, the Cayman Islands real estate market has proven to be resilient even during times of economic uncertainty. With that being said, the last three years have seen significant outsized increases and reversion back to a more normalised market should be expected. Structurally, the long-term market dynamics continue to remain strong as our population continues to grow. Given the island's appeal, it’s not surprising that many more family offices are beginning to set up in Cayman. We’ve all heard the famous Mark Twain quote: “Buy land, they're not making it anymore” - this rings even truer for such a geographical tiny island with truly finite land available. The availability of developable raw land remains extremely limited; this has led to initiation of redevelopment projects with more expected in the years to come.

WHAT ARE HIGH-NET-WORTH AND ULTRA HIGH-NETWORTH INDIVIDUALS LOOKING FOR IN THEIR PROPERTY SEARCH?

The single consistency I have found across all wealthy individuals exploring property in Cayman is their desire to embrace the island and absorb as much knowledge as possible. Given the time constraints most purchasers are under, I have made it my personal practice to provide full itineraries over consecutive days with one single client. This enables clients to gather their bearings and compare different neighbourhoods. Having been raised in Cayman and a witness to our island’s progress and development, I’ve found that buyers really appreciate a local perspective. For most, it’s much more than just a real estate purchase - it’s a new beginning.

WHICH LOCATIONS ARE PROVING POPULAR?

Seven Mile Beach continues to be the flagship location, but as the island has matured, so has its offering of exclusive neighbourhoods.

A few of the most popular with affluent newcomers include: Vista Del Mar, Crystal Harbor and Yacht Club. Since each area is so unique, I find it extremely important to build a true relationship with the client to best access what neighbourhood suits them.

ARE THERE ANY EXCLUSIVE NEW DEVELOPMENTS COMING TO THE MARKET?

Every so often there’s a developer with a vision that truly redefines an area. For those well versed in Cayman property, it is common knowledge how rarely opportunities present themselves on exclusive locations such as Seven Mile Beach. A newly released project brings six luxury residences to the iconic Boggy Sands Road, just a stone’s throw from Seven Mile Beach. The Sands brings the first exclusive rooftop terrace with private cabanas for each residence. This boutique offering provides ultra-luxury living nestled on one of the most exclusive addresses in the Cayman Islands.

WHAT CAN YOU TELL US ABOUT THE RESIDENCE BY INVESTMENT PROGRAM?

The Residence by Investment program continues to be a huge success for Cayman. In exchange for making a substantial investment into our economy, those who qualify are granted the right to permanent residency in the Cayman Islands. There are multiple avenues to achieve this status, but the most common tends to be through a minimum purchase of US$2.4 million in developed real estate. It is always recommended that a buyer consults a residency lawyer prior to any real estate purchase intended for residence.

HOW DO YOU EXPECT THE CAYMAN PROPERTY MARKET TO LOOK IN 2023 AND BEYOND?

The Cayman Islands is a unique and special place. We are welcoming, innovative, safe, financially secure, tax natural, well developed and located in the beautiful Caribbean.

The island will successfully navigate through the initial headwinds of 2023, reaccelerating in the second half of the year as global interest rates plateau and become more accommodating to buyers.

Protector powers: which view will ultimately prevail?

Emma Santiago and Andrew Peedom

Emma Santiago (Crestbridge) and Andrew Peedom (Collas Crill) discuss recent judgements on protectors and enforcers and why collaboration is key when it comes to ensuring the smooth administration of a trust.

The judgments in The X Trusts1 (from Bermuda) and The Piedmont Trust & Riviera Trust2 (from Jersey) in the latter part of 2021 have presented a conundrum for trustees and advisers of Cayman Islands trusts, given their competing views as to the nature and scope of a protector’s powers and the fact there is no decision of the Cayman courts addressing that issue. The judgments will no doubt form part of the Cayman courts’ deliberations when that becomes necessary.

The potential importance of the judgments cannot be understated. Trustees and their advisers should accordingly be mindful of them when advising on the establishment of new trusts and when reviewing trust deeds to determine the scope of a protector’s powers.

The judgments respectively determined that the ‘narrow view’ and the ‘wider view’ applied where a power is vested in trustees and can only be exercised with the consent of protectors. That is, the role of a protector:

1) is limited to it satisfying itself that the proposed exercise of powers by a trustee is one which a reasonable trustee could arrive at, such that it could consent to the trustee’s decision if it was within the trustee’s powers and was reasonable (‘the narrow view’); or

2) regardless of the trustee’s decision and the reasonableness of it, was to exercise its independent discretion in deciding whether to consent to the trustee’s proposed course of action (the ‘wider view’).

The competing judgments are controversial because those who establish a discretionary trust (by way of example) and seek to appoint a protector usually do so on the footing that the protector will act as an independent voice, taking into account the wishes of the settlor and the interests of the family. Protectors are usually trusted family friends or advisers who have an intimate knowledge of the family dynamic and often, a far greater insight into the needs and wishes of the family and the beneficial class. The wider view permits such an approach to the role.

Conversely and unless the trust deed expressly provides otherwise, trustees normally expect a protector to exercise a reasonable degree of oversight, but do not expect them to conduct their own independent enquiry with a view to rejecting a trustee’s proposal which is otherwise sound (ie. the narrow view). The argument in favour of this approach is that protectors do not enjoy equal status to that of trustees - their role is fundamentally different and is an ancillary role. If the wider view applied it would result in a duplication of roles. However, as the Royal Court of Jersey held, if

the role of a protector was simply to review a trustee’s decision in the same way that a court would then their role would be ‘almost redundant’.

The other interesting feature of the decisions is that the ‘narrow view’ was determined by a judge of the Grand Court, Mr Justice Kawaley3, so there is a distinct possibility that similar reasoning will be applied by the Cayman courts4.

In practical terms, now is a sensible time for trustees and their advisors to review trust documents and if necessary, revisit whether the section addressing a protector’s powers should be amended to remove any ambiguity. This will ensure there is sufficient clarity around the nature and scope of such powers and may ultimately avoid the need for court intervention.

From a trustee’s perspective, as the appointment of a protector and the extent of their powers is often fundamental to the smooth administration of a trust, it is important that a trustee fully understands what the settlor’s wishes are at the onset of the relationship. A trustee should obtain clear instructions as to what the intended scope of the protector’s role is and ensure that this is reflected in the drafting of the trust documents. This includes what is meant by the words used and what is in contemplation at the time of drafting. It is also worth considering setting out in supporting documents the scope of such powers, which may ultimately need to be relied upon if their scope is challenged. From a protector’s perspective, the settlor’s expectations about how they will fulfil that role should be made abundantly clear before acting as a protector. They should also ensure that appropriate indemnities are included in the trust documents given the possibility that the wider view may be applied in Cayman. The other key consideration arising from these decisions is to ensure that protectors are kept fully informed of actions which a trustee intends taking, particularly where the exercise of a trustee’s powers is proposed. This includes ensuring that the protector is provided with all relevant information to enable them to undertake their own analysis of what is proposed and to understand the rationale for it. Collaboration, rather than obstruction, is key. It may also assist in ensuring that the need for determination by the Cayman courts is avoided.

1 [2021] SC BVA 72 Civ 2 [2021] JRC 248 3 Who was sitting as an Assistant Judge in the Supreme Court of Bermuda 4 At the time of writing there is an extant appeal from that decision

Family office innovation

a place to live and invest.

more focus on private wealth; ultra high-net-worth individuals and their family offices. That is not just in terms of structuring for business and personal assets, but also families physically relocating and/or putting in place contingency planning that would allow them to quickly relocate if certain events occur in their existing jurisdictions.”

“There is increased interest in the Cayman Islands as a jurisdiction for relocation and diversification by single family offices, particularly from Canada, LATAM and Europe,” says Sue Nickason.

“Due to Cayman’s proximity, timezone, British Overseas Territory status, and its consumption base tax system.”

WHAT IS DRIVING THESE TRENDS?

“Family offices are becoming more professional,” Carrie starts. “They are now more aware of the risk of failing to transfer wealth to the next generation. Many families want to engage earlier with sophisticated advisors who can assist in generational planning. “It is the next generation who are demanding ever-increasing scrutiny on sustainability and ESG principles. We do a lot of work on this, particularly around philanthropy and getting the younger generations involved in areas that they are really passionate about. “The Cayman Islands saw a number of family offices relocate during Covid, when it was one of the only places in the world where you could live a ‘normal’ life. The Cayman Islands are a modern sophisticated jurisdiction and has become a very desirable jurisdiction for many families.”

RECENT TRENDS IN THE CAYMAN ISLANDS FAMILY OFFICE SPACE

“In recent years there has been very significant growth in the family office space, not just in the Cayman Islands, but throughout the world, unprecedented wealth creation and the very broad definition of ‘family office’ has led to this. More recently, the focus has been on the next generation; preparing family members for succession and the transfer of wealth, and also an increased demand for accountability on sustainability,” says Carrie Harding.

“The Cayman Islands has always been very popular for structuring, due to the tax neutrality it offers and the high calibre of local professionals, although historically that was weighted around the structured finance and investment funds space.”

Carrie continues: “In recent years, the Cayman Islands have seen

“Cayman’s value proposition is increasingly appreciated in a volatile world,” says Sue.

“Its government, sound judiciary, strong credit rating, low debt, vibrant and diversified local economy that fosters innovation and a strong sense of community and collaboration in the private sector - these are all attributes that are important to families and which are being recognised as important for future planning.”

HOW OUR ROLES ARE CHANGING AS A RESULT

As new trends come in, the roles of professionals within the industry are constantly changing to keep up with demand.

“We are spending more time reconnecting in person with private client advisors and family office representatives,” Sue starts. “This is a relationship-based sector and nothing compares to

Carrie Harding (Panthera International) and Sue Nickason (Dart Family Office) discuss how recent global trends are encouraging international families to choose the Cayman Islands as

Carrie Harding

meeting personally to exchange ideas and information. There has been an increased focus on executing planning from ‘lessons learned’ from the pandemic, particularly as it relates to global mobility and risk mitigation.”

“There are two main focuses in my role with Panthera International,” says Carrie.

“The first was to set up a contingency plan for UK families who needed a structure in place whereby they can quickly relocate to the Cayman Islands if they needed to. The second is that we have discovered that there is a real desire and need for a true multi-family office providing independent private office services including comprehensive real time reporting of a client’s entire portfolio, treasury, structuring, finance, asset management and next generation planning - for the UHNWs who are already here in the Cayman Islands.

“It is necessary for both families and their service providers to continually evolve as the social, economic, political, geographical and technological environment changes. The service providers in the Cayman Islands are all adapting and broadening their offering. It is an ever growing space - in terms of what the families need and what service providers are able to provide.”

HOW CLIENT STRUCTURES AND PROPERTY DEMAND HAS CHANGED

The traditional corporate and trust structures that have been used in the Cayman Islands in the past are still very relevant today.

“The difference is the perceived interest versus the actual interest in the Cayman Islands as a place to come and live for the UHNWs - more families are now actually relocating here to live,” says Carrie.

“Families are setting up Cayman trusts and companies, getting a local adviser team in place and buying properties so that they or their children can come and live here either now or in the future.

The Cayman Islands offer the flexibility to be able to structure here and get comfortable with the jurisdiction and then over time expand operations if appropriate.”

“A fairly recent change in Cayman was the introduction of Foundation Company law (passed in 2017), which has proven to be of interest to a growing number of families and ultra high-networth individuals,” Sue adds.

“There is significant demand for residential property as family office representatives look to earn permanent residency in Cayman and invest in the island, and for commercial office space once they establish a physical presence here.”

THE ROLE OF INCREASED REGULATORY AND REPUTATION SCRUTINY

“For me, this is one of the most significant and most influential areas,” says Carrie.

“Some of the biggest risks facing family offices are increased transparency, increased regulation, increased compliance, increased governance - and with that, increased costs.

“Nobody in today’s world can afford not to be compliant with the requisite governance and regulation and it is essential to have best practice reporting in place.

“When families arrive in the Cayman Islands they realise how

sophisticated it is as a jurisdiction, that it has been successful in attracting and retaining talent and that it offers a world class robust regulatory and AML regime, anyone who has tried to open a bank account here in recent years will be able to testify to that!

“The current geopolitical environment and fiscal uncertainty in certain jurisdictions is also contributing to the shift. When UHNW families get concerned about their current jurisdiction, they demand a robust contingency plan, from a country that they trust. The Cayman Islands, as a British Overseas Territory, offers that.”

THE CAYMAN ISLANDS AS A UNIQUE AND ATTRACTIVE JURISDICTION

Cayman is a trifecta of quality of people and places when it comes to professional services and regulatory and political environments.

“It is unique in the Americas in this regard and its proximity to Canada, the US and LATAM is an important consideration for families,” says Sue.

“Additionally, the ‘buzz’ that is happening regarding new opportunities in sectors such as tech, film and healthcare are inspiring others to take note and consider Cayman as their jurisdiction of choice.”

“Despite being home to many UHNWs, Cayman is a very discrete place where individuals can quietly live and get on with their lives,” Carrie adds.

“It is a well-connected jurisdiction, with excellent infrastructure and healthcare, incredible restaurants and a fantastic lifestyle.”

Sue Nickason

Stylish sundowners

Door No.4 is the new Caribbean-inspired cocktail bar everyone is talking about. Tucked behind the beautiful blue waters of Seven Mile Beach, it’s a seriously stylish drinking and dining destination.

Door No.4 is a stylish new cocktail bar serving an exquisite menu of refined cocktails using fresh, locally sourced ingredients - and more recently, a small yet impressive food menu.

“Our aim was to create an approachable cocktail bar that didn’t take itself too seriously,” says owner Simon Crompton.

“We wanted to have fun with it and offer something unique; and from the feedback we’ve received so far, I think we’ve achieved that.”

With its prime location within The Grove complex, right at the heart of Seven Mile Beach, Door No.4 is in a perfect position and brings something new and exciting to Cayman’s food and drink scene.

“In terms of design, we worked with a lot of people here in Cayman including IDG, one of the island’s longest-standing interior design firms, and John Bird from Martlet Design who did an amazing job building our iconic bar. Everything was designed, built and made here, which is something we’re incredibly proud of,” says Simon.

Door No.4 is a real head-turner in terms of its unique style and offering.

“We’ve had a lot of compliments on the design of the bar with the most common remark being that they can imagine this bar being

anywhere in the world - be it New York, Melbourne, London or Paris,” says Simon.

“We knew we had a great, versatile design, but we wanted to bring in a bit of Caribbean influence with the food and the drinks on the menu,” he adds.

The cocktails are the star of the show here, but you will also find an array of beers, wines and spirits, as well as a range of small plates, mains and sharing platters.

From small snacks like truffle popcorn, marinated olives and mini grilled cheese, to larger plates such as crispy octopus, miso duck ramen and smoked braised short rib, there’s something for all tastes and preferences.

Door No.4 is a very welcome addition to the hospitality industry in the Cayman Islands, and with lots in the pipeline for 2023including a programme of events and classes - it will continue to shine a light on The Grove as a desirable leisure destination on the island.

Trust and fiduciary services for ultra-high net worth individuals, families and global businesses.

Peter Goddard peter.goddard@imgtrust.ky

Maxine Bodden maxine.bodden@imgtrust.ky

imgtrust.ky

A law firm like no other

• Stewarts is the UK’s leading litigation-only law firm with 80 partners across 15 practice areas

• Our specialist Trust and Probate, Fraud, Insolvency and Asset Recovery litigators regularly coordinate proceedings in multiple jurisdictions

• We advise exclusively on complex, high value and high profile global disputes

“A great combination of powerful intellect, experience in the field, tactical thinking and personable individuals…”

James Price, Head of Trust & Probate E jprice@stewartslaw.com

Marcus Parker, Trust & Probate Partner

E mparker@stewartslaw.com

stewartslaw.com

Return of the STEP Cayman international wealth structuring forum

After a three-year hiatus due to international travel and border restrictions, the STEP Cayman Islands Branch is pleased to once again be able to hold its International Wealth Structuring Forum at the Ritz Carlton, Grand Cayman.

Past conferences have been a huge success for the Branch, and the Forum itself is widely known in the international private client community as a must-attend event in the calendar. When last held in January 2020, the Forum attracted a record number of delegates from around the world including the United Kingdom, the United States, Switzerland, and from across Latin America and Asia. Adding the Forum’s success, it was sponsored by a wide range of local and international advisory firms, banks, law firms, and high-net-worth representatives. Similar success is anticipated for 2023. This year, there is a lot to discuss particularly in light of just how much the trusts industry – and the Cayman Islands more generally - has grown and evolved over the past three years. The Forum has been designed around the theme of evolution, with topics touching on how advisors must keep pace with changing client needs and ever-increasing cross-border legislative developments. Sessions have been prepared to help delegates and their

High-Net-Worth clients to navigate a tumultuous global environment and protect their wealth safely into the future. Also front of mind is the growth of new asset classes including digital assets and, as our population ages, sensitively caring for vulnerable family members and managing their planning. And, as an international financial centre, delegates based in Cayman or working with Cayman structures, will no doubt benefit from updates from closely connected jurisdictions such as the United Kingdom, the United States, and Canada – as well as sessions on regulatory developments and managing litigation (and reputation) when matters might take a turn for the worse.

The STEP Cayman Islands Branch Council extends a very warm welcome to our local and international delegates and looks forward to enjoying the balmy winter temperatures with our visitors during our Forum Welcome Drinks and, at the conclusion of what will no doubt be a successful conference, at our Farewell Beach Party.

Daniel Martineau

Group Executive Chairman

dsm@SummitTrustGroup.com

Stella Mitchell-Voisin Group Managing Director smv@SummitTrustGroup.com

James Long Director, Client Services

jl@SummitTrustGroup.com

David Mackintosh Senior Trust Officer

dma@SummitTrustGroup.com

Summit Trust (Cayman) Limited is a boutique trust services company located in the Cayman Islands, founded in 2008.

Summit Trust provides continuity in personal relationships and the orderly passing of family wealth for high net worth individuals who require offshore trust and company management services.

Because Summit Trust is committed to an independent trust administration policy, it is free to work with your existing financial advisers, lawyers, bankers and asset managers, or introduce you to suitable advisers if you do not yet have your preferred team.

We are not expecting to be the biggest offshore services provider, but we are striving to be the best.

720 West Bay Road KY1- 9006 - PO Box 601

Grand Cayman - Cayman Islands

Tel. +1 (345) 623 - 2066 @: jl@summittrustgroup.com www.SummitTrustGroup.com

Introducing: Island Primary

Island Primary, a brand new private primary school scheduled to open in September 2023, is giving families another reason to relocate and settle in the Cayman Islands.

There are many reasons why families are choosing to relocate to the Cayman Islands. The tropical climate is an obvious draw, but other factors include low crime rates, good infrastructure, a stable government and an exceptional education system.

Cayman’s private education sector continues to thrive, offering first-class teaching through the British and American curricula, as well as state-of-the-art facilities, leading technological advances and a number of exciting extra-curricular activities for children to enjoy both during and around teaching hours.

The private sector is guaranteed to offer the best education for families selecting a school for their children in the Cayman Islands; and with new establishments such as Island Primary opening its doors to up to 350 children aged 4-11, we are seeing a rise in families looking to settle in the Cayman Islands, enrolling their children into inspiring schools that will allow them to transition effortlessly from their education overseas.

Offering the best global standards in education, Island Primary will provide exceptional opportunities for expat families moving to Cayman. With state-of-the-art amenities and a solid global infrastructure in place, the aim is to provide a dynamic learning

community committed to actively engaging with, and contributing to, an ever-changing and diverse local and global society. With a highly experienced and strong leadership team including UK and US teachers as well as educators from Cayman, Island Primary is committed to offering a well-rounded education that gives children the skills they need to fulfil their potential both in and out of school.

Ensuring it always has one eye on the future, the school has been sustainably designed with nature learning central to its core, encouraging children and staff to become active, responsible and engaged citizens.

From sports, art, music, crafts and more, Island Primary will be offering a well designed collection of afterschool clubs and co-curricular programming to expand on your child’s experience. Monthly tuition for the 2023/24 school year is $1,570.00. Tuition fees are established on an annual basis for the period September to June inclusive.

Applications are now open for the 2023/2024 school year and can be submitted via an online application at: islandprimary.org.

Our Trusts and Private Wealth practice

Advising private clients is at the heart of our business. We have an experienced team of lawyers who advise local and international private clients and trustees in matters of trusts and estate planning, asset protection, family office, probate, succession and the resolution of trust and estate disputes. For people looking to relocate to the Cayman Islands, we provide practical and pragmatic advice on the relocation and immigration process.

We like to get to know our clients and tailor our advice to meet their objectives. We work with many private clients, families and their advisers, to find strategic and practical solutions to manage their wealth and protect their interests.

To find out more, please contact one of the lawyers listed.

Bernadette Carey

Partner, Cayman Islands

D +1 345 749 2025

E bernadette.carey@careyolsen.com

Chris Duncan

Counsel, Cayman Islands

D +1 345 749 2057

E chris.duncan@careyolsen.com

Graham Stoute

Counsel, Cayman Islands

D +1 345 749 2014

E graham.stoute@careyolsen.com

Sarah-Jane Hall

Associate, Cayman Islands

D +1 345 749 2076

E sarahjane.hall@careyolsen.com

LAW SPECIALISTS

“

Its trusts and fiduciary group is in a class of its own.”

W rld-leading

W rld-leading

Ogier’s Trusts Advisory Group, a team specialising in private client, dispute resolution and corporate law, draws together experts with substantial experience across each of Ogier’s locations in the Caribbean, Asia and Channel Islands.

Ogier’s Trusts Advisory Group, a team specialising in private client, dispute resolution and corporate law, draws together experts with substantial experience across each of Ogier’s locations in the Caribbean, Asia and Channel Islands.

Services and areas our team covers:

Services and areas our team covers:

• Advising on resolving breaches of trust

• BVI VISTA and purpose trusts

• Advising on resolving breaches of trust • BVI VISTA and purpose trusts

• Cayman Foundation Companies

• Cayman STAR trusts

• Charitable purpose trusts

• Corporate advice to private clients

• Court applications concerning trusts

• Discretionary trusts

• Employee incentives and employee benefit trusts

• Estate planning • Family Offices

• Pensions • Private trust companies • Probate and Estate administration • Regulatory • Trust advice

• Trust disputes

• Cayman Foundation Companies • Cayman STAR trusts • Charitable purpose trusts • Corporate advice to private clients • Court applications concerning trusts • Discretionary trusts • Employee incentives and employee benefit trusts • Estate planning • Family Offices • Pensions • Private trust companies • Probate and Estate administration • Regulatory • Trust advice • Trust disputes

James Campbell

James Campbell

Partner, Jersey

Partner, Jersey

“Vast amount of knowledge and technical ability.”

“Vast amount of knowledge and technical ability.”

Chambers HNW Guide, 2022

Chambers HNW Guide, 2022

Rachael Reynolds KC

Rachael Reynolds KC

Partner, Cayman Islands

Partner, Cayman Islands

“The best trust litigator in Cayman.”

“The best trust litigator in Cayman.”

Legal 500 Caribbean, 2023

Legal 500 Caribbean, 2023

Matt Guthrie

Matt Guthrie

Partner, Guernsey

Partner, Guernsey

“Stand out trust lawyer and one of the best Guernsey practitioners.”

“Stand out trust lawyer and one of the best Guernsey practitioners.”

Legal 500 UK, 2023

Legal 500 UK, 2023

Grace Gao

Grace Gao

Senior Legal Manager, Hong Kong

Senior Legal Manager, Hong Kong

Rising star

Rising star

IFLR 1000, 2022

IFLR 1000, 2022

Legal and Corporate Services

Legal and Corporate Services

Beijing British Virgin Islands Cayman Islands Guernsey Hong Kong Ireland Jersey London Luxembourg Shanghai Singapore Tokyo

Beijing British Virgin Islands Cayman Islands Guernsey Hong Kong Ireland Jersey London Luxembourg Shanghai Singapore Tokyo

Anthony Partridge

Anthony Partridge

Partner, Cayman islands

Partner, Cayman islands

“A pleasure to work with.”

Chambers HNW Guide, 2022

“A pleasure to work with.” Chambers HNW Guide, 2022