Trust Cayman 2021 - Issue 2

TRUST T R UST Cayman

2021

CAYMAN COMMITMENT

Discover why now is the time to build a Cayman family office

MODERN STRUCTURES

2021

The concepts and changes encountered by Cayman trustees in 2021 and beyond

William Walmsley - Senior Partner William.Walmsley@rawlinson-hunter.com.ky

Alan Milgate - Partner

Tamara Corbin - Partner

Amanda Bako - Partner

Philippa Stokes - Director

Alan.Milgate@rawlinson-hunter.com.ky

Tamara.Corbin@rawlinson-hunter.com.ky

Amanda.Bako@rawlinson-hunter.com.ky

Philippa.Stokes@rawlinson-hunter.com.ky

STEP INSIDE

Welcome

It gives me great pleasure to welcome you to the 2020/2021 STEP Cayman magazine. We are proud to again produce this magazine to highlight not only the trusts industry but also the larger financial services industry in the Cayman Islands. This is even more profound given the difficulties and hardships of 2020 experienced worldwide due to COVID-19.

2020 has been a year of upheaval in many ways and we have had to quickly adapt and transition into new ways of living and working against the backdrop of a volatile global economic outlook.

Businesses have tested and stretched their contingency plans and are looking ahead to ensure the strategies they now implement will allow them to continue to operate in a constantly changing and somewhat uncertain legal and regulatory landscape.

Operational resilience and a clear, non-conventional strategy will be essential for businesses to survive and thrive in 2021 and beyond. Protecting public health remains the priority, but many organisations are still facing challenges including disruption to their supply chains, returning to the workplace and implications under contractual arrangements. Many of these issues are dealt with on a cross-border basis.

We too, in the Cayman Islands, have endured our share of challenges. But, we are very fortunate thanks to the early actions taken by our Government in response to the virus. The financial services industry has demonstrated its strength and resilience and the Cayman Islands remains the jurisdiction of choice for establishing trust arrangements, both for private wealth structuring

purposes and for complex corporate structures.

COVID-19 has shown us that we are truly a global economy and that with challenges come opportunities. We must embrace these challenges and learn how best to use them to continue to service our clients to the highest standard.

As can be seen from these pages, the future of the trusts industry in the Cayman Islands remains vibrant. We are able to discuss openly the issues surrounding trusts and wealth management from a global perspective, particularly looking at the Cayman Islands’ sophistication in this area, its transparent regulatory infrastructure and the role of the Cayman Islands’ trusts in the global economy.

We are also able to highlight the talent and highly qualified experts and professional service providers that call the Cayman Islands home.

Although we are not able to host our STEP Cayman International Wealth Structuring Forum in 2021 due to COVID-19, we will be hosting a series of webinars which we hope you will attend.

I hope you enjoy reading this issue of STEP Cayman magazine.

MAXINE BODDEN Chair, STEP Cayman Islands

TRUST CAYMAN / 3

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

Contents

STEP Cayman Islands Published by Sidekick and Remember Media on behalf of STEP Cayman Islands

PO Box 247 10 Market St Camana Bay Grand Cayman Cayman Islands KY1 1006 emma@sidekick.ky sidekick.ky +44 7743 910 347

6 How trusts and trustees are pivoting in the political landscape

10 An important update on regulation and compliance

chris@remembermedia.co.uk remembermedia.co.uk +44 191 500 7850 All contents copyright Š2020 STEP Cayman All rights reserved.

Photography: Guy Waller www.guywaller.com 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 2020.

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

12 Why Cayman is a vibrant place to call home

16 The challenges faced in a global pandemic

24 A robust and refreshing education system

DISCOVER MORE

28 The future of private air travel on Cayman

30 The draw of the Cayman Islands

40 All you need to know about the culinary capital of the Caribbean

34 A look at ‘new age’ concepts and changes

44 The Cayman property market at a glance

42 Let us take you on a Cayman wine journey

48 In safe hands with a trusted judiciary

TRUST CAYMAN / 5

SAFE HANDS

Restructuring through troubling times

By Bernadette Carey and Chris Duncan, Carey Olsen and Andrew Leggatt and Stuart Bray, Butterfield Trust (Cayman) Limited Events across the globe during 2020 have given a completely new dimension to the term ‘troubling times’, with the wealth management industry - and the international community at large - dealing with the impact of a global pandemic, large-scale climate concerns, and a tumultuous political landscape

T

hroughout this upheaval and uncertainty, it is incumbent on those dealing with the wealth and assets of others to not only steadfastly protect those resources but also to ensure their own position as a fiduciary remains robust.

TRUST ASSETS IN DISTRESS Private wealth structures are certainly not immune from distress, and assets held by trustees can quickly plummet in value or, in the case of entities, face insolvency. A trustee facing an insolvency event within its structures must act promptly, carefully, and with close regard to its fiduciary duties if it is to avoid significant losses or liabilities. But the strain is not only a financial one; the trustee must also take care to manage client distress, particularly where there is a divergence of opinion over potential resolutions or a blind resolve on the part of the family to cling hopelessly to a lost but sentimental cause. Some trust deeds will include a process allowing the trustee to engage an insolvency practitioner to assist it as necessary to wind up aspects of the trust structure but, in other instances, it may be left to the trustee to wade through a minefield of contention, conflict, and emotions as generations of wealth face existential threats.

RESTRUCTURING THE TRUST At its most basic, the process of administering a trust in distress 6 / TRUST CAYMAN

may involve a more general restructuring of the trust and its underlying entities. Often, for practical reasons, there will be a need to make changes to the structure to ensure it remains fit for purpose in a turbulent market (either through the winding down of current entities or the introduction of new ones). Other changes may be more technical in nature: it may be necessary to decant assets from a trust, or to vary its terms, to avoid any unintended or catastrophic consequences. Ordinarily, the trust deed will include mechanisms to facilitate a restructuring. But, if a trustee does not have the necessary powers (or they are not clear or wide enough to achieve the desired result), the court may be called on to exercise its inherent supervisory jurisdiction to assist in the administration of the structure.

A successful restructure depends heavily on open communication, and all parties connected to the proposal must be made fully aware of what is happening, what advice may be required, and have their expectations managed through the process. Restructurings can be complex: by way of example, a recent restructuring undertaken in

“In reliance on careful restructuring, robust and strategic decision making by the trustee and its advisors, and protections built into the trust deed, troubling times can often be safely and amicably weathered.”

Stuart Bray, Director - Private Clients, Butterfield Trust (Cayman) Limited

Andrew Leggatt, Managing Director, Butterfield Trust (Cayman) Limited

SAFE HANDS

Chris Duncan, Counsel, Carey Olsen & Bernadette Carey, Partner, Carey Olsen

Cayman involved a trust proposed to be distributed in full to one of the living beneficiaries - the others being minors - a change of domicile for the family from a tax neutral to a high tax jurisdiction, health issues (not COVID-related, but taking place within the height of the pandemic) and an investment portfolio decreasing in value.

Comprehensive and full advice on these challenges was required across all jurisdictions and involved balancing the implications of doing nothing against those of following the restructuring plan proposed, as well as a consideration of variants on the proposed plan so that the best decision could ultimately be taken with the involvement of all parties.

RELIANCE ON THE TRUST DEED Restructuring and insolvency events can also result in claims directed to the trustees in respect of losses suffered by the trust.

Helpfully, well-drafted trust deeds will include a variety of provisions that should give comfort, and support, to trustees. The most common of these provisions is an Anti-Bartlett provision, which operates so that responsibility for management and decisionmaking in respect of the investment of trust assets is transferred to an entity other than the trustee. In those circumstances, the trustee will likely do no more than hold the shares in the nominated company, with the directors of the underlying companies being

responsible for the investment of the assets. However, Anti-Bartlett clauses can have limitations, and they are not necessarily a ‘get out of jail free’ card, authorising the trustee to sit idly by and watch assets reducing when the directors are being reckless within the scope of their powers. Their limitations should therefore be reviewed carefully. Nearly all trust deeds contain exoneration or limitation of liability provisions, which operate to limit a trustee’s liability save for that resulting from the trustee’s own gross negligence, wilful default or fraud. The precise drafting can and does vary widely from trust to trust, leading to differences in the protection such clauses confer on trustees. If well-drafted, the effect of the provision will be that the trustee will not be personally responsible for any liability that exceeds the value of the trust assets.

CONCLUSION While tumultuous global conditions can make life difficult for trustees and private clients alike, a trust structure in distress should not automatically cast doom and gloom over the parties.

In reliance on careful restructuring, robust and strategic decisionmaking by the trustee and its advisers, and protections built into the trust deed, troubling times can often be safely and amicably weathered.

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ABOUT STEP

STEP: What is it?

What are the benefits?

And how can I become a member?

ABOUT STEP STEP is a global professional association for lawyers, accountants, trustees and other practitioners who help families plan for their futures.

The professional body works to improve public understanding of the issues families face when planning inheritance and finances, and promotes education and high professional standards among its members.

the ideal business development opportunities that can add real value to you, your business and your clients.

STEP’s Special Interest Groups provide you with the opportunity to exchange knowledge with like-minded people who work in your specialist area, all around the world.

You also receive discounts on third party products and services including courses, books, Professional Indemnity Insurance and London hotels.

BENEFITS OF BEING A MEMBER OF STEP Full STEP members are internationally recognised as experts in their field, with proven qualifications and experience. You’ll be part of a global network of over 21,000 practitioners who help families with a wide range of services including drafting wills to advising on issues concerning international families, protection of the vulnerable, family businesses and philanthropic giving.

STEP provides confidence to families by setting standards, training and educating its members, and upholding those standards.

A STEP membership demonstrates your commitment to high professional standards and continued professional development.

Ultimately, this will inspire confidence, respect and trust from an employer, a client and the wider community.

Members can benefit from an extensive suite of qualifications from certificates to STEP’s diploma programme, gaining specialist knowledge and skills to help you further develop your career.

You also have access to technical resources including the monthly STEP Journal and quarterly TQR, as well as briefing notes, research reports and regular news updates.

There are also seminars, conferences and web events on a local, national and international level to provide technical updates from leading experts to ensure all STEP members are at the top of their game.

Full members also have opportunities to get involved in the organisation, from writing for STEP’s publications and speaking at events, to contributing to technical and policy debate, enabling you to raise your professional profile.

You’ll get access to STEP’s online member directory which works as the ultimate networking tool, ensuring you’re visible to both potential clients and other professionals who may require your services.

Our international events and online communities bring together practitioners from a wide range of fields and jurisdictions, providing

STEP CAYMAN The Cayman Islands branch of STEP was established in 1997 and currently has more than 300 members. As a leading financial centre, and with a wealth of statutory and jurisprudential guidance on trusts and estates law, the Cayman Islands’ trust industry is vibrant.

The branch continues to facilitate the STEP Foundation and Diploma exams and holds monthly evening lectures for its members, student members and prospective members to attend.

STEP Cayman is also focused on promoting the Cayman Islands, both as a jurisdiction of choice for private and institutional clients and more widely, locally and internationally.

8 / TRUST CAYMAN

For more information about STEP visit: step.org and for the Cayman branch visit: stepcayman.ky

What might STEP members advise clients on?

• Providing for an individual following a partner’s death, while protecting the interests of their children • Ensuring elderly or vulnerable relatives are cared for and supported • Helping families with interests spread across the world to be compliant with laws and tax rules of different countries • Ensuring that a family business will pass safely from one generation to another • Helping clients to effectively support charitable causes

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

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

Jasmin Davies

Associate, Cayman Islands

Chambers and Partners

D +1 345 749 2032 E jasmin.davies@careyolsen.com

O F F S H O R E L AW S P E C I A L I S T S B E R M U DA CA PE TOWN

B R I T I S H VI RG I N I S LANDS H O N G KO NG

LOND ON

CAYMAN I S LANDS S INGAP ORE

GU ERNSEY

JERSEY

careyolsen.com

GLOBAL PLAYER

Regulation and compliance issues faced by Cayman Island trustees Cayman has faced an increased regulatory burden as a result of a global drive for transparency and wider information exchange. Emma Parker caught up with Andrew Peedom, Counsel with law firm Collas Crill in Cayman, and Michael Halsey, Managing Director of JTC’s Cayman office, to get an update

F

rom the very beginnings of establishing itself as a global financial centre, Cayman was an early adopter and took a proactive approach to regulation. At the same time Cayman has always sought to ensure that a level playing field is maintained globally, and that regulation does not become too much of a burden on clients, or cause Cayman to be at a competitive disadvantage when compared to other international financial centres both on and offshore.

As Michael Halsey, Managing Director of JTC in Cayman, explains: “It is a balancing act for Cayman when it comes to regulation; we of course want to ensure that we continue to meet and exceed global standards in our approach to anti-money laundering, financial reporting and transparency, but we need to ensure Cayman does not become uncompetitive.

“Increased regulation inevitably leads to increased costs. For clients where cost is the primary motivating factor, they would probably not choose a jurisdiction like Cayman and may well select a different jurisdiction where both the regulatory burden and the associated administration costs are lower.

“The quality business will continue to come to Cayman, and quality service providers will thrive. There is likely to be some consolidation in the market as smaller service providers are less equipped to deal with the increased regulatory workload, but the well-staffed and well-resourced businesses will have no issues.”

Cayman enjoys a good level of cooperation and partnership between the public and private sector. The Government and the private sector service providers have worked well together for many years to ensure Cayman is at the forefront of global standards and proactive in its response to global regulation.

CRS UPDATE A review of regulatory changes that took place in 2020 isn’t complete without touching on updates in relation to the Common Reporting Standards (CRS). Halsey comments: “The CRS reporting portal, which we have been waiting on for some time, is now open and there are more countries that we now have to report on, so CRS reporting is an ever changing task.

“In addition the Cayman Government is planning on implementing a new CRS Compliance Form in March 2021, whereby every 10 / TRUST CAYMAN

Michael Halsey, Managing Director, JTC

Andrew Peedom, Counsel, Collas Crill

entity that has to report for CRS will have to produce a CRS Compliance Certificate. We are not clear whether this will be a common standard across all competitor jurisdictions, but it’s worth stating that Cayman has always been very compliant with both CRS and FATCA reporting, and in fact Cayman’s first exchange of information with the USA goes back to 1996.”

ECONOMIC SUBSTANCE Cayman has been a member of the OECD Inclusive Framework for Base Erosion and Profit Shifting (BEPS) for some time and has enacted its Economic Substance (ES) Law in response to requirements for companies with geographical mobile activities.

Andrew Peedom is Counsel with Collas Crill in Cayman, and has been watching the implementation of ES legislation with interest.

He commented: “Cayman’s economic substance law doesn’t apply directly to trusts, but does apply to a relevant entity, which could include a company within a trust structure. Since the law came into force in 2019, we have had to look at whether entities are carrying out ‘relevant activities’ identified in the law and if they do, there are additional reporting requirements.”

Halsey comments that: “Cayman has not been as affected by economic substance legislation as some IFCs. Trustees in Cayman

GLOBAL PLAYER

have been talking to their clients about substance since long before the laws were enacted, and we have many clients who not only have their structures in Cayman, but their businesses are headquartered here, and we have many clients who have physically moved here with their families too.

“Cayman is a very easy sell and clients are very happy to move here or run a business from here.”

CAYMAN’S BENEFICIAL OWNERSHIP REGIME Cayman’s beneficial ownership regime applies to certain companies, but not trusts. Following changes to Cayman’s Companies Law and the Limited Liability Companies Law, from October 2020, members of the public have been able to apply for basic information about a Cayman company on payment of a fee of USD 61. However, details about the beneficial ownership of companies remains unavailable to the public.

In October 2020 Cayman’s regulator, the Cayman Islands Monetary Authority (CIMA) issued a Beneficial Ownership Enforcement Manual, which outlines the statutory powers that the Cayman Companies Registry has to impose administrative fines for breaches of the beneficial ownership regime. Halsey commented that: “There is now more information required under the beneficial ownership regime, and there are heavy fines in place for non-compliance, in line with many other jurisdictions.”

Peedom added: “Cayman has taken a balanced approach to the implementation of our beneficial ownership regime. It’s demonstrated that the jurisdiction appreciates the risks associated with making certain information publicly available, thus ensuring that we don’t leave clients exposed to ‘fishing expeditions’ that could cause security issues for them. Given Cayman’s proximity to Latin America and Central America, there are some serious and legitimate security concerns and a need to ensure that these clients are protected.”

REGULATORY FINES Cayman trustees were also informed in June 2020 that CIMA has been given additional teeth when it comes to fines for regulatory breaches, which cover a raft of legislation including the Insurance Law, Private Trust Companies Law and Securities and Investment Business Law. The value of the fines which might be imposed has increased, and Halsey thinks that: “This will ensure a continued flight to quality, where only the firms with necessary resources and infrastructure will prosper, given the increased regulatory burden and the commercial threat posed by these high-level fines.”

PRIVATE FUNDS BILL The advent of Cayman’s Private Funds Bill in 2020 brought Cayman in line with other international financial centres, which required an independent audit of single investor funds. Peedom commented that: “This has been a positive move for the jurisdiction, as it balanced the need for efficiency from investors, with a desire for transparency and security. It was implemented to ensure that investor confidence in Cayman continued, and to ensure good corporate governance, and I think it has been a great

example of the fact that entities and investors favour Cayman as a jurisdiction, and appreciate the good corporate governance and US-based manager confidence that Cayman fund structures offer.”

VIRTUAL ASSET SERVICE PROVIDER LEGISLATION Halsey explains that: “The flight to quality has been extended to the new virtual asset legislative framework, which came into force in October 2020. The new legislation was implemented to attract and maintain good crypto-business in the Cayman Islands. The fact that Cayman is leading the way at such an early stage will ensure investor confidence.”

PRIVACY IN CAYMAN ISLANDS LITIGATION Another important aspect of Cayman’s legal landscape is the court’s ability to understand the need for trust litigation to remain confidential when required. One of the key drivers for confidentiality is often security issues. Peedom explains that: “A departure from the general principle of open justice requires a party to demonstrate to the court why there are legitimate concerns about trust proceedings being open to the public. The fact the Cayman court is prepared to order that such proceedings should be heard in private and the names of the parties should be anonymised certainly gives clients with assets held in Cayman trust structures a degree of confidence in the jurisdiction.”

WHAT’S NEXT? Looking ahead to 2021, it is anticipated that the level of regulation in Cayman will continue to evolve and develop at a rapid rate.

There are some additional proposed changes to legislation and regulations around the submission of annual accounts, which are yet to be confirmed.

Halsey sums up that: “The regulatory landscape has been extremely fluid for the past few years. This is expected to continue, and Cayman will continue to respond and adapt. The key thing is that everyone wants to be seen as the leading IFC globally and we have the resources and expertise to make this happen.”

THE BLACKLIST In closing, Cayman was surprised to find itself temporarily on the EU Blacklist in early 2020, and its swift removal was expected by everyone in Cayman’s financial services industry. Peedom commented: “Cayman has positioned itself as an early adopter and worked hard to ensure compliance with EU directives, and its removal from the blacklist has validated the steps that were already being taken to implement new legislation and regulations in line with the latest EU recommendations.”

Halsey added: “Since Cayman’s removal in October 2020, there has been a renewed commitment from the government, the financial services industry and Cayman Finance to ensure that Cayman avoids any further ‘foot faults’ with the EU. Cayman’s financial services industry is diverse and covers trusts and private wealth, insurance, investment funds and banking. All of these industries work extremely hard individually, and as a whole, to champion the continued recognition of Cayman as a world-class financial services centre.”

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CAYMAN KIND

Relocation for high-net worth individuals and their families

By Robert Madden, Managing Director, Alexandria Bancorp Limited Enjoying one the highest standards of living in the world, the Cayman Islands is a safe, stable, tax free, and vibrant place to call home. The beaches, infrastructure, professional services, schools and restaurants are world-class, and our famous ‘Caymankind’ attitude makes everyone feel welcome

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he Cayman Islands deployed one of the most effective strategies globally to combat the COVID-19 pandemic, with residents currently living safely and freely within the Cayman bubble while the outside world continues to suffer growing pandemic restrictions. The wealthy have taken note and are increasingly embracing the Cayman Islands as the jurisdiction of choice for their families.

There are a number of alternatives available to those wishing to establish residency in the Cayman Islands as summarized briefly below.

CERTIFICATE OF PERMANENT RESIDENCE FOR PERSONS OF INDEPENDENT MEANS The Certificate of Permanent Residence for Persons of Independent Means enables individuals to acquire Permanent Residency with the right to work based on a minimum investment of CI$2,000,000 (US$2,439,024) in developed real estate. If granted, this certificate enables the applicant and their dependents the right to live and work in the Cayman Islands, offers a path to citizenship, and the opportunity to apply for full British citizenship. Applicants are required to demonstrate financial soundness and meet good character tests to qualify, and are subject to various undertakings.

RESIDENCY CERTIFICATE FOR PERSONS OF INDEPENDENT MEANS The Residency Certificate for Persons of Independent Means enables individuals to reside in the Cayman Islands for a period of up to 25 years. It does not offer a path to citizenship and is designed to appeal to persons who wish to retire in the Cayman Islands. This certificate does not entitle the holder or their dependents to work in the Cayman Islands.

Applicants must invest a minimum of CI$1,000,000 (US$1,219.512) into the Cayman Islands of which CI$500,000 (US$609,758) must be in developed real estate in Grand Cayman, or in the case of residency in Cayman Brac and Little Cayman 12 / TRUST CAYMAN

investments of CI$500,000 (US$609,758) and CI$250,000 (US$304,879) are required. Applicants must be of good character, able to demonstrate annual income of not less than CI$120,000 (US$148, 341), be in good health, and must purchase adequate private medical insurance for themselves and their dependents.

GLOBAL CITIZEN CONCIERGE PROGRAM Launched in October of 2020, the Global Citizens Concierge Program enables approved applicants earning over US$100,000 (or US$150,000 for a two-person household, or US$180,000 for an applicant together with their spouse/civil partner and children) derived from sources outside of the Cayman Islands to reside and work in the Cayman Islands for up to two years without the need of a traditional work permit.

While the program is not a path to permanent residency or citizenship, it offers a temporary safe haven to those who are able to work remotely.

While the program is not a path to permanent residency or citizenship, it offers a temporary safe haven to those who are able to work remotely. Applicants must be of good character and possess a valid passport. If approved, the annual fees are extremely modest (US$1,500 per applicant and US$512 for each dependent) in comparison to standard work permit fees which can be substantial. Successful applicants must reside in the Cayman Islands for a minimum of 90 days each calendar year, they must obtain private health insurance for themselves and each dependent(s), and cannot offer goods or services to any person resident in the Cayman Islands.

RESIDENCY CERTIFICATE – SUBSTANTIAL BUSINESS PRACTICE This Residency Certificate enables individuals to achieve residency

CAYMAN KIND

by way of a minimum 10% investment into an approved category of local business or where the individual is employed in a senior management capacity in the business. This certificate offers a route to permanent residency and citizenship, including the opportunity to apply for full British citizenship.

established company act as an employer which acquires a work permit for the individual, along with an appropriate trade and business license. This approach can offer a route to permanent residency and citizenship, including the opportunity to apply for a full British citizenship.

CERTIFICATE OF DIRECT INVESTMENT The Certificate of Direct Investment enables individuals to obtain temporary residency by investing a minimum of CI$1,000,000 (US$1,219,512) into a local business. Applicants need to demonstrate expertise in the business concerned as well as a track record or entrepreneurial background and also must be of good character. This certificate does not offer a route to permanent residency or citizenship.

EMPLOYMENT BY CAYMAN ISLANDS EMPLOYER While the most common method of obtaining residency in the Cayman Islands is by way of obtaining a work permit for local employment, it is unlikely that this alternative will appeal to most wealthy families. Work permit holders are subject to a term limit of nine years, after which they either must cease to reside in the Islands or apply for permanent residence status in order to continue in their employment. If Permanent Residence is granted, a path to full citizenship is available after a further six years, including the opportunity to apply for full British citizenship.

ESTABLISH A BUSINESS OR A SPECIAL ECONOMIC ZONE COMPANY Subject to certain restrictions designed to protect locally-owned businesses, establishing a local business or a Special Economic Zone Company can be a path to residency by having the

OBTAIN CAYMANIAN STATUS FROM CABINET In highly exceptional circumstances, the Cabinet of the Cayman Islands Government may grant Caymanian status upon application.

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A trinity of quality in the Cayman Islands

Camana Bay

Quality of people, place and lifestyle is at the heart of what attracts ultra-highnet-worth private clients and family offices to the Cayman Islands.

The Cayman Islands has long been accepted as one of the leading jurisdictions for ultra-high-net-worth individuals and family offices to house their global investment, wealth planning and succession structures; but Cayman is increasingly being recognised as a place where wealthy families can physically expand or relocate their personal lives and their business interests.

Ranked as the easiest place to do business by The Global Complexity Index in 2019, Cayman has earned accolades for being a straightforward place in which to operate, where establishing a physical presence is a simple process thanks to worldclass service providers, a stable and efficient government and a highly regulated financial services industry.

The Cayman Islands is only a 70-minute flight from Miami and benefits from a high standard of

living and an excellent business environment. Renowned for its modern infrastructure, luxury resorts and residential properties, worldclass culinary scene and international community, Cayman is a sophisticated place in which to live and conduct business. From a new airport with extensive airlift, to modern roads, three major hospitals, quality power, water and internet provision and a world-class international school, it’s small wonder that visitors and new residents alike appreciate the livability of Grand Cayman.

The Cayman Islands’ allure to the wealthy is further enhanced by Cayman having zero corporate tax, income tax, inheritance or capital gains tax as well as no withholding taxes. Cayman’s tax-neutral status is a bonus when it comes to purchasing property; there are no restrictions on foreign ownership of property, no alien landholding licenses required

and no recurring property taxes.

Dart Real Estate recently published a piece of research titled “The Cayman Islands: a jurisdiction of choice for family offices.” To learn more about the advantages of Cayman as a family office jurisdiction, readers can visit familyofficereport.dartrealestate.com.

Dart has itself made significant contributions to Cayman’s sophisticated lifestyle, investing over US$1.5 billion in US$1.5 billion in projects including luxury resorts and residential properties, Class A commercial office buildings, public infrastructure projects in partnership with government and its flagship development, Camana Bay. Camana Bay is a 685-acre waterfront town centre home to global legal, banking and accountancy firms, as well as an array of retail boutiques, food and beverage establishments, an international school with an IB

North Sound Golf Club

programme, and OLEA, a residential community now under construction that offers condos, townhomes and villas for sale.

A new commercial office building in the Camana Bay town centre, 60 Nexus Way, will add to Camana Bay’s Class A office space, and accommodate growing interest from prospective tenants in the family office, reinsurance and financial services sectors, including those organisations needing space to meet economic substance requirements.

A short drive from Camana Bay is another Dart development, Kimpton Seafire Resort + Spa, and The Residences at Seafire. The AAA Five Diamond award-winning resort shares a 12-acre property on Seven Mile Beach with The Residences at Seafire, a luxury condominium development ready for immediate occupancy on Grand Cayman. The 62-unit property offers contemporary one- to five-

The Residences at Seafire

bedroom residences that are ideally suited for full-time residents, part-time vacation home owners and those applying for permanent residency by investing in real estate. An optional rental programme managed by the Kimpton Seafire Resort + Spa is available to purchasers interested in renting their property when not on island.

The Dart Real Estate team assists business owners, international private client advisors, family offices and private individuals in learning about the benefits of residency by investment in the Cayman Islands, and helps to make the relocation process an efficient and smooth experience.

The Dart team has recently been assisting globally mobile individuals with relocation via Cayman’s new Global Citizen Concierge Programme - a visa programme established by the Cayman Islands government allowing individuals and their families to live

and work remotely in the Cayman Islands for up to two years.

This programme is popular with those who have the ability to work from anywhere in the world, and who prefer the climate and lifestyle in Cayman.

The Cayman Islands is one of very few countries in the world to have successfully controlled the local spread of COVID-19 and, as a result, Cayman’s population is living largely mask-free and with no community transmission.

Learn more about relocating to the Cayman Islands at whycayman.dartrealestate.com or email relocate@dartrealestate.com.

BOUNCING BACK

Cayman in the time of COVID How Cayman businesses have responded to the challenges faced by the global pandemic

E

arlier this year, the pandemic sent shockwaves across the globe and it is safe to say that 2020 has been a challenging year for many in business. For both health and economic reasons, organisations have had to pivot to provide a service, something that those in the Cayman Islands have responded incredibly well to.

The jurisdiction and the trust industry in particular has, to date, adapted positively to the challenges imposed by COVID-19.

NAME: Jackie Doak TITLE: President, Business Development, Dart THE CHALLENGES WE HAVE FACED IN A TIME OF CRISIS… Cayman has been in a fortunate position where we could not only endure the challenges of COVID, but also find opportunities during this crisis, and our company followed suit. As an island, our Government made the swift decision to close our borders and effectively contain the spread of COVID-19. With the exception of the tourism industry, all companies are back to business and social gatherings are largely permitted.

For Dart, we faced the same issues as other businesses during the pandemic: adapting to an unprecedented impact on how we work, a significant impact on our hospitality and retail portfolios, and the challenge of trying to plan for the future.

We are fortunate to have our national airline, Cayman Airways, and an airbridge to the United Kingdom via British Airways, continues to offer repatriation flights in a strong private-public partnership.

The opportunities we found from these challenges include virtually furthering our international marketing of Cayman as a jurisdiction of choice for HNWIs and family offices, continuing the planning of future developments and being actively involved in recovery efforts as they relate to the impact that COVID has had on Cayman.

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HOW WE PIVOTED OUR SERVICES… Like most corporations around the world, we moved to remote and online working. We adapted to meet our clients’ needs and continue to recognise that changes may need to be made as time goes on and the situation changes.

We increased our marketing plan to help those seeking information about a safe and less densely populated jurisdiction such as Cayman, and we witnessed an increase in enquiries about residency by investment, global citizenship, private family compounds, vacation homes, corporate relocation opportunities and more.

WE ARE ABLE TO MOVE FORWARD BECAUSE… Our team already had much of what was needed to effectively work online; access to a sound telecommunications network, a safe IT system, a culture of collaboration, a library of digital assets and an established practice of working with international clients.

We also benefited from the peace of mind knowing we are working and living in a jurisdiction with a sound and diversified economy, a low crime rate and excellent healthcare. Things we might ordinarily take for granted became valued as we watched communities struggle in response to the pandemic.

Finally, we are most fortunate to work for a company like Dart; one committed to its people, its community and the long-term sustainability of the Cayman Islands.

HOW CAYMAN IS LOOKING IN THE NEW COVID WORLD… Safe and solution-oriented. A desirable cosmopolitan island with sun, sea, sand and beautiful open spaces. Cayman welcomes those who want to live, invest or work here with a community committed to ensuring we are prepared for what is to come.

HOW OUR BUSINESS LOOKS FOR 2021…

We anticipate ongoing interest and demand for the Cayman

BOUNCING BACK

value proposition. Interest from family offices and high-net-worth individuals to establish a personal and corporate presence in Cayman will continue due to the heightened awareness of all we have to offer.

NAME: Maxine Bodden TITLE: Of Counsel, Maples THE CHALLENGES WE HAVE FACED IN A TIME OF CRISIS… 2020 has been a year of upheaval and adversity. The greatest challenge being COVID-19, which is unprecedented in our modern world. It is a rare occasion when both people and institutions face the same challenge together.

Systems and business contingency plans have been tested and strained, IT platforms have been reinforced and security systems reevaluated. There was little time to prepare for COVID-19, only time to react, do our best and hopefully get most of what we did right.

The Cayman Islands Government mobilised quickly and effectively with actions that stemmed the transmission of the virus and protected the people of the Cayman Islands. This alleviated some of the burden off businesses, which enabled employers to prioritise the wellbeing of their employees and focus on how best to manage with a ‘through-cycle’ mindset, giving appropriate attention to present pressures while planning strategically for long-term success.

The lack of personal contact - social isolation, disrupted work and family routines, living and working remotely, home schooling - has undoubtedly posed challenges for many. However, with these challenges also came opportunities. Technology has been the key to keeping the world connected and enabling businesses to deliver.

Services can be delivered through secure platforms with the same outcomes as were previously provided on-site and in person. For many, a well-needed work-life balance has been achieved.

HOW WE PIVOTED OUR SERVICES… We put our business contingency plans into action. We worked as a team and supported each other. We quickly adapted to working remotely to ensure our clients knew we were still there to support them. As much as we were and are dealing with the various challenges of COVID-19, so are our clients. It is important for us to remain engaged and listen to their needs.

We embraced our staff. COVID-19 is personal - the concerns people have, how they are able to cope, the help they may need and we have to acknowledge this with empathy. Working remotely allowed for greater flexibility but our staff remained connected and were able to get updates from firm leaders. The work of all persons is meaningful, especially during this challenging time.

WE ARE ABLE TO MOVE FORWARD BECAUSE… Our technology platforms allowed a seamless transition to remote working. Much praise must go to our IT team.

Going forward, organisations will not only need effective, nonconventional business contingency plans, but it is also crucial that they identify persons within their organisation who are critical to

CONTACT DETAILS More about the Cayman Islands as a jurisdiction of choice can be found at: whycayman.dartrealestate.com. For more information, please contact: relocate@dart.ky.

the continued running of the business, even in the most challenging of circumstances. We are living in a world that is unpredictable and leaders must recognise and accept this as the norm.

COVID-19 has tested our resilience and it has taught us that we need to be quick on our feet. We are able to move forward because we were able to adapt, be innovative and respond in an effective manner. Leaders must be forward-looking and be able to identify opportunities even in the most challenging of times.

HOW CAYMAN IS LOOKING IN THE NEW COVID WORLD… The Cayman Islands is, as always, surfacing as a leader and remains forward-looking. Although there may be shifts across some sectors of the economy, such as labour and employment, others will have to address different situations especially in more distressed sectors such as tourism, travel and leisure. Still, others such as healthcare and financial services will continue to be innovative and grow.

As families and businesses have become increasingly global, the focus on international planning has benefitted the Cayman Islands as a centre of excellence in financial services. The Cayman Islands has a record of enacting innovative and far-sighted legislation in the financial services sector, and a wide offering of expert service providers in the Cayman Islands who can assist stakeholders with an efficient and effective strategy to establish or move structures to the jurisdiction. The Cayman Islands Government also continues to demonstrate responsiveness to the needs of the financial industry, and there is a broad ongoing commitment to enact further legislation as needed in the financial services arena including in consultation with local professionals.

HOW OUR BUSINESS LOOKS FOR 2021…

I think 2021 will see further growth in financial services and, by extension, all the various services required to ensure a compliant, innovative and cooperative jurisdiction. This includes continued growth in IT for increased speed of connectivity for remote working and life. This also translates into the technological revolution itself in the area of fintech, blockchain and other currencies. Practitioners and service providers must learn to quickly adapt because clients will increasingly require faster but accurate responses and advice. A crucial aspect of planning for the internationally mobile wealthy client is finding a jurisdiction that is not only well-regulated with sound yet innovative legislation to assist with modern planning, but carries a strong reputation among governments and regulators around the world.

CONTACT DETAILS Direct line: +1 345 814 5214 Mobile: +1 345 525 5214 maples.com TRUST CAYMAN / 17

BOUNCING BACK

NAME: Alan Milgate TITLE: Partner, Rawlinson & Hunter THE CHALLENGES WE HAVE FACED IN A TIME OF CRISIS… One of our biggest challenges during COVID-19 has been the travel restrictions preventing us from seeing our clients face-to-face, having regular meetings with our advisors and intermediaries and being unable to forge new relationships in the usual way. The work from home requirements have also meant that we’ve had to look at our corporate culture and evolve some of our workflows while maintaining quality throughout. Finally, slower responses from those providing services to us has meant that we have been working longer hours, adapted to new routines and have had to find new ways to ensure we’re connecting with staff, clients and intermediaries.

HOW WE PIVOTED OUR SERVICES… We have held a large slate of Zoom calls with clients, advisors and business development teams, which have all been successful.

We have put new workflows in place and have been innovative with our IT solutions. We have re-deployed travel and business development resources into more article writing, online seminars and virtual events. And finally, we have doubled up on visibility initiatives by recognizing our opportunity to outperform the competition.

WE ARE ABLE TO MOVE FORWARD BECAUSE… Our industry has a growing need for new structures, so putting in a solid infrastructure for remote working was key in order for us to move forward in this new way of living and doing business. Not only do we have a great team who are committed to the best client services and growth, but we have also forged new relationships that are only possible because we have a new perspective.

HOW CAYMAN IS LOOKING IN THE NEW COVID WORLD… With virtually no COVID cases, the Cayman Islands are safe and secure with the freedom of local movement. The financial services industry is still thriving and looks to continue as travel (both business and leisure) kickstarts and the tourism industry grows once again.

HOW OUR BUSINESS LOOKS FOR 2021…

We are in a great position for growth and have been able to work on new processes by focusing internally and making investments to put us in the best possible position to move forward.

CONTACT DETAILS Direct line: +1 345 814 2315 Mobile: +1 345 926 4011 rawlinson-hunter.com 18 / TRUST CAYMAN

NAME: Andrew De La Rosa & Shân Warnock-Smith TITLE: Independent Counsel & Queen’s Counsel, ICT Chambers THE CHALLENGES WE HAVE FACED IN A TIME OF CRISIS… The lack of in-person meetings, court hearings and conferences in exotic locations. There is no real substitute for looking at clients, colleagues and judges in the eye, which was certainly a challenge during the crisis.

HOW WE PIVOTED OUR SERVICES… Like everyone else in business, we have become adept at virtual meetings although remote hearings remain a challenge.

WE ARE ABLE TO MOVE FORWARD BECAUSE… We have an enormously loyal and widespread client base.

We have actually been busier throughout this period than ever before - the demands on our advisory and litigation practices remain as high or higher than ever and have been largely unaffected by the crisis.

HOW CAYMAN IS LOOKING IN THE NEW COVID WORLD… Once regular travel becomes possible again, we are certain that Cayman will emerge stronger than ever. Its fundamentals, including an exceptionally strong core of professionals in the financial services industry, continues to make it a prime choice for clients. Key, though, is the ability to travel in and out without undue restrictions.

HOW OUR BUSINESS LOOKS FOR 2021…

Busy, busy, busy - with plenty of travel in the pipeline.

CONTACT DETAILS Andrew De La Rosa: +1 345 926 5214 or adlr@ictchambers.com Shân Warnock-Smith: +1 345 926 5211 or sws@ictchambers.com ictchambers.com

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NEW RULES

Cayman Islands legislative update

Robert Lindley, Partner, Conyers

By Robert Lindley & Wesley O’Brien, Conyers & Conrad Proud, Ocorian

I

t’s trite to say that 2020 was a year marked by change. Having been bombarded with a variety of unsolicited adjustments to our daily lives, we could be forgiven for having developed a collective fear of change over the last 12 months. Fortunately, the legislative changes affecting Cayman Islands’ trust and private wealth practitioners do not align with the general trend of 2020. On the contrary, the pace and direction of change has been much more palatable as legislators have continued with the incremental modernisation of the Cayman Islands’ trusts law and related legislation.

Many of the amendments have been focused on increased transparency and regulatory oversight, and have arisen in response to recommendations from financial action task forces and international bodies (a persistent theme on the Cayman legislative agenda).

While some practitioners may be weary of the seemingly constant change on this front, this is indeed our ‘new normal’, and we should take comfort that the legislature’s approach to complying with international standards while seeking to minimise unnecessary impediments to legitimate business should ensure that the jurisdiction is well-positioned for the future.

There have also been some exciting developments which demonstrate the continued commitment to ensuring that Cayman remains an attractive and leading jurisdiction for wealth structuring. Not least amongst these is the proposed Perpetuities Disapplication Bill. While the Bill had not been finalised or approved at the time of writing, it is expected to remove the current statutory time limit applicable to some trusts (noting that STAR trusts, charitable trusts and pension trusts are already able to exist in perpetuity under Cayman law).

Other developments, such as legislative reform to allow for the virtual witnessing and attestation of deeds, and for digital nomads to work remotely from Cayman, have been introduced specifically in response to the pandemic, but are not (at least for now) intended to be permanent.

The key recent developments are broadly summarised in the table opposite.

20 / TRUST CAYMAN

Conrad Proud, Director, Ocorian

Wesley O’Brian, Associate, Conyers

NEW RULES

KEY CHANGES

LEGISLATION

COMMENT

Introduction of ‘Global Citizen’ program for digital nomads to work remotely from Cayman for up to two years

Immigration (Transition) (Global Citizen Exemption) Regulations 2020

Individuals wanting to work remotely in Cayman for a period of up to two years that can show proof of employment outside of Cayman and a minimum household income of US$100K for singles; US$150K for couples; or $180K for families with children, can apply for a special residency permit.

Proposed system of oversight and enforcement for accounting records requirements

Trusts (Amendment) (No.2) Bill, 2020; Banks and Trust Companies (Amendment) (No.2) Bill, 2020; Companies Management (Amendment) (No.2) Bill, 2020; and various other acts; Companies (Amendment) (No.3) Bill, 2020

Various entities (and their corporate service providers) will now be required to provide annual declarations confirming that the entity maintains proper books of account and recording the place at which the books of account are kept and, where applicable, confirming that information regarding its books of account has been provided to its registered office semi-annually.

The requirements also apply to ‘Exempted Trusts’ being trusts that are registered with the Registrar of Trusts. While non-registered trusts are not covered by the legislation, trustees generally have legal obligations to maintain financial records for trusts they administer.

The introduction of a regulatory regime for ‘Virtual asset service’ providers

Virtual Asset (Service Providers) Law, 2020 (the ‘VASP Law’)

Under the VASP Law it is mandatory for providers of a ‘virtual asset service’ to be licensed or registered.

‘Virtual asset service’ is given a very broad definition covering the issuance, exchange, transfer, custodial services and “participation in, and provision of, financial services related to a virtual asset”.

The new regime (which fully comes into effect by 31 January 2021) requires virtual asset service providers to maintain minimum standards, including having a registered office in the Cayman Islands and compliance with regulations such as the Cayman Islands AML regime and Data Protection Law. Other requirements are imposed on those offering virtual asset custody services or virtual asset trading platforms.

Single Family Offices no longer exempt under the Securities Investment Business Law

Securities Investment Business Law (2020 Revision) (‘SIBL’)

SIBL provides for the licensing and regulation of ‘securities investment business’ carried on in, or from, the Cayman Islands.

While ‘Single Family Offices’ (‘SFOs’) were previously exempt as a non-registrable person, such exemption has now been removed meaning that SFOs which conduct ‘securities investment business’ (i.e. managing, dealing in or arranging deals in securities) may now be required to register with CIMA and be regulated under SIBL.

Introduction of ‘Living Wills’ (advanced health care directives)

Health Care Decisions Law, 2019

The law allows a person to determine their wishes surrounding medical care and treatment, including end-of-life care, should they become mentally incompetent, and to prepare a legal document to this effect.

Modernisation of Cayman’s Trusts Law

Trusts (Amendment) Law 2019

Various amendments to Cayman’s Trusts Law took effect from 14 June 2019 including: (1) a codification of the ‘Hastings-Bass’ principle providing a clear framework to apply for relief where a fiduciary has made a mistake in the exercise of their powers; (2) making it easier for the Grand Court to approve variations to trusts and compromises to litigation on behalf of minor and unborn beneficiaries; and (3) extending the ‘firewall’ provisions which protect against a foreign law applying to a Cayman trust or foundation company.

APPROVED MEASURES

CURRENTLY UNDER CONSULTATION Abolishing perpetuity periods for trusts

Perpetuities Disapplication Bill

As currently drafted the law will: (1) abolish perpetuity periods for new trusts and powers (other than those relating to land in Cayman); and (2) make provisions for applying to extend a perpetuity period for an existing trust.

Virtual witnessing and attestation

Property (Miscellaneous Provisions) (Amendment) Bill, 2020

Provides for the virtual witnessing and attestation of required signatures for the execution of a deed or instrument under seal; and for incidental and connected purposes.

At present it is contemplated that this will be an interim measure ending on 16 April 2022.

Specific rules relating to the deregistration of private trust companies (PTCs) *This information is up-to-date as at 12 November 2020

Additional requirements will be applicable to PTCs which are seeking to deregister.

The PTC will be required to declare (amongst other things) that it is not acting as the trustee of any trusts at the time of its deregistration.

TRUST CAYMAN / 21

TRUSTED PEERS

Estate experiences

By Anthony Partridge & Jennifer Fox, Ogier and Roger Priaulx & Lee Hart, Genesis Trust and Corporate Services INTRODUCTION The administration of deceased estates in the Cayman Islands is governed by the Succession Law, 2006 Revision (the law) and its accompanying Probate and Administration Rules, 2008 Revision (the rules).

As required by the law, when an individual dies owning Cayman Islands assets, some form of grant of representation issued by the Grand Court of the Cayman Islands is usually required before the Cayman assets can be administered. This will be a grant of probate in the case of an individual who has died leaving a valid will; or letters of administration on intestacy or with will annexed where there is either no valid will or it is not possible for the executor named in the will to apply for probate.

It is also possible to reseal a foreign grant before the Grand Court of the Cayman Islands if the foreign grant is of like force and effect to a Cayman grant, as confirmed by foreign law evidence.

APPLICATION PROCEDURES The application procedures for probate, letters of administration and resealing are set out in the rules and the filing process takes about six months to obtain a grant from when the matter commences. The executor or administrator of the estate (the personal representative) has two further filing requirements following the issue of the grant; filing of the inventory and finally the affidavit of general accounting which effectively closes the estate administration proceedings before the Grand Court. The estate administration should be concluded within twelve months of the original filing for the grant, providing everything runs smoothly.

22 / TRUST CAYMAN

POSSIBLE DISPUTES But what if the estate administration does not go as planned?

Complications with the will, disputes between beneficiaries and difficult executors are all common examples of the complexities that often arise within this area of the law.

Sometimes it is necessary for the Court to intervene to resolve any difficulties in respect of Cayman Islands estates and in connection with those appointed to administer them. Thankfully there are a number of options available to executors and beneficiaries in order to resolve difficulties. These include referring questions of construction or seeking the court’s direction on any thorny issues pursuant to s.48 of the Trusts Law (2020 revision), and even removing a problematic personal representative.

REMOVAL APPLICATIONS There have already been two occasions during 2020 on which the Cayman court has removed personal representatives following contested hearings. Previously there were few reported decisions considering such matters. As a consequence of the recent removals, it has been clarified that the Cayman court has the ability to do so either under s.8 of the law for cause, and that inappropriate conduct must constitute either “neglect” or “misconduct”; or otherwise than for cause, pursuant to section 50 of the UK Administration of Justice Act 1985 (effectively incorporated into Cayman Islands law by section 42 of the law), and which provides the statutory jurisdiction of the English High Court to remove personal representatives.

The latter jurisdiction has been interpreted to be one that ought to be used in a flexible and practical way without the need for costly and time consuming factual inquiries, and indeed

TRUSTED PEERS

Lee Hart, Senior Manager, Genesis Trust and Corporate Services

Roger Priaulx, CEO, Genesis Trust and Corporate Services

it is not necessary for an applicant to establish wrongdoing or for the court to make adverse factual findings for a personal representative to be removed.

The key concern of the court on any removal application reliant on section 50 is to consider the best interests of the beneficiaries as a whole and thus to decide whether such interests require a different personal representative to complete the administration of the estate. The court’s emphasis of the availability of swift removal in justified circumstances without the need for lengthy court proceedings makes it plain that the court will intervene to ensure the due and efficient administration of Cayman Islands estates.

SERVICE PROVIDER OBSERVATIONS When appointing a new personal representative, it is important to choose a licensed Cayman Islands service provider who has the necessary expertise and experience in dealing with estates and resolving disputes. The role of the new personal representative includes: • Gathering accurate information on the estate’s assets and liabilities.

• Ensuring assumption of proper governance and control over bank/investment accounts.

• Obtaining appropriate and cost-effective valuations of estate assets, particularly for operating companies.

• Being mindful of the costs of administering the estate

Jennifer Fox, Partner, Ogier

and keeping these under control.

• Being aware of, and proactively dealing with, any non-Cayman situated assets and liabilities and other cross border issues, for example, claims from non-Cayman residents or active or threatened litigation in other jurisdictions, which may impact on the Cayman estate and the beneficiaries.

• Where there is an active or potential dispute, canvassing the views of the beneficiaries and seeking to find consensus over a practical resolution at an early stage.

• Seeking the assistance of the Cayman Court, where applicable, to address any uncertainty, give directions, and bless any important decisions or proposed settlements.

• Working closely with specialist Cayman counsel (and overseas counsel where applicable) is essential to support the process.

CONCLUSION In every case of an individual dying and leaving assets in the Cayman Islands, some form of grant must be obtained in order for the Cayman assets to be legally administered. Cayman as a jurisdiction has a robust framework for resolving estate disputes.

The availability of professional trustee service providers to be appointed as personal representatives and who can draw on their substantial executor and trusts experience in complex estates is also a huge advantage.

Anthony Partridge, Partner, Ogier TRUST CAYMAN / 23

ISLAND LEARNING

A Cayman education A robust and refreshing education system is another reason why families choose to settle in the Cayman Islands

N

ot only does the Cayman Islands tick the boxes for low crime rate, high standards of living, good infrastructure and a stable government, it is also favoured for its quality education system; and with a literacy rate of 98%, it’s easy to see why.

Cayman’s private education sector is a thriving community offering both British and American curricula and plenty of exciting extra-curricular activities for children to enjoy around learning and throughout their school lives.

Standards are kept very high when it comes to education on Grand Cayman. The Cayman Islands Government Office of Education Standards conducts a rigorous audit on all public and private schools every year, ensuring that all establishments are up to standard, offering the best service to pupils across the island.

While public schools are reserved for the children of Cayman citizens, there are plenty of options available when it comes to finding education for expat children, and the private sector is guaranteed to offer the best education for those starting school in the Cayman Islands.

Private schools including Cayman International School, Cayman Prep and High School and St. Ignatius are all available for applications and admissions, and offer education from elementary right through to high school. Special education schools and learning centres are also available on the island. Hope Academy is a private school specialising in special needs education for children of all ages, and the Cayman Learning Centre is a hub offering support services for pupils and parents on a part-time and full-time basis.

Typically, in order to enroll at a private school in the Cayman Islands, parents will need to provide proof that the family is legally residing on the island and children must be endorsed on their parent’s work permit or residency certificate.

It is not uncommon to be put on waiting lists, asked for personal recommendations from former teachers and invited to take part in interviews and placement tests. All of which help to ensure that each student is matched with the best possible school. It is advised that parents start the application process early, reaching out to as many schools as possible to avoid disappointment.

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Credit: Dart Real Estate

Tuition costs vary from school to school, but parents can expect to pay from $12,500 USD per year for preschool, to $26,000 USD per year for high school.

Home schooling is also an option on Grand Cayman, with formal registration processes available for parents to complete.

Requirements must be met annually for home schooling to continue. More information on how to homeschool in the Cayman Islands can be found on the Department of Education website.

There are plenty of options within the private school sector for families relocating to the Cayman Islands with children.

Please visit the Department of Education Services website for more information. schools.edu.ky

“Cayman’s private education sector is a thriving community offering both British and American curricula and plenty of exciting extra-curricular activities.”

Credit: Dart Real Estate

OUR CAYMAN PRIVATE CLIENT AND TRUSTS TEAM SALLY PEEDOM Senior Associate

ANDREW PEEDOM Counsel

DAVID COONEY Partner

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Robert Lindley Head of Cayman & BVI Private Client & Trust robert.lindley@conyers.com +1 345 814 7360

HEALTHY FUTURE

Cayman’s healthcare heroes Grand Cayman has been very successful in controlling the spread of COVID-19. One of the very few places in the world where there is zero community transmission, credit goes to the island’s high-quality healthcare system and those supporting it

I

n a pre-COVID world, there were many reasons to applaud Cayman’s healthcare system. From hospitals and walk-in centres, to clinics and cutting-edge equipment, there is no shortage of services for those seeking medical attention.

But with the outbreak of COVID-19 in early 2020, like thousands of communities across the globe, we were faced with an out of the ordinary challenge; tackling a new virus, controlling the infection rate and pivoting to continue providing a service.

Many businesses across the island have been impacted by the pandemic, but communities have worked together to ensure Cayman remains a safe and sociable place to live and work.

As we approach the back end of 2020 with zero community transmission and residents living in bubbles of normality with no requirements to wear facemasks, we have our healthcare system and our residents to thank.

Cayman’s borders have been closed to all except residents, homeowners and family of residents since March, with a mandatory 14-day quarantine for all incoming travellers to ensure COVID does not get into the community.

These measures, alongside hard work from the general public and our healthcare workers, has meant that we are one of the safest places to be in the current climate.

It’s something Cayman residents should be incredibly proud of, and something of note to those considering a move to the islands.

This is just another example of the fantastic work and support that goes into the Grand Cayman healthcare system.

Residents have full access to excellent health services, from dental care and opticians, to specialised services such as chemotherapy, gynecology, cardiac surgery and hospice care, Cayman’s healthcare is readily accessible in many different ways.

With three full-service hospitals boasting cutting-edge equipment and more than 150 registered healthcare facilities including walkin centres and pharmacies in every district, Cayman residents will never fall short of support from trusted professionals in professional environments.

In 2019, figures indicated that there are approximately 4.5 doctors and 6.3 nurses for every 1,000 people in the Cayman Islands. An astounding figure that reminds us we are in safe hands.

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Cayman law makes it mandatory for all residents to have health insurance, with employers required to cover at least 50% of the cost for each employee. This does not cover an employee’s spouse or children, but most employers offer benefits to cover family members. Self-employed residents are required to pay for their own health insurance coverage, but advice is readily available at firms across the island.

If you are considering a move to the Cayman Islands, you must demonstrate that you have adequate health insurance prior to the application process.

For more information, please visit the Health Services Authority website. hsa.ky

FLYING HIGH

The rise of private air travel

Marcus Cumber, Managing Director, Island Air

By Marcus Cumber, Managing Director, Island Air Island Air has been serving the Cayman Islands since 1987 and continues to pivot to meet aviation demands. In what has been a challenging time for travel, the business is hopeful that the future for private charter services is bright CAN YOU TELL US A LITTLE BIT ABOUT THE HISTORY OF ISLAND AIR? Island Air started in 1987 as a small private charter company serving primarily the sister islands of Little Cayman and Cayman Brac, however other popular charter destinations included Cuba, Jamaica and Central America.

In 1992, Island Air took over the Cayman Islands internal domestic service from Cayman Airways and as such, were deemed as an airline and charter company.

In 2004 Hurricane Ivan visited us and tourism came to a sudden halt. In July 2005 I bought the company and changed the model to focus on FBO servicing (fueling, ground handling, hangar storage, office rental and concierge services), with all kinds of private aircraft (military, cargo, air ambulance, corporate and small prop aircraft) coming to the Islands.

WHAT CAN YOU TELL US ABOUT YOUR SERVICES? Island Air primarily ground handles all private and non-commercial aviation in and out of the Cayman Islands. This includes air ambulance, cargo, private corporate charters, military, and small prop aircrafts. We also fuel and supply the necessary oil and gas for the aircraft. We provide hangar storage, office rental, lavatory service, maintenance and cleaning.

WHAT IS UNIQUE ABOUT ISLAND AIR’S OFFERING? In 2005 I saw that the Ritz Hotel was being built and would open in the November, so I decided to get out of the airline business and focus more on the HNWI that would come in via private 28 / TRUST CAYMAN

plane and chartered aircraft. My hope was to give them a very comprehensive VIP concierge service that could oversee their entire visit to the Cayman Islands.

YOUR BACKGROUND? I was born and raised in the Cayman Islands, but from the age of 7 I was sent to attend boarding school in Kent, England. It was a beautiful school with great history and culture. I then went to the University of London to study economics and finished up at the University of Tampa, Florida.

HOW DID YOU COME TO BE INVOLVED IN THE BUSINESS? I started as the COO in 1996. We were a successful small charter airline that got through the increase of fuel pricing and insurance due to September 11 2001. Then, with Hurricane Ivan and Cayman Airways re-entering the domestic service business, we could not compete. I then had the opportunity to buy the business and do something a little different.

HOW DID YOU ADAPT DURING THE CORONAVIRUS PANDEMIC? Because we look after the air ambulance, military and cargo planes, we are an essential service. I decided to split our dispatchers and ramp agents into separate teams so that there was no crossover between the teams. That way, if someone in one team fell ill, we were still able to continue to service our clients with other teams.

It was vital for us and our clients during these challenging times.

FLYING HIGH

ARE YOU FINDING THAT PEOPLE ARE MORE AWARE OF HEALTH AND SAFETY, SO ARE THEREFORE LOOKING TO PRIVATE CHARTER SERVICES? We are certainly seeing more clients wishing to travel on private aircraft so that they can stay within the family or social bubble.

This makes private charter a better option in a post-pandemic world. It’s much more convenient and easier for social-distancing.

even during these tough times. Another interesting side note is that the late Bob Soto, who owns the property we rent, actually started recreational diving in the 50s right from our property.

So it is lovely to watch the dive and fishing boats come in and out of the dock. Our fish is local, fresh and usually brought in the morning that you dine. For more info please take a look at our website at: lobsterpot.ky.

WHAT IS YOUR CONNECTION TO LOBSTER POT RESTAURANT & WINE BAR? Lobster Pot is everyone’s favorite seafood and steak restaurant being that it’s the oldest restaurant in Cayman, established back in 1964. I was fortunate to have the opportunity to buy 50% of the restaurant in 2001 and we have been serving the goods ever since,

WHAT’S IN THE PIPELINE FOR 2021?

We are all hopeful that the world can open up to tourism and travel once again. At present, we are just trying to break even to give our staff employment so they too can pay their bills. islandair.ky

A new ministry for the Cayman Islands Eric Bush JP and Kendra Okonski, MITIAMA In January 2019, the Cayman Islands Government formed a new Ministry of International Trade, Investment, Aviation and Maritime Affairs (MITIAMA). Led by Chief Officer, Eric Bush JP, MITIAMA is the central government entity responsible for monitoring and enhancing external relationships as well as identifying and attracting international trade and investment to the Cayman Islands.

WHAT ARE THE MAIN PURPOSES OF MITIAMA? MITIAMA promotes the Cayman Islands as a world class place to work, invest, innovate, live and visit. It also advances the economic and political interests of the Government, the people and the business community by building and leveraging strategic global alliances, representing the Cayman Islands Government

Eric Bush

Kendra Okonski

in international fora and fostering relations with overseas governments. It works with other government ministries and the private sector to promote investment in the Cayman Islands’ economy.

WHAT BENEFITS WILL MITIAMA BRING TO THE CAYMAN ISLANDS? The year 2020 has shown the importance of building Cayman’s ability to withstand global political and economic changes, as well as outlier events such as the global COVID-19 pandemic.

The Ministry’s efforts will support and grow trade linkages between Cayman and the world. It will also undertake activities to increase and streamline inward investment, aligning with local priorities for economic diversification, sustainability and resilience.

WHAT PROJECTS DOES MITIAMA HAVE UNDERWAY FOR 2021?

MITIAMA will launch a global trade and investment strategy which will be complemented by a global branding and marketing strategy for the Cayman Islands. It will continue to lead the Government’s establishment of an overseas presence in key geographical regions, as well as participation in global flagship events. It will also pursue the development of cultural opportunities that align with Cayman’s heritage, geography and economy. We look forward to bringing Cayman to the world, and the world to Cayman.

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A REAL DRAW

Building a Cayman family office

Andrew Miller, Partner, Bedell Cristin

By Andrew Miller, Bedell Cristin & Dominic Lawton-Smith, Crestbridge

O

ur best estimation is that there are currently some 25 single family offices (SFOs) in Cayman, depending on how the term is defined. That number is steadily growing and whilst Cayman remains better known as a key, high quality international financial centre than as a place which is attractive to ultra high-net-worth (UHNW) families as a place to establish their SFOs and live, that view is changing quietly but quickly.

Since the early 2000s, Cayman has benefitted from exponential development of not just its infrastructure (including ultra-high speed internet connectivity, healthcare, schools, roads etc. as well as extensive re-development of real estate for housing as well as leisure activities) but also the sophistication of that infrastructure such that (albeit presently on a less obvious scale), it has become an alternative to the likes of Dubai, Geneva, London, Miami, Monaco and Singapore (indeed, we have seen UHNW families relocating from all of these places).

The growth in the number of UHNW families worldwide and their use of SFOs, often goes hand in hand with security and other increasingly unwelcoming factors in their home jurisdictions such that a (COVID-assisted) trend of moving out of crowded cities and making the life-style choice to be based in an idyllic, safe location is looking increasingly attractive in the long term.

In addition to being a lifestyle choice, some of the other reasons why Cayman appeals as a possible location for the family’s SFO and as a place to live include: • A very well developed legal system originally based on English law but with decades of development and refinement to suit the needs of UHNW international families (such that many of those families will already be using Cayman trust and other fiduciary structures).

• A stable political and economic climate (indeed, the family may already own property and have immigration residency 30 / TRUST CAYMAN

Dominic Lawton-Smith, Director, Family Office Services, Crestbridge in Cayman as their ‘plan b’ to their home jurisdiction’s growing political and economic volatility).

• Whilst not having the increasingly unwelcome taint of being a ‘passports for sale’ jurisdiction, Cayman offers relative ease of long-term investor level immigration residency terms to certain categories which can lead to full UK citizenship after as little as six years.

• Being a very well integrated society with a generally high average standard of living and a very low crime rate.

• World-class hotels, restaurants, schools, housing and office stock (and the relative bang for buck that the Cayman housing market presently offers).

• Miami being just over an hour’s flying time and a good selection of direct flights to other North American cities as well as London.

• A greater degree of personal privacy than elsewhere.

• An appropriate balance between, on the one hand, having a well respected and regulated financial services industry and, on the other, an avoidance of excessive personal regulation and reporting.

• Well developed financial services providers including nine

A REAL DRAW

“Cayman has benefitted from exponential development of not just its infrastructure but also the sophistication of that infrastructure.”

Category A banks, various of which now have substantial private banking groups and an increasing number of licensed independent investment advisers geared towards providing investment services to wealthy families.

• A government and private sector strongly committed to attracting UHNW families and their family offices and businesses.

• Having no corporate, capital gains, income, profits, withholding, inheritance or annual property taxes (even those moving from the US may thereby legitimately avoid substantial state and other such taxes). Just avoiding having to think about personal tax returns and complicated tax structuring can be a liberating experience.

• Finally, just how well Cayman dealt with getting COVID-19 under control can only enhance its reputation as a desirable place to live.

At present, Cayman does not have one primary law in respect

of SFOs. Depending on how the SFO is to be structured, in theory, the banks and trust companies, companies, foundation companies, immigration, AML, trusts, beneficial ownership, companies management, directors registration, economic substance, local companies, mutual and private funds, securities investment business and FATCA/CRS legislation and regulations could all have a bearing. To the uninitiated, this could sound daunting; the reality is that many of these laws actually assist with structuring an SFO in Cayman and a range of planning options exist to find the best solution.

The pandemic has been an opportunity for Cayman to hit the pause button and think carefully about the direction of its future development. After more than a decade of private investment on an unprecedented level in the Caribbean, Cayman was already heading in the direction of becoming ever more sophisticated.

There is an even greater focus on favouring sustainable growth over mass tourism. Attracting SFOs and HNW and UHNW families aligns very well with these aims; they bring high economic benefits for low environmental downside. In turn, being very much considered an important part of Cayman’s future wellbeing can only add to Cayman’s attraction for such families.

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INSPIRING INVESTMENTS

Environmental, Social and Governance Investing

By Carlos de Serpa Pimentel & Esmond Brown, Appleby and James Long, Summit Trust Environmental, Social and Governance investing for Cayman Trustees. An analysis of ESG concerns for trustees and beneficiaries, and how to meet them when using Cayman structures WHAT IS ESG INVESTING? ESG is an acronym that is on everyone’s lips, but what does it actually mean? Environmental, Social, and Governance (ESG) investing means different things to different people. ESG investing generally refers to the set of standards that a company is screened against in order to determine whether it meets the criteria to be classed as a socially conscious investment.

When engaging in conversations around ESG investing with professional advisers, it is therefore instrumental to determine their understanding and approach as this will shape the product that is being offered. By way of providing a quick example, one might be surprised to learn that established ESG investment funds hold shares in oil stocks as they meet the criteria for investment (due to their significant investments in renewables).

An understanding of what ESG means to a particular client will help avoid any potential confusion down the line.

TRUSTEES DUTIES VS BENEFICIARIES OBJECTIVES In exercising their fiduciary duties, trustees must comply strictly with the terms of the trust instrument and exercise their powers over the trust property in the best interests of the beneficiaries.

This duty of care stipulates that trustees must use reasonable care and skill (expected of a prudent man of business) in administering a trust and extends to a duty to preserve and enhance trust property. These equitable duties are particularly relevant when approaching ESG investing as trustees must ensure that the trust instrument provides them with wide enough investment powers to enter into such arrangements.

In practice, when implementing an ESG strategy over trust assets where investment management is to be delegated to a third-party 32 / TRUST CAYMAN

Carlos de Serpa Pimentel, Partner, Appleby

Esmond Brown, Senior Associate, Appleby

professional manager, trustees should conduct full due diligence on the advisers to determine their approach to ESG investing, to establish whether they have a dedicated ESG team (which will minimize the risk of being caught by greenwashing where a company attempts to convey the impression that they offer environmentally sound products), and ascertain their historic and projected performance.

Trustees should satisfy themselves that the implementation of ESG investing will not result in a breach of their duties. Following implementation, trustees should also conduct periodic investment reviews (at least quarterly) to ensure that the investment manager is complying with the terms of the mandate and performing in line (and hopefully beating) the benchmark. In terms of benchmarking, it is important to compare the performance against ESG and nonESG benchmarks to ensure that implementation has not resulted in opportunity losses.

Invariably, effective trusteeship will mean providing beneficiaries with a forum to express their thoughts because as a class they are generally concerned by a lack of consultation. ESG investing is traditionally associated with socially conscious ‘next gen’ beneficiaries that want to be provided with the opportunity to add their personal flavour over investment of trust assets (this is a generality, not a rule).

These beneficiaries will want to ensure that the trust structure is flexible enough to allow for ESG investing, that the ESG criteria

Xxxxxx

James Long, Director, Summit Trust

“UHNW clients are seeing the benefits of establishing their own private trust company which can act as a trustee of their family trust.” applied caters to their sensibilities and that the investment performance is not adversely impacted. By encouraging ESG discussions, trustees can help bridge generational gaps as it promotes the concept of investing and saving whilst also adhering to values that are inherently important to the Next Gen. THE CAYMAN ISLANDS AND ESG INVESTING Professionals operating in the Cayman Islands have a number of options to help address the ESG considerations touched on above. Flexibility is perhaps the single most important weapon in Cayman’s armoury.

If a client based in a civil law jurisdiction isn’t familiar with the concept of a common law trust, a foundation company with separate legal personality can be incorporated with a detailed set of bylaws detailing exactly what investments should and should not be considered.

If the foundation company names beneficiaries, their rights can be limited or, conversely the founder could specifically provide for them to have a voice on what investments the company makes.

Or, a solution to consider for the client wanting to settle a trust, but eager to retain a sufficient degree of control over investments is a Cayman STAR trust with its purpose of investing in ESG

investments. The settlor could appoint himself or a close adviser as the enforcer to ensure such investment guidelines are closely followed. Alternatively, a settlor could consider a discretionary trust with certain express ESG powers of investment reserved to him or her.

Increasingly UHNW clients are seeing the benefits of establishing their own private trust company which can act as trustee of their family trust and the make-up of the board can include family members with particular ESG investment credentials.

Finally, if trustees are struggling to reconcile a particular beneficiary’s desire to have a large proportion of the trust assets invested in a little known green energy portfolio, with her father’s old, and seemingly unalterable trust instrument, that was established with boilerplate investment provisions, then an application to the Grand Court of the Cayman Islands to seek it’s blessing to resolve such a difficulty is a powerful and well established option to consider in the right circumstances.

CONCLUSION As trustees increasingly look to find ways of seamlessly introducing the ‘next gen’ into conversations about the future of their family structures, it is becoming more and more important to address conversation about social and environmental issues that matter to them to ensure that they not only feel engaged but that they are being listened to when it comes to investments. Cayman, as a jurisdiction of choice, is well placed to put these ESG investment objectives into practice with its broad range of flexible structures and well respected industry professionals.

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A NEW AGE

Modern structures, assets and planning WHAT ‘NEW AGE’ CONCEPTS AND CHANGES ARE CAYMAN TRUSTEES ENCOUNTERING IN 2021 AND BEYOND? In an interview with Henry Mander, a Private Client Partner at Harneys in the Cayman Islands, and Sheena Thompson, Director of Private Wealth at Intertrust, Emma Parker explores how developments in private client law and changing ‘new age’ client demands, have impacted on the role of the trustee and on the typical Cayman Islands private client structure

C

ayman has long been at the forefront of developments in the private client and trust industry, and has often been a pioneer with legislation such as the Cayman Star Trust, which was enshrined in law in 1997.

Henry Mander, a private client partner with Harneys in the Cayman Islands, explains: “When Cayman was considering alternative structures for international clients, and specifically the development of the Cayman Foundation Company, there was concern to get the concept right, and not simply to bolt on a civil law concept in a common law jurisdiction. I think this was very important, Cayman has a reputation for its best-in-class laws and it was crucial to get this development right.”

Cayman’s Foundation Company Law was established in 2017 and the resulting entity is a hybrid of both the well-regarded Cayman Trust and the equally well-established Cayman Islands company.

Taking the best of what Cayman had to offer and combining these two elements to create a robust alternative for those seeking a wealth preservation structure with its own legal personality.

This separate legal personality was key to the development of the foundation company, as in civil law jurisdictions clients can sometimes be mistrustful of the trust concept, as a trust itself has no legal personality. It was therefore important for Cayman as a jurisdiction to offer a structure that offers the flexibility and advantages of a trust, but in a form that was translatable to jurisdictions used to dealing with a company-based structure.

Mander explains: “Other than exempted trusts, which do not commonly apply to private client scenarios, a Cayman Islands trust does not have a registration number, and a certificate of incumbency cannot be produced, and this was sometimes hard to explain to those clients not familiar with trust law concepts.

In these instances having a foundation company vehicle available as an alternative is advantageous to the jurisdiction.”

Mander goes on to explain, that similarly to when the Cayman Islands Star Trust was first established: “We always knew that it would take time to see what the best use of these structures will be, it is only year three in the life of our foundation companies, 34 / TRUST CAYMAN

and we are starting to see how they may be useful.

“As expected the foundation company is being used and works well in the crypto currency space and we are seeing many crypto-structures being established as Cayman Islands Foundation Companies.

“What we have also seen is positive feedback from clients who are considering Cayman Islands structures, about the fact they have a choice of structuring options. So instead of just having trusts to talk about, for those clients from civil law jurisdictions, we are also able to offer the foundation company as an alternative, it is important to have these options.

“Another notable trend is the integration of Cayman’s trust structures and the foundation company structures. So using the two structures, perhaps as a foundation company could be utilised in a larger or more complex trust structure to simplify the overall arrangement. For example in a PTC structure, where you would typically have seen a Star Trust holding the shares in the PTC, you can now make the PTC a foundation company and remove the need for the top level of this structure. Foundation companies are also being used as enforcers of STAR trusts, and we are generally seeing foundations working well in combination with trusts.”

Sheena Thompson, Director of Private Wealth with Intertrust in

Sheena Thompson, Director, Intertrust

A NEW AGE

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A NEW AGE

the Cayman Islands, adds: “It is vitally important for Cayman as a jurisdiction to be continually advancing and innovating in the private wealth space in order to meet client’s changing demands.

We deal with a number of Latin American clients and from a Latam perspective, clients are more comfortable with the distinct legal personality and tangibility that a foundation company offers.

Having that range of product offerings is therefore very important to us from a jurisdictional perspective.”

Mander notes that Harneys is also seeing clients favouring foundation companies for philanthropic use. Explaining that: “There are often tax advantages for charities in a client’s home country for the philanthropic endeavours which they undertake, but sometimes it can be difficult to benefit fully from them if the vehicle which funds the charities is not registered, as would be the case with a Cayman charitable trust. Depending on the country in question, it can potentially be easier for the receiving charities to access the local tax advantages if the vehicle financing it is a foundation company, which has a registration number and legal personality, as opposed to the client using a trust to finance the charitable activities.”

“The reason Cayman is such a great jurisdiction for today’s clients is precisely because Cayman has the ability to provide flexibility. ” Aside from the increasing use of Foundation Companies as an alternative structuring option for wealthy global families, there have been changes in terms of the types of assets that clients are concerned about preserving and protecting through their Cayman Islands structures, and also in terms of the primary concerns and objectives of settlors and beneficiaries.

Sheena Thompson explains: “We are seeing a big change in terms of the type of assets we are being asked to hold. More and more clients, and not just the next generation, are concerned about digital assets, and the value and protection of their Instagram account, their images or their emails. Concern about these types of assets comes from across the generations from the silver generation to the next gen.

“There is an expectation that the modern day trustee has the right professional connections to facilitate and deal with placing these types of assets into structures and that we can facilitate the onshore and offshore advisors that will be needed to put this together.”

Mander comments: “It’s not just the addition of digital assets into client’s structures that we are seeing, but also a trend to more diverse assets generally, so whether that’s an operating company, alternative investments, art and collectables or something else, we have to ensure that there is an appropriate allocation of responsibility between the various stakeholders in the structure depending on what the assets are.”

Both Mander and Thompson felt that the lack of a ‘typical’ Cayman Islands private wealth structure was a common theme across the 36 / TRUST CAYMAN

Henry Mander, Private Client Partner, Harneys board in recent years. Thompson commented that: “There is simply no such thing as a cookie-cutter structure these days. Every trust, foundation company or hybrid structure we establish is bespoke, and it is therefore vitally important that as professionals we are well-placed and well-networked to put the right team together, no matter what the client objectives are.

“We are seeing clients come to us with different motivations than would have been typical 10 years ago. As trustees back then it was all about preserving the trust assets and ensuring the capital value and income was maximised. Today, settlors and beneficiaries may be more concerned about environmental or impact investing, and the trust has to be set up in a way that the trustee can still fulfil their fiduciary obligations, but meet the client’s environmental or impact agenda. This again has fuelled a trend towards very bespoke structures that can both meet the wishes of the settlor and beneficiaries, but also still accord with our duties as trustees.”

Other trends that have impacted the modern-day trustee and the private wealth structures they manage, according to Thompson include: “Ever-changing family dynamics due to generational transition and other circumstances. Such changes require flexibility to be built into families’ structures and plans, to deal with a variety of circumstances, some of which will be unforeseen. Many families now involve ‘non-traditional’ arrangements whether that’s divorce, same-sex marriage, children outside marriage, family members in multiple jurisdictions and more. The key requirement for your planning and structures today is flexibility.”

Mander concludes that: “The reason Cayman is such a great jurisdiction for today’s clients and their varied needs is precisely because Cayman has the ability and expertise to provide this flexibility. We are a well-regarded jurisdiction with good laws, specialist judges and courts, and well-established legal precedents.

“Our professionals are globally recognised as leaders in the field and have the experience to adapt to any situation and get it right.

We are also extremely well connected globally, because Cayman is a market-leading jurisdiction, Cayman professionals are exposed to all the core onshore markets and have vast experience planning for families from the UK, Europe, Middle East, Latin America, North America and Asia. This exposure, and network of connections with leading onshore professionals, is crucial when devising bespoke, flexible structures for today’s global families.”

Imagine lawyers who tailor solutions to your needs.

Everyone is different, and not one size fits all. Our private wealth clients trust our integrity and personal approach; we customise our services to meet your individual needs. We make sure our solutions are fit for purpose.

We’re Harneys, a global offshore law firm with entrepreneurial thinking. harneys.com

For more information, please contact:

Henry Mander

Partner | Cayman Islands henry.mander@harneys.com | +1 345 815 2927

Charles Moore

Counsel | Cayman Islands charles.moore@harneys.com | +1 345 815 2942

LEGAL SERVICES

Global Wealth Structuring Experience, with agility

Our global wealth structuring team provides specialist BVI, Cayman Islands, Guernsey and Jersey trust, foundation and related corporate law and regulatory advice to individual and institutional clients. We are highly regarded for the quality of our work and have an excellent reputation for our client service.

Having worked with many of our clients for decades, we have an excellent knowledge of succession and next-generation planning, creating and amending structures so that they remain fit for purpose and relevant in the modern world.

Andrew Miller, Partner +1 345 814 0871 andrew.miller@bedellcristin.com

bedellcristin.com

Daniel Altneu, Managing Associate +1 345 814 0885 daniel.altneu@bedellcristin.com

BVI | CAYMAN ISLANDS | GUERNSEY | JERSEY | LONDON | SINGAPORE

FACTS AND FIGURES

Cayman by numbers ISLAND FACTS OFFICIAL LANGUAGE

ENGLISH

Total population

65,000+

POLITICAL STATUS British Overseas Territory

Average temperature high

30째C / 87째F

Main industries Financial services Tourism Construction

Average temperature low

24째C / 76째F ACCESSIBILITY

Time zone

5,500

UTC (-5) year-round

international flights per year

Resident nationalities

120+

38 / TRUST CAYMAN

Proximity to USA 90-minute flight from Miami, Florida

ogier.com

Gl bal reach Ogier’s Trusts Advisory Group, a team specialising in private wealth, 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: • 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

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“Very responsive, reassuring, knowledgeable” Chambers HNW

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“A powerhouse” Legal 500 Caribbean

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“A pleasure to work with” Legal 500 Caribbean

“First rate litigator” Legal 500 Caribbean

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Partner, Cayman Islands

Partner, Cayman Islands

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Partner, Cayman Islands

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Managing Associate, Cayman Islands

FOOD NOTES

Culinary excellence on Cayman

The Cayman Islands are heralded as the culinary capital of the Caribbean, and with over 200 restaurants to enjoy fabulous food, visitors and residents are spoilt for choice

T

he trio of islands’ traditional cuisine is influenced by Jamaican flavours with inspiration from all over the world, and what makes the food scene so special is its diversity and fresh ingredients. The warm soil provides a myriad of vibrant, exotic fruit and vegetables including yellow squash, avocados, cassava, callaloo (spinach), pineapples, tomatoes, coconuts, peppers and an abundance of citrus fruits. Surrounded by the sea, the islands’ restaurant menus are brimming with freshly-caught fish and seafood, the most popular being tuna, turtle, conch, lobster, snapper and mackerel.

Some of the must-try dishes in the Cayman Islands include conch stew, a type of sea snail which you’ll find on most menus during conch season, between November and April; Johnny Cakes, Jamaican deep-fried delicacies which are delicious on their own or with butter and jam; Cayman-style lobster, cooked with hot sauce and scotch bonnet peppers; and Cayman-style beef which is slow cooked, shredded and blended with hot spices.

As you would expect, the Cayman Islands are committed to supporting local farms and fisherman by sourcing ingredients directly from them. Naturally, this also means that the food being served up in its restaurants is as fresh as it possibly can be.

One of the highlights in the Cayman calendar is the Cayman Cookout, hosted by renowned chef, Eric Ripert, which is set along Seven Mile Beach at the luxurious Ritz-Carlton. This annual event, held in January every year, brings together talented chefs, culinary influencers and wine and spirit experts, and is one of the most prestigious food and drink celebrations in the world.

Usually this event welcomes the most famous and best-loved chefs from across the globe, but for 2021 it has been scaled back, as Eric Ripert himself explains: “Despite the obvious challenges through most of 2020, I’m very happy the Cayman Cookout is going ahead on 15th to 17th January 2021.

“We are going back to the roots of how we started the festival 12 years ago when only local chefs and restaurants took part.

Hopefully I’ll be able to go to Cayman depending on restrictions.”

40 / TRUST CAYMAN

Eric is chef and co-owner of the 3 Michelin star Le Bernardin in New York, which has been ranked among the best restaurants in the world. He also partnered with The Ritz-Carlton Hotel Company to open Blue in Grand Cayman.

He says: “Cayman Cookout means a lot to me because I was part of the small committee that created the event. It’s a lot of fun and I’m always happy to be able to entertain a crowd that loves discovering the island through food.”

The Cayman Cookout includes picnics and parties on the beach, events with winemakers, guest chefs and a gala at Blue. Local chefs will be cooking, teaching and sharing cultures. It’s likely there’ll be a different feel to it this time around, but rest assured, celebrating the diversity of food will be at the heart of the 2021 festival.

“It’s normally so busy with people visiting from all over the world, so this year locals will have more space to explore,” Eric adds.

One of Eric’s favourite local ingredients that he loves to cook when he’s in Cayman is conchs. They’re in season during the festival and as he says, “They can’t be exported to the US, you can only get them in Cayman and the Bahamas. It’s one of the ingredients that

Eric Ripert

Massimo De Francesca

Agua, Camana Bay is extremely refined and represents what is available from the sea.”

If Eric is able to visit Cayman for the event, he plans to host a dinner and will teach cooking classes on the beach. If restrictions prevent him from travelling, he’ll be taking part virtually.

“I hope I’ll be able to attend the festival. The food scene is so diverse and there are so many different cultures living there which are expressed through food. It’s all about discovery and celebrating the culture. It’s a homage to Cayman and is well worth a visit.”

Another regular at the Cayman Cookout, who is very much looking forward to being involved for his sixth consecutive year, is Massimo De Francesca, Executive Chef at Kimpton Seafire Resort and Spa. A well-travelled chef who has spent time working in Italy, Canada and the USA, he is now proud to be part of the food scene on Grand Cayman.

Massimo brings his many global influences to the hotel’s three restaurants. He is considered an authority on the multicultural culinary scene in Cayman, incorporating his extensive knowledge gleaned from locals, restauranteurs and fisherman into his unique culinary offerings.

He’s very excited that the Cayman Cookout is going ahead in 2021, albeit in a slightly different form.

“It’s always a lot of fun, and I’m particularly looking forward to this year’s event as we’ll be collaborating with local culinary talents,” says Massimo.

“Cayman is the culinary capital of the Caribbean, so when all of the best local chefs get together it’s bound to be a top notch event.”

Massimo and the Kimpton Seafire Resort team will be supporting a number of different events and are particularly looking forward to the highly-anticipated Barefoot BBQ. “The people of the Cayman Islands love to eat, so they particularly appreciate great tasting food, and drinks of course! Cayman’s rich history and our exposure to international audiences has truly developed the islands to be the ultimate destination for exceptional cuisine. Our food and drinks scene has become a main source of entertainment for locals and visitors alike.”

Massimo also feels very strongly about developing chefs of the future and says events like the Cayman Cookout help young culinary talents see the potential of working in the hospitality industry. He says it’s important to support and encourage them to pursue such careers to ensure Cayman continues to maintain its reputation for culinary excellence for generations to come.

At-home dining While there are a huge number of exceptional restaurants to visit on Cayman, some of us might still prefer to eat in the comfort of our own homes or rented accommodation, whilst still dining on the best possible food.

Rent-a-Chef, owned by Remy Azavedo, caters for intimate dinners or, when allowed, larger catered events. It’s a chance to enjoy restaurant-quality food in your own, laid-back environment. Remy looks after everything from the food to the cutlery, crockery and service, so there’s no need to lift a finger or clean up following the dinner.

Originally from Goa, Remy draws heavily on his heritage in terms of philosophy, passion for food and presentation. He has featured in the International Who’s Who of Chefs among some of the best chefs in the world and strongly believes that you eat with your eyes first, so unsurprisingly, his dishes are works of art.

WHAT DO YOU LOVE ABOUT THE CAYMAN FOOD SCENE? It’s a small island with lots of huge culinary talent. I’ve been cooking here for 21 years and love the diversity of flavours available on the island.

WHAT’S SO GREAT ABOUT CAYMAN COOKOUT? You get to meet so many great chefs, many of them celebrities, and also get the opportunity to sample some of the world’s finest cuisine. In previous years I have enjoyed helping guest chefs at their events, but it’s always such a busy time of year for me, so I’ve not been able to commit to my own event.

HOW HAS THE RENT-A-CHEF SERVICE CHANGED AND HOW DID YOU ADAPT DURING THE PANDEMIC? We had so many cancellations – weddings, villa dining events, so I quickly switched to offering meal deliveries to locals and it was a huge success. Honestly, my business has bounced back thanks to customer loyalty and support from the local community. I have been busier now than ever before.

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WINE TIME

The ultimate destination for wine enthusiasts Because the Cayman Islands is the go-to destination for luxury holidays in the Western Caribbean, it shouldn’t surprise you that these beautiful islands have also developed a reputation for boasting some of the best selections of wines from across the globe

W

hether you’re a connoisseur or you are just starting to learn more about the wonderful world of wines, you’ll be spoilt for choice in the Cayman Islands, not only with the drink itself, but also with the number of experts on hand.

Matteo Manfio is Wine Director and Assistant Restaurant Manager at Luca Restaurant at the Caribbean Club on Grand Cayman.

He says one of the reasons the wine scene in Cayman is so exciting is because you get so much choice and quality for such a relatively small island.

“In most of the restaurants you are spoiled with a well-integrated wine list with lots of grape varieties ranging from famous wine producers to hidden gems,” says Matteo.

“It is not unusual to find an old vintage from a highly important wine producer and most restaurants have a sommelier or wine expert who can share so much interesting information with you.

I believe this is a great plus for the customers because it delivers a more exciting dining experience.”

Pawan Negi, Wine Director at Agua Restaurant and Lounge in Camana Bay, says: “The Cayman Islands are home to people from all parts of the world, so it’s important that the wines available are from all parts of the world too. There’s a really interesting balance between our American tourists who are generally into New World wines, and our European expats who love their Old World wines.”

The wine list at Agua is extensive and Pawan says it’s important to give customers plenty of choice.

“We get a lot of tourists every year who are big wine lovers and are always looking to try new wines,” he explains.

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Matteo Manfio, Wine Director and Assistant Restaurant Manager at Luca Restaurant “Every season we stock up on new and exciting wines, as well as the old favourites, to make sure we can cater for all tastes, including the most adventurous.”

Mario Lacoviello owns The Tasting Room and Wine Cellar on Caribbean Plaza, Grand Cayman. He says Cayman is a ‘boiling pot’ of diverse nationalities and everyone brings something different to the table.

“There are many people here that are wine enthusiasts, who I have learnt a lot from,” says Mario.

Having grown up in rural Italy surrounded by vineyards and helping his father make wine at home, he feels lucky to make a living doing what he loves, and in such a beautiful part of the world where almost everyone appreciates wine. Mario specialises in sourcing products from small, organic wine producers and he says this is really important to him.

“From a young age, I saw how much hard work goes into making wine,” he says.

“Families in the industry have a real passion for producing quality wines which can be smelt, tasted and felt in every aspect of their business. Small wineries aren’t chasing financial returns, these winemakers have vision, much like an artist imagines his work.

Their only constraints are the vineyard and history, and more often than not the outcome is near perfection.”

Mario says there’s something really special about introducing rare and unique wines to his customers.

“If you go to the big box stores you will find all the famous brands, but when you visit The Tasting Room, you’ll find new products from wineries you’ve never heard of, or not yet discovered.

WINE TIME

“Every season we stock up on new and exciting wines, as well as the old favourites, to make sure we can cater for all tastes, including the most adventurous.”

Pawan Negi, Wine Director at Agua Restaurant and Lounge

Mario Lacoviello, Owner The Tasting Room and Wine Cellar

“We have a loyal following so if a customer comes in and we know their taste, I can show them something that has come from off the beaten track. With new customers, if they tell me their taste and preference, we can normally pair them up with something special that they have not tasted before.”

Unsurprisingly, the pandemic hit tourism in Cayman hard, so the wine scene was pretty quiet in 2020. Matteo shares that they lost 70% of their business at Luca, but as he says, they’re still standing and continue to offer the best quality food, wine and service that they have been providing for the last 13 years.

Pewan says Agua Restaurant and Lounge also saw a massive drop in business, the locals have been extremely supportive and loyal, helping to keep the business afloat.

Mario says, like many businesses, they’ve learnt to adapt their offering at The Tasting Room and Wine Cellar.

“I am extremely grateful for my local clientele who have supported so many businesses like us throughout the pandemic,” says Mario.

“Maintaining stock levels was difficult as my suppliers are from

all over the world, and with lockdowns everywhere it was hard to get my product shipped. However, after getting over a few obstacles we were up and running.”

As soon as the Cayman Islands went into lockdown The Tasting Room switched immediately to delivery, and once the shop was open again, tastings were available but with restricted numbers to allow for social distancing. There’s no stopping a real wine buff.

Over at Agua and Luca, both adapted to the new normal by offering a food delivery service and Pawan and his team at Agua hosted wine tasting sessions on Zoom, which were a huge success.

The last word goes to Mario, who seems to have fallen in love with Cayman and its people even more in recent months.

“The Cayman Islands is a very special place to be at the moment,” he smiles.

“We have been able to continue to operate, albeit at a much slower pace, but our doors are still open and that says a lot about our amazing community, and our fabulous wines.”

Wine recommendations from the experts MATTEO MANFIO WINE DIRECTOR AND ASSISTANT RESTAURANT MANAGER AT LUCA RESTAURANT My favourite wine is “Chateau Palmer”.

It is French, Bordeaux from Margaux. A blend of merlot, cabernet sauvignon and petit Verdot. It is concentrated with great intensity of pure, sweet fruit and velvety tannins. Price can change depending on the vintage but average 620/650 kyd.

PAWAN NEGI WINE DIRECTOR, AGUA RESTAURANT AND LOUNGE Palari Faro 2007, from Sicily, Italy is fabulous. It’s a highly underrated wine.

I believe a wine tastes more delicious when you don’t know what to expect and it turns out to be delicious!

76kyd.

MARIO LACOVIELLO THE TASTING ROOM AND WINE CELLAR If I am honest, I do not have an absolute favourite wine. My search for my favourite continues with every cork I pop open.

Each wine you try is different from the last, so for me there can be no favouritism in wine. I have to keep searching and trying new wines.

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MARKET UPDATE

Prime property in Cayman The Cayman property market shows no signs of slowing down, says Sue Nickason of Provenance Properties HOW IS THE PROPERTY MARKET LOOKING IN THE CAYMAN ISLANDS? Total sales of all properties in 2019 was approximately USD $434m. In 2020 to date (November), sales are reported at USD $404m. The median average sales prices of single family homes and condos have increased in 2020 compared to 2019.

WHY IS NOW A GOOD TIME TO INVEST IN CAYMAN PROPERTY? It is always a good time to buy property in the Cayman Islands.

Whether the purchase is for a vacation property, a full-time residence or for investment, Cayman has always been well 44 / TRUST CAYMAN

regarded for offering quality real estate in an easy-to-reach and stable jurisdiction. There are no restrictions on foreign ownership of land, no alien landholding license requirements and no recurring property taxes, making it a straightforward process for international buyers to acquire property.

HOW IS THE MARKET LOOKING COMPARED TO THIS TIME LAST YEAR? Q1 2020 started off strongly, following three years of steady market growth. The Cayman Islands observed shelter in place guidelines due to COVID in Q2, resulting in fewer than expected closings, but no decrease in inquiries in the luxury segment. In fact,

MARKET UPDATE

The Residences at Seafire Credit: Dart Real Estate

“Whether the purchase is for a vacation property, a full-time residence or for investment, Cayman has always been well regarded for offering quality real estate.”

a number of realtors reported an increase in inquiries since people had more time at home to spend online looking at properties for sale. Q3 and Q4 have seen very strong sales in the luxury segment, with reports of ‘best months ever’ from realtors in this segment of the market. Sales are coming from domestic and international markets alike, with move-in ready condos on Seven Mile Beach and luxury homes in popular neighbourhoods like Crystal Harbour in limited supply. Our own Provenance Properties team - which specializes in luxury real estate - has sold over USD $34m at The Residences at Seafire this year, has had a decided uplift on inquiries for OLEA at Camana Bay and has been busy transacting on other luxury properties as well as vacant land parcels.

WHAT’S IN THE PLANS FOR 2021?

We expect inquiries to remain strong due to three key factors: 1. The new Global Citizen programme, which allows qualified applicants to live and work from home in the Cayman Islands for up to two years.

2. The Residency by Investment through real estate programme, which allows qualified applicants to become a lifetime resident of the Cayman Islands after investing a minimum USD $2.4 m in developed real estate (and meeting some other basic requirements).

3. The value proposition of Cayman. The Islands have provided TRUST CAYMAN / 45

MARKET UPDATE

“Seven Mile Beach is popular with buyers seeking luxury waterfront condos on a beautiful beach in a location proximate to the airport.” an example of effective leadership, stable government, British Overseas Territory status, sound judiciary, strong credit rating (Moodys A-3), low debt to GDP (one of lowest in the world) and low crime rate.

These are all important factors to property buyers, particularly international clients who consider the stability of a jurisdiction when considering property acquisitions for vacation home, investment or residency purposes.

WHAT ARE THE MOST POPULAR ISLAND LOCATIONS? Every Cayman Islands neighbourhood offers unique attributes and benefits, so it ultimately depends on what the buyer is seeking.

The neighbourhood of Seven Mile Beach is best known due to its acclaim as one of the top beaches in the Caribbean. As such, it is popular with buyers seeking luxury waterfront condos on a beautiful beach and in a location proximate to the airport, George Town and Camana Bay. Similarly, the Seven Mile Beach Corridor is a popular choice for luxury residences in communities such as the Yacht Club, Vista del Mar, Salt Creek, Crystal Harbour and Canal Point. Most homes in these communities are canal-front, offering convenient access to the North Sound and yet they are also a short walk or drive to Seven Mile Beach. This area is also home to Grand Cayman golf courses and the Cayman Islands Yacht Club.

South Sound is another lovely waterfront community and in recent years has seen the introduction of several new contemporary condominium developments. Residents in this area appreciate the proximity to several schools and the popular rugby and tennis clubs. The eastern district of Grand Cayman is much loved for its ‘authentic Caribbean’ ambiance and slower pace of life. Here, property buyers will find historic Bodden Town (once the Islands’ capital), the lovely Queen Elizabeth II Botanic Park, Rum Point (home of the original mudslide cocktail) and classic beachfront homes. This is often a popular locale in which Cayman Islands residents own weekend properties.

Finally, West Bay is another neighbourhood that offers the benefits of an island lifestyle and more recently has seen redevelopment of waterfront properties and notable new home construction activity in communities such as The Shores.

AVERAGE CONDO PRICES? In 2019, the average sales price was $2,309,978 for Seven Mile Beach and $905,215 for Seven Mile Beach Corridor. In 2020, the average sales price was $2,512,800 for Seven Mile Beach and $813,886 for Seven Mile Beach Corridor. These are the leading areas for luxury real estate sales in the Cayman Islands. provenanceproperties.com 46 / TRUST CAYMAN

Credit: Dart Real Estate

The average time it takes to sell a property has dropped every year since 2015 Condo prices have rapidly increased across all submarkets from 2015 to 2020 Short term rentals were climbing fast (preCOVID)

CONFERENCE 2020

Step Cayman’s international wealth structuring forum Step Cayman Islands’ third annual International Wealth Structuring Forum was held in January 2020 at the Ritz Carlton, Grand Cayman and once again heralded as a huge success for the STEP Cayman branch

B

uilding on the success of the last two years, the event attracted its highest number of delegates yet and was enjoyed by a wide range of attendees and sponsors.

Respected speakers converged on the Islands from the United Kingdom, the United States, Switzerland, and from across Latin America and Asia to take advantage of the extensive educational and networking opportunities on offer.

Topics ranged from discussing new regulatory updates, analyzing the psychology behind trust disputes, debating the needs of the ‘next generation’ of trust beneficiaries, and reporting on new case law. Once again, Cayman was showcased as the leading jurisdiction for private clients, wealth managers, and the

administration of cross-border trusts and estates.

Facing unprecedented global events that have restricted travel to our beautiful islands in January 2021, the STEP Cayman Branch will instead be hosting a ‘Wealth Structuring Week’ in which local and international speakers will present webinars to its international connections on developments in local legislation and case law, discuss new challenges and opportunities for trustees in the future, and debate solutions to challenges regularly faced by trustees of Cayman Islands trusts.

The STEP Cayman Branch hopes to welcome international delegates back to the islands for the return of its International Wealth Structuring Forum in 2022.

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TRUSTED TOOLS

Trustees in trouble

Lucy Diggle, Senior Counsel, Walkers

By Lucy Diggle, Senior Counsel, Walkers Innovative legislation as well as pragmatic and robust rulings from the Cayman courts have long provided trustees of Cayman Islands trusts with a helpful toolkit to navigate contentious situations. Even the most carefully drafted trust deed and exceptionally high level of trustee expertise cannot prevent the occasional family dispute from arising. When that dispute extends to the administration of the trust, the trustee who finds itself caught in the crossfire has a number of tools at its disposal to successfully guide it through the dispute. The nature and extent of two such tools has recently been confirmed by the Cayman courts, demonstrating the Cayman judiciary’s willingness to provide assistance to trustees when they need it most

RETROSPECTIVE BEDDOE RELIEF A Beddoe application is one in which a trustee seeks the direction of the court as to whether it should defend, pursue or continue to defend or pursue litigation in its capacity as trustee. Beddoe relief is a particularly helpful tool for trustees seeking to navigate their way through contentious situations for two reasons. Not only does it protect the trustee from future criticism from beneficiaries in

respect of the action it has taken in the legal proceedings, but it also ensures that the trustee will be able to take its own costs, and any costs awarded against it in the legal proceedings, from the trust fund.

Ideally, a trustee will seek Beddoe relief before it participates in any legal proceedings. That said, occasions do arise where it may not be possible to seek the court’s guidance prior to taking any

48 / TRUST CAYMAN

TRUSTED TOOLS

steps in the proceedings. In those circumstances, the trustee may wish to seek the protection of retrospective Beddoe relief in respect of the steps it has already taken in the litigation. The question of the availability of such relief arose this year in the case of In the matter of the XYZ Trust (unreported, 27 February 2020).

In that case, the trustee had found itself on the receiving end of two sets of foreign proceedings attacking the Cayman trust which had their roots in an extremely acrimonious divorce between the named settlor and alleged economic settlor of the trust.

The foreign proceedings were so fast moving that by the time the trustee’s application was heard, the trustee had already taken a number of steps in the foreign proceedings in order to protect the trust assets and one of proceedings had in fact already been dismissed. Accordingly, the trustee sought prospective and retrospective Beddoe relief from the Cayman court.

In granting the relief sought by the trustee, the Cayman court endorsed its 2018 decision in the case of In the Matter of the Stingray Trust in which the Cayman court confirmed the availability of retrospective Beddoe relief. These two decisions make it clear that although it remains prudent for a trustee to make an application for Beddoe relief before bringing proceedings or as soon as proceedings are brought against it, the court may grant retrospective relief in certain circumstances. In particular: • Such relief may be granted if, had the trustee applied for the Beddoe relief at the outset, the court would have directed the trustee to take the steps that it had in fact taken.

• The court will be sympathetic to a retrospective application if it only later becomes apparent that the litigation is likely to be become protracted or complex.

• If the litigation does become more protracted or complex than initially anticipated, the trustee should make its retrospective application promptly.

SURRENDER OF DISCRETION This year the Cayman court also confirmed that a trustee may seek the surrender of its discretion to the court provided that the court is satisfied there is a good reason for doing so. Professional trustees are regularly required to make difficult decisions with which not all of the beneficiaries may agree. However, in limited circumstances, the court may be prepared to step into the trustee’s shoes and make that decision for the trustee pursuant

“A Beddoe application is one in which a trustee seeks the direction of the court as to whether it should defend, pursue or continue to defend or pursue litigation in its capacity as a trustee.”

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TRUSTED TOOLS

to what has come to be known as the Public Trustee v Cooper jurisdiction. Again, provided the trustee has made full disclosure to the court and follows the court’s directions, it will be protected from later attack by disgruntled beneficiaries.

In HSBC International Trustee Limited v Tan Poh Lee & Ors (unreported, 22 January 2020), a family dispute among the deceased settlor’s children resulting in litigation in numerous jurisdictions, led the trustee to seek the surrender of its discretion in respect of three crucial decisions concerning the administration of the trust. In confirming that the court would accept the surrender of the trustee’s discretion on this occasion, the court held that it had no greater powers than the trustee under the trust deed or the law and that it would: 50 / TRUST CAYMAN

• Act in the place of the trustee by giving the trustee directions as to what it must do.

• Act as any reasonable trustee could be expected to act having regard to all the material circumstances.

• Not consider itself bound by the wishes of any particular beneficiary.

Being able to seek such relief provided welcome protection to the trustee who, through no fault of its own, would be in the firing line from the beneficiaries regardless of the decision it made.

These cases demonstrate just some of the powerful tools trustees have at their disposal and the willingness of the Cayman courts to provide practical assistance when it is needed most.

Walkers' Private Capital & Trusts team comprises specialists who advise on private and commercial trusts, wealth and succession planning, wills and probate, and trusts and estate litigation matters. We work with high-net-worth individuals, family

businesses, family offices, private banks, trust companies and their advisers to provide timely, customised advice across jurisdictions addressing the needs and sensitivities of private capital clients.

"They are strong and have depth of knowledge and expertise in offshore trusts‌ Major blue-chip companies and very wealthy people see them as a natural choice."

Chambers HNW Guide

www.walkersglobal.com

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FACTS AND FIGURES

Cayman by numbers GLOBAL FINANCE CENTRE FACTS

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members of Cayman Islands Legal Practitioners Association

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Over 40 of the Top 50 banks globally have licenses in Cayman

“The nature of offshore banking has changed over the years, including as a result of the global pandemic in 2020, but its role has not. The Cayman Islands has continued to demonstrate its ability to professionally manage risk and conduct business in this highly regulated industry, while still driving innovation and serving our clients’ needs.

Ultimately, our ability to provide our clients with access to privacy, data protection and trusted relationships with skilled service providers, is paramount to our continued success.”

Regina Oliver, Cayman National Bank 52 / TRUST CAYMAN

Because success matters

In a world that is changing - we adapt our approach, not our values.

At Crestbridge Family Office Services our focus is always on what matters most to our clients. Our service is founded on flexibility, collaboration, reliability and transparency.

As a truly independent business we create solutions to meet your specific needs, both now and as they evolve.

Dominic Lawton-Smith Director, Family Office Services dominic.lawton-smith@crestbridge.com Emma Santiago Director, Family Office Services emma.santiago@crestbridge.com

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