STAR Trusts (known in other jurisdictions as purpose trusts) have been available for use in the Cayman Islands since 1997 following the enactment of the Special Trusts (Alternative Regime) Law, 1997, which has since been incorporated into the Trusts Law (revised) (the “Law”).
The introduction of the STAR Trust regime represented a huge shift in the potential uses for Cayman trusts, resulting in a highly adaptable tool for settlers which allows much greater flexibility in structuring possibilities, subject of course to the STAR Trust’s purpose(s) being lawful and not contrary to public policy.
The uses for STAR Trusts will continue to evolve and grow, limited only by the creativity of settlors, lawyers and trustees, but the main benefits of their use will be the flexibility and confidentiality afforded by their use. Examples for uses of STAR Trusts include:
It is a requirement that STAR Trusts have an ‘Enforcer’, who is the only person with standing to enforce the terms of the STAR Trust (the Law removes that power from the beneficiaries (if the trust has any), as well as the rights of beneficiaries to obtain information relating to the trust and its administration). The Enforcer is usually a close friend or family member of the settlor or one of the settlor’s legal or other advisers. Where a professional Enforcer is required, IMS has close working relationships with other service providers in the Cayman Islands who provide Enforcer services at a very reasonable cost.
The trustee of a STAR Trust must be or must include a trust company licensed to conduct trust business in the Cayman Islands pursuant to the Banks and Trust Companies Law (Revised). This provides the settlor with comfort that the administration of the trust is being carried out by a suitably qualified and experienced person or entity. IMS holds a full trust licence issued by the Cayman Islands Monetary Authority to carry on trust business and can provide comprehensive trust services. We can also act as Enforcer where we do not act as trustee.
Documentary records of the following must be kept, in the Cayman Islands, at the office of the trust corporation acting as trustee:
(i) the terms of the STAR Trust;
(ii) the identity of the trustee(s) and the enforcer(s);
(iii) all property settled upon the STAR Trust and the identity of the settlors;
(iv) the property subject to the STAR Trust at the end of each of its accounting years; and
(v) all distributions or applications of the trust property.
Contact us at firstname.lastname@example.org or click on the links on this page to find out more.
PO Box 61
Harbour Centre, Grand Cayman
KY1-1102, Cayman Islands
T: +1 (345) 949 4244
F: +1 (345) 949 8635
IMS attends a number of relevant industry events in various jurisdictions, from private banking and family office forums, to hedge fund and captive insurance conferences. To find out where you can next meet us, please click here.