1. Overview of Cayman Islands
The Cayman Islands is a British overseas territory in the Western Caribbean Islands of America where the political and economic environment is relatively stable. Relying on the UK’s mature economic system,market environment, sturdy and flexible tax system and judicial system in the Cayman Islands, as well as perfect financial and legal professional services, Cayman has become a pioneer in the global offshore trust industry .
2. Cayman Trust Legal System
The Cayman trust law is inherited from the British common law. The main laws governing Cayman trusts are the Trust Law, the Anti-Fraud Law and the Perpetual Law.
3. The functions of Cayman Trust
The establishment of a Cayman trust aims to achieve the goals of estate distribution, personal financial planning, tax planning or other business planning. The achievement of these goals usually includes one or more of the following:
• Support spouse and children;
• Segregation of assets so that they will not be affected by personal liability in the future;
• Reduce inheritance tax, income tax and capital gains tax as much as possible;
• Circumvent the special inheritance rules of civil law jurisdictions;
• Protect family wealth and continue the family business;
• Eliminate complicated probate, allocate assets effectively and in a timely manner after death;
• Free from foreign exchange controls;
• Set up or make provisions for charities;
• Set up pension or employee share option plans;
• Ownership of specific assets or general investments;
• Protect lenders in corporate financing transactions.
3. Types of trusts commonly used in Cayman
With the changes in laws and regulations and the development of trust practices, the following types of trusts have been formed Under the Cayman trust system:
• discretionary trust
•Fixed Equity Trust
• Trust with protector
•Reserved power of the client
It is worth noting that, with the exception of STAR and charitable trusts, which have no deadlines, all other types of Cayman trusts established after August 1, 1995 must comply with the “Permanent Rights Law”, which stipulates that the duration of trusts can be no more than 150 The fixed time of the year.