The Cayman Islands is an autonomous British Overseas Territory consisting of three islands located to the south of Cuba. The main island, Grand Cayman, has long been recognized as an offshore tax-free jurisdiction. As one of the most popular tax haven countries in the world, it has been a desirable place to conduct business in for many years.
Although Cayman law has been derived from English common law, this jurisdiction has been innovative when it comes to revising and enacting legislation to fine-tune its laws with regards to trusts. Cayman Islands trusts are principally governed by the Cayman Islands Trusts Law (revised in 2009), but the Fraudulent Dispositions Law (FDL), enacted in 1989, is relevant when considering the asset benefits of an offshore trust in the Caymans.
According to the Cayman’s FDL: “Every disposition of property made with an intention to defraud, and at undervalue, shall be voidable at the insistence of an eligible creditor thereby prejudiced.” However, the burden of proof is on the creditor applying to set aside the trust. And, the creditor in question must bring the action in the Cayman Islands’ courts versus their home jurisdiction, which can be a costly proposition.
Due to the Caymans’ status as a British Overseas Dependent Territory, the quality of their judicial system is considered superb. The islands are known for providing the services of highly qualified tax professionals and attorneys, especially important when disputable cases arise. Additionally, the quality of the banking as well as the investment services on the islands, entice clients.
Something to know Before you Start
The Cayman Islands, unlike most countries, do not have a corporate tax and do not impose personal taxes on residents. The creation of a trust in the Cayman Islands will provide protection for your legacy on a tax-neutral basis. The islands have no income tax, property gain taxes, capital gain taxes, payroll taxes, and no withholding tax and are, therefore, considered to be tax neutral.
In addition, there is also no inheritance/estate tax in the Caymans which would become applicable upon the death of the Settlor.
With the exception of exempted trusts, trusts, in general, aren’t registrable with the Cayman government. Therefore, any information that relates to the trust as well as the Settlor are held strictly in confidence unless the Trustee is under a legal obligation to disclose the information or the Settlor has asked that the trust information be disclosed.
Other advantages of establishing an offshore trust in the Caymans include:
- Asset Management and Protection
- Flexibility
- Avoidance of Probate
- Preservation of family wealth/continuity of a family business.
Working with a Financial Professional
Generally speaking, trusts are used by individuals for a variety of personal as well as business reasons, especially in the situations of estate and succession planning as well as part of an asset protection plan.
Establishing an offshore trust in the Cayman Islands not only protects your assets from creditors, ex-spouses, and lawsuits, but also offers fiscal neutrality and tax benefits.
As an experienced estate planning and risk mitigation attorney, Jeffrey M. Verdon and his law firm provide effective comprehensive estate planning and asset protection solutions for the more vexing challenges for affluent families and their businesses. The mission of Jeffrey M. Verdon Law group is to protect your legacy, your family, and everything that you’ve worked so hard to achieve over the course of your lifetime.