Introduction/disapplication of the rule
The Perpetuities (Amendment) Act, 2024, passed by the Cayman Islands Parliament in July and in effect as of 22 August 2024 (the "Amendments"), disapplies the rule against perpetuities in relation to Cayman Islands ordinary trusts (Cayman Islands STAR trusts continue not to be subject to the rule).
Previously, the Cayman Islands rule against perpetuities was governed by the Perpetuities Act (1999 Revision) (the "Perpetuities Act"), which imposed a requirement for an ordinary trust to vest within a perpetuity period of one hundred and fifty years failing which it would be void, subject to a "wait and see" principle.
Additional Perpetuities Act amendments
The Amendments also provide that:
- subject to the terms of a trust, if it is of unlimited duration and its governing law is changed to that of the Cayman Islands, it will continue to be of unlimited duration, even if it predates the Amendments; and
- the Cayman Islands Grand Court may, upon application, make an order to extend a trust period or to disapply the rule against perpetuities for those trusts or powers currently subject to the rule (an "Application").
Application to the Grand Court
- An Application may be made by:
‒ a trustee, settlor or enforcer;
‒ a person on whom powers are conferred; or
‒ a person with a beneficial interest.
- An Application must be served on:
‒ all interested persons; and
‒ any other person the Grand Court considers relevant.
- The Court must be satisfied that:
‒ the Application is not detrimental to the beneficiaries; and
‒ it is not in relation to disposition of land or an interest in land in the Cayman Island (unless held through a company partnership or other entity).
Closing comment
These changes were long awaited by leading private client and trust lawyers in the Cayman Islands and internationally and will, no doubt, further enhance the standing of the Cayman Islands as a jurisdiction of choice for international succession planning.
