A trust instrument may provide a trustee with the power to adapt a trust
structure to changing circumstances, thus ensuring that it does not
fall out of step with convention, with beneficiaries’ circumstances or
with changes in the law but sometimes it does not.
In June 2011 I spent a few days at the Bermuda captive
conference. It was a very well done affair.
The
focus and pressure on trustees from regulatory bodies and stakeholders
(beneficiaries, settlors, protectors and other interested parties) has never
been greater.
Many
financial institutions and trust companies in the Cayman Islands serve
as the trustee of trusts in which at least one settlor or a current or
future beneficiary is a United States person.
Ironically, the concept of philanthropic giving may, in some cases make its
benefactor more wealthy, if he or she so wishes, thus distinguishing
philanthropy, which may or may not yield a profit, from purely charitable
activities which are strictly not-for-profit.
The facts of In Re D
were this: Mrs D had lost capacity and as a consequence, a committee of
guardians had been appointed by the Grand Court to look after her interest as primary beneficiary of a Cayman
Islands family trust.
In the first two parts of this three part
series, we reviewed some of the common issues to which trustees of Cayman
Islands trusts have been exposed as a result of instability in the global
economy since 2008.
While 2009 appeared to be dominated by restructuring work and problem
solving, by most accounts private client practitioners in the Cayman
Islands are busier setting up new trusts and fielding fresh inquiries.
For those in the business of holding and managing private wealth,
turbulence like we experienced in 2009 is the ultimate “stress test” for
trusts. Weaknesses become apparent in existing structures, often
requiring the structure itself to be amended. Investments perform badly
and beneficiaries look for someone to blame. Tensions within the family
or between various branches of the family become more acute.
The international private client community has observed a noticeable
rise in popularity of both Private Trust Company (PTC) and Restricted
Trust Licence Company (RTC) structures in Cayman over recent years.
“I’m sorry, Double-Oh, it’s completely out of my hands” she said, avoiding eye contact and nervously shuffling the papers on her desk. “You may have thought that taking out the entire Owner’s Box at the European Cup Final disguised as an assistant referee was a clever thing to do...