A Cayman trust is a tax-neutral, legally secure structure used by high-net-worth families to protect assets, plan succession, and manage wealth across borders.
It offers strong privacy, modern asset protection rules, and flexibility for global portfolios.
Before setting one up, you need to understand how Cayman trust law works, who can establish a trust, the types of structures available, the costs involved, and the key advantages and drawbacks of using this jurisdiction.
Este artículo responde:
- What laws do the Cayman Islands follow for trusts?
- How to set up a trust in Cayman Islands
- How much does a Cayman Islands trust cost?
- Who can set up a trust in Cayman Islands?
- Is Cayman Islands tax exempt?
- What are the benefits of the Cayman Islands trust?
- What are the disadvantages of setting up a trust in Cayman Islands?
Key Takeaways:
- Cayman trusts operate under English common law with modern asset protection enhancements.
- You do not need to be a resident to establish a trust in the Cayman Islands.
- Exempted trusts offer up to 50 years of guaranteed tax neutrality.
- Cayman Islands is premium, but costs and strict compliance may not suit every family.
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La información contenida en este artículo es meramente orientativa. No constituye asesoramiento financiero, jurídico o fiscal, ni una recomendación o solicitud de inversión. Algunos hechos pueden haber cambiado desde el momento de su redacción.
What is the trust law in the Cayman Islands?
Trust law in the Cayman Islands is based on English common law but enhanced by modern statutes such as the (2021 Revision), the Fraudulent Dispositions Act, and the Special Trusts Alternative Regime (STAR).
These laws create a flexible environment where trusts can be tailored for traditional estate planning, dynastic family wealth structures, charitable purposes, corporate arrangements, or complex international holdings.
Cayman law strongly protects the validity of trusts against herencia forzosa claims from foreign jurisdictions.
This is important for globally mobile families who may live under civil law systems where inheritance rules are rigid.
The jurisdiction also supports perpetual trusts, purpose trusts, and sophisticated fiduciary arrangements through licensed trust companies.
Can I set up a trust in the Cayman Islands?
You can open a trust in the Cayman Islands as long as you are legally competent and able to transfer assets to a trustee.
There is no requirement to be a resident or to maintain physical presence in the jurisdiction.
Most non-resident investors and expats use professionally licensed Cayman trust companies to administer the structure.
Eligibility is straightforward. Individuals, families, and corporate entities can establish Cayman trusts for estate planning, tax neutrality, philanthropic work, or long-term wealth protection.
The assets held in the trust do not need to be located in Cayman Islands; they may include global investment portfolios, empresas extraterritoriales, intellectual property, crypto assets, or real estate in other countries.
How much does it cost to set up a trust in the Cayman Islands?
A Cayman Islands trust typically costs at least USD 8,000 to set up, with more complex structures costing more.
This reflects the standard fees charged by licensed Cayman trust companies for drafting the trust deed, conducting regulatory due-diligence checks, and establishing the structure.
More sophisticated arrangements such as STAR trusts, purpose trusts, or trusts involving corporate entities or multijurisdictional holdings, may start above this range due to added legal and administrative work.
Ongoing annual fees can go up to USD 20,000, depending on the trustee’s responsibilities, reporting requirements, and the complexity of the assets being managed.
What is an exempted trust in the Cayman Islands?
A Cayman Islands exempted trust is a registered trust that receives a government guarantee of no Cayman taxes for up to 50 years, protecting it from any future introduction of income, capital gains, or inheritance taxes.
To qualify, the trust must not have beneficiaries who are resident or domiciled in the Cayman Islands, except for approved charities.
Once registered with the Cayman Registrar of Trusts, the government issues a formal undertaking confirming that the trust will remain exempt from any potential future local taxation for the full duration of the guarantee.
Exempted trusts operate much like traditional discretionary trusts, but they offer an added layer of long-term fiscal certainty.
This makes them especially attractive for expats and high-net-worth families who want predictable, stable, and tax-neutral wealth planning in a jurisdiction known for legal consistency and asset-protection strength.
What is the main benefit of a trust in the Cayman Islands?
The main advantage of a trust in Cayman Islands is asset protection paired with tax neutrality.
Cayman trusts help shield assets from legal disputes, marital claims, political instability, and forced heirship systems.
The jurisdiction’s strong firewall legislation ensures that foreign court judgments related to inheritance challenges cannot easily override a valid Cayman trust.
The environment is highly private, professionally managed, and supported by experienced trustees.
For internationally mobile individuals, Cayman trusts offer both flexibility and long-term security for multigenerational wealth planning.
What are the tax benefits of the Cayman Islands?
Cayman Islands trusts benefit from a zero-tax regime. There are no taxes on income, capital gains, inheritance, or corporate earnings at the jurisdictional level.
This does not eliminate the requirement for trust beneficiaries or grantors to follow tax rules in their home countries, but the structure itself does not add additional layers of taxation.
The lack of stamp duty on many transactions and the absence of wealth taxes also contribute to smoother cross-border planning.
This tax-neutral environment is one reason Cayman trusts are widely used in global wealth management and family office strategies.
What are the downsides of a trust in the Cayman Islands?
The main disadvantages of using the Cayman Islands are higher costs, strict compliance requirements, and increased regulatory scrutiny.
While Cayman trusts offer significant advantages, their establishment and administration fees are typically higher than those in other offshore jurisdictions.
The jurisdiction’s highly regulated environment also means more intensive due-diligence checks and documentation during onboarding and ongoing management.
Cayman’s prominence as a global financial hub brings additional scrutiny from international regulatory bodies.
This does not undermine legitimacy, but it does require trustees to follow rigorous KYC, AML, and reporting standards.
Finally, a Cayman trust does not shield beneficiaries or settlors from tax obligations in their own countries of residence.
Cross-border families may need specialized international tax planning to avoid compliance issues.
How do I set up a trust in the Cayman Islands?
To set up a Cayman trust you choose the trust type, appoint a licensed Cayman trustee, execute a trust deed, transfer assets into the trust, and complete any required registration and compliance steps.
1. Choose the type of trust
Decide whether you want a discretionary/family trust, STAR trust, purpose trust, or charitable trust. The choice determines drafting needs, beneficiary rules, and whether you can include non-charitable purposes (STAR).
2. Select and appoint a licensed Cayman trustee
Engage a licensed Cayman trust company or trustee. Most HNWIs use a professional trustee for administration, regulatory compliance, and custody of assets.
Consider whether you also want a protector, advisory committee, or corporate trustee.
3. Provide required due diligence documents
Prepare and deliver KYC/AML documentation for the settlor, beneficiaries, and any controlling persons. Trustees will run onboarding checks and will not proceed without full compliance.
4. Draft the trust deed and ancillary documents
Work with Cayman-qualified counsel or the trustee’s legal team to draft the trust deed, letters of wishes, and any ancillary governance documents.
The deed will set beneficiary classes, trustee powers, distribution rules, and investment powers.
5. Execute the trust deed and transfer initial assets
Sign the deed and settle the trust by transferring the chosen assets into the trustee’s name or into a structure controlled by the trustee.
This can include cash, shares, company interests, IP, or overseas real estate (subject to local rules).
6. Register the trust if applicable (for exempted trusts)
If you want exempted status, register the trust with the Cayman Registrar of Trusts and pay registration fees so the trust can receive the government undertaking (tax guarantee) where appropriate.
7. Pay setup and initial trustee fees
Settle establishment fees and any one-off legal or registration costs. Expect the trustee to invoice for onboarding services and any corporate or company formation fees if used.
8. Put in place ongoing administration and reporting
Agree annual administration, accounting, valuation and reporting arrangements, including any tax reporting obligations the trustee must assist with (for example CRS and FATCA disclosures).
9. Coordinate cross-border tax and estate planning advice
Obtain specialist tax and estate advice in the settlor’s and beneficiaries’ home jurisdictions to ensure the trust structure delivers the intended tax and succession outcomes.
10. Review governance periodically
Conduct periodic reviews of trustees, investment mandates, and governance documents to ensure the trust remains fit for purpose as family circumstances and laws evolve.
Conclusión
Setting up a trust in the Cayman Islands is ultimately about achieving long-term control, protection, and tax-neutral structuring for global wealth.
The jurisdiction combines common-law flexibility with modern legislation, making it suitable for families who manage assets across borders and want a predictable legal environment.
While the costs and compliance standards are higher than in many offshore centers, the trade-off is a level of security, professional oversight, and stability that appeals to expats and high-net-worth individuals seeking durable multigenerational planning.
Preguntas frecuentes
Which country is best to set up a trust?
Cayman Islands, Singapur, Jersey, and Switzerland are the top choices for high-net-worth families because they offer stable legal systems, strong asset-protection rules, and tax-neutral environments.
Cayman Islands is particularly preferred for long-term estate planning and complex, multi-jurisdictional structures.
What is the 2 year rule for trusts?
The 2-year rule typically refers to look-back periods used in some countries when assessing transfers into a trust.
It determines whether assets placed into a trust may still be considered part of a person’s estate for tax or legal purposes if the transfer occurred within two years of death or another triggering event.
The rule varies by jurisdiction and does not originate from Cayman law itself.
What are the three types of trusts?
The three broad types of trusts are revocable trusts, irrevocable trusts, and discretionary trusts.
In practice, these categories expand into others such as purpose trusts, charitable trusts, and the Cayman-specific STAR trust, which allows both beneficiaries and non-charitable purposes to coexist within one structure.
Why do rich people put their money in a trust?
Wealthy individuals put money in trusts to protect assets, manage inheritance efficiently, support long-term family planning, and create clear legal separation between personal assets and trust assets.
Trusts allow control, privacy, and resilience against disputes or political and economic risks. For global families, they also simplify succession across multiple countries and legal systems.
¿Le duele la indecisión financiera?
Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.
It’s really interesting how the Cayman Islands offers such a long tax neutrality period for trusts, especially for families with global assets. But, it seems like the costs and strict compliance might make it less ideal for smaller families or those just starting out with wealth planning.
Indeed. some cheaper options exist.