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Firewalls, Families and Fiduciaries: New Cayman Case Law

To say the very least, matrimonial disputes can be a trying and traumatic state of affairs for all involved. Discord over custody, property and innumerable other matters can seem to endlessly plague family members, and related litigation often creeps across a variety of jurisdictions. Where a family trust is involved, the more contentious of marital disputes can quickly draw trustees into the ring for a bout over rights to information regarding, or even to assets held in, the trust.

If foreign matrimonial proceedings seek to encroach on the administration of a Cayman Islands (“Cayman”) trust, the trustee of that trust is protected in many respects by what are known as the “firewall provisions” of the Trusts Law (2011 Revision) (“Trusts Law”). In a helpful development for the jurisdiction, a judgment delivered by the Grand Court of the Cayman Islands (“Grand Court”) in December 2016 has confirmed the operation of those provisions and reinforced the need for a trustee of a Cayman trust under attack in foreign matrimonial proceedings to ensure its response is at all times in the best interests of the trust.

Re The A Trust

In In the Matter of the A Trust (unreported, 1 December 2016), a Cayman STAR Trust (the “Trust”) was the subject of proceedings in the Grand Court commenced by the trustee of the Trust. In establishing the Trust, its settlor had executed various Letters of Wishes, which set out his very detailed views about who should and should not benefit from the Trust and how the assets of the trust should be applied. These Letters of Wishes also made it clear that the settlor wished to ensure that beneficiaries did not live lavish lifestyles funded by the Trust while still ensuring that they received appropriate benefit from the Trust in the future. Consistent with this, the settlor had expressed a desire to see the trust grow from generation to generation and to be a charitable trust providing support for its specified charitable objects.


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Firewalls, Families and Fiduciaries: New Cayman Case Law


Robert Lindley
Counsel, Head of Cayman & BVI Private Client & Trust

British Virgin Islands, Cayman Islands   +1 345 814 7360

Paul Smith
Partner, Head of Cayman Islands Litigation & Restructuring Practice

Cayman Islands   +1 345 814 7777


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