Trust Cayman

Cayman T RUST

Xxxxxx

2019 - 2020

WHY CAYMAN

Discover why Cayman is the destination of choice for high net wor th individuals and family offices

LEADERS OFFSHORE

How Cayman’s exper ts remain at the cutting-edge of developments in trust law and wealth structuring TRUST CAYMAN / 1

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Always client-first

Discreet, professional trustee and company administration services tailored to your needs.

Because success matters.

For further information, please contact Heather Tibbo Group Co-Head of Family Office Services heather.tibbo@crestbridge.com T: +44 1534 835672

Paul Hunter Group Co-Head of Family Office Services paul.hunter@crestbridge.com T: +44 1534 835786

Bahrain Cayman Jersey London Luxembourg New York

Dominic Lawton-Smith Director of Family Office Services dominic.lawton-smith@crestbridge.com T: +1 345 814 9386

crestbridge.com

The Crestbridge Limited affiliation is regulated by the Jersey Financial Services Commission. Crestbridge S.A. and Crestbridge Management Company S.A. are regulated by the CSSF. Crestbridge Cayman Limited is regulated by the Cayman Islands Monetary Authority. Crestbridge Bahrain B.S.C (c) is regulated by the Central Bank of Bahrain. Crestbridge Property Partnerships Limited is authorised and regulated by the Financial Conduct Authority. Crestbridge Operator Services Limited is authorised and regulated by the Financial Conduct Authority.

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STEP INSIDE

Welcome

It is my great pleasure to welcome you to the 2019/2020 STEP Cayman magazine, showcasing the vibrant trusts and financial services industry in the Cayman Islands.

Since its establishment in 1997, STEP Cayman has grown dramatically from its beginnings as a niche society for accountants and lawyers working with trusts, to a highly engaged body of world-class trust professionals employed across the financial services industry.

STEP Cayman’s primary goal is to promote and develop the Cayman Islands’ wealth management industry and to discuss openly the issues surrounding trusts and wealth management from a global perspective, particularly looking at Cayman’s sophistication in this area, its transparent regulatory infrastructure and the role of Cayman trusts in the global economy.

To meet that goal, we are very active in Cayman’s financial services industry and contribute regularly to local and international initiatives, including taking a leading role in explaining our branch’s views and expertise to the Government, the regulator and the public, as well as focusing on the education and continued professional development of our branch members.

This magazine is a continuation of that process; a chance for us to update our members on important developments in our jurisdiction, but also to inform our global readers why the Cayman Islands is a preferred jurisdiction for high net worth individuals and

family offices, not only for their global investment and wealthplanning needs, but now also a preferred relocation destination for those looking to move overseas.

As can be seen from within these pages, the talented and highly-qualified professional service providers residing here are experts in their field, supported by a robust government and highly-respected judiciary, as well as strong infrastructure and sophisticated lifestyle offerings.

Like Cayman more broadly, our offering continues to grow from strength to strength. The STEP Cayman International Wealth Structuring Forum, now held annually and attracting attendees from across the globe, showcases the best and the brightest of our industry discussing local and international trends and developments in trusts law and the financial services industry more widely.

I hope you enjoy reading about some of the reasons why Cayman continues to be the jurisdiction of choice.

MAXINE BODDEN Chair, STEP Cayman Islands

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cayman.step.org General enquiries: Bernadette Carey +1 345 749 2025 bernadette.carey@careyolsen.com

Contents

STEP Cayman Islands Published by Sidekick and Remember Media on behalf of STEP Cayman Islands

PO Box 247 10 Market St Camana Bay Grand Cayman Cayman Islands KY1 1006 emma@sidekick.ky sidekick.ky +1 345 325 3041

6 Why Cayman is a top destination for private wealth

10 Experts gather to discuss Cayman’s trust industry

chris@remembermedia.co.uk remembermedia.co.uk +44 191 500 7850 All contents copyright ©2019 STEP Cayman All rights reserved.

Photography: Guy Waller www.guywaller.com While every effort is made to ensure accuracy, no responsibility can be accepted for inaccuracies, howsoever caused. No liability can be accepted for illustrations, photographs, artwork or advertising materials while in transmission or with the publisher or their agents. Reproduction in whole or in part is strictly prohibited without written permission from the publisher. All information is correct at time of going to print November 2019.

This publication and its content is paid for and controlled

by STEP Cayman Islands. STEP’s editorial team, including the STEP Journal Editorial Board, has not been involved in the production of this publication. The views expressed in this publication are not necessarily those of STEP and readers should seek the guidance of a suitably qualified professional before taking any action or entering into any agreement in reliance upon the information contained in this publication. Whilst the publishers have taken every care in compiling the content to ensure accuracy at the time of going to press, neither they, nor STEP accept liability or responsibility for any loss caused by any reliance on the content of any such advertisement.

ISSN 2633-3015

12 Cayman’s economy is transforming - and new business sectors are taking notice

16 Economic substance rules present challenges, but ones that Cayman is prepared for

20 Why wealthy families from Asia Pacific and Latin America are calling Cayman home

DISCOVER MORE

22 Cayman is at the cutting-edge of developments in trust law

24 Lifting the lid on Cayman Cookout and the island’s mouthwatering culinary scene

30 Getting to know two of Cayman’s top chancery barristers

28 Discovering fine wine at The Tasting Room & Wine Boutique

34 Stepping inside three of Cayman’s beautiful beachfront resorts

32 Uncovering emerging trends in global family office

42 STEP Cayman’s International Wealth Structuring Forum conference

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Xxxxxxx DESTINATION LEADING

Why Cayman?

by Amanda Bako: Partner at Rawlinson & Hunter and Bernadette Carey: Partner at Carey Olsen Exhibiting a dynamic attitude to its own development, the Cayman Islands is undoubtedly a jurisdiction of choice for private clients.

A LONG HISTORY Originally focused primarily on banking services, the Cayman Islands has rapidly grown into a wider private client proposition, offering trust business, accountancy, legal, and family office services.

The jurisdiction’s status as a British Overseas Territory, imposing no direct taxation on its residents, has also provided the Cayman Islands with the economic, legal and political stability to attract investors and develop its financial services industry.

STRUCTURING OPTIONS AND SERVICE PROVIDERS For private clients with succession planning, asset protection, forced heirship or philanthropy front of mind, the Cayman Islands offers an impressive number of structuring options in addition to the standard discretionary or fixed interest trusts available elsewhere, including: • Reserved Powers Trusts that enable the settlor to reserve certain powers to him/herself, including powers of investment or appointment and powers to vary or revoke the trust.

• STAR Trusts, which are purpose trusts unique to the Cayman Islands that can be established for charitable, non-charitable, persons or a combination of purposes. STAR Trusts have no perpetuity period and so are useful for dynastic purposes.

• Private Trust Companies (“PTCs”) that can be established to act as trustees of connected trusts, which may allow a settlor to retain some control over the trust.

• Foundation Companies were introduced in 2017 and are companies incorporated in the Cayman Islands that can function like a civil law foundation.

Bernadette Carey

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Amanda Bako

The financial services industry in the Cayman Islands attracts and retains a wide range of high-calibre professionals to administer these structures, who are employed by a variety of trust, legal, accountancy and investment management firms across the islands.

A ROBUST JUDICIARY If a higher level of assistance is required, a sophisticated and wellregarded local judiciary is easily available in the Cayman Islands.

Presided over locally by the Chief Justice - and comprising several full and part-time judges - the Grand Court regularly hears and determines both contentious and non-contentious applications concerning trusts governed by Cayman Islands law.

Local judgments are highly persuasive and regularly cited with approval in other jurisdictions. From the Grand Court, appeals are made to the Court of Appeal and, in limited circumstances, to the Judicial Committee of the Privy Council in London.

INTERNATIONAL CO-OPERATION The Cayman Islands now plays a leading global role in the fight against money laundering, tax evasion and other illegal activities.

Regulations to give effect to the United States’ Foreign Account Tax Compliance Act (“FATCA”) and the OECD-approved Common Reporting Standard (“CRS”) are in effect in the Cayman Islands. A beneficial ownership register regime is in operation in some sectors of the financial services industry, although this is not yet applicable to trusts. Economic substance initiatives are also in place, and under continued development, in order to meet other OECD global requirements.

CONFIDENTIALITY AND PRIVACY Over time, the jurisdiction has developed statutory protections and guidelines in respect of the protection and disclosure of confidential information brought into the Cayman Islands. It has also established its famed “firewall” legislation which ensures that, in prescribed circumstances, Cayman Islands law alone will decide questions of the capacity of a settlor to create a Cayman Islands trust and that Cayman Islands law will govern all matters of administration of that trust.

From humble beginnings, the Cayman Islands exists as an integral part of the global economy and its thriving trusts industry is a key component of the local financial services industry.

The Cayman Islands will remain a leading jurisdiction for private clients who seek flexibility, substantiality, and innovation in the organisation of their personal affairs.

LEADING DESTINATION

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FACTS AND FIGURES

Cayman by numbers ver 40 top-50

643

of the

members of the Cayman Islands Legal Practitioners Association

145

144

active licenses for companies management and corporate services

active Trust Licences in the Cayman Islands

66,000

banks globally hold licenses in the Cayman Islands

Overseas territory of the United Kingdom

Cayman population

Average of

88

degrees Fahrenheit all year round

The Cayman Islands is home to

1.4 trillion is held in Caymanregistered banks

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133 banks (as of 30 June 2019)

CORPORATE

FUNDS

TRUSTS

Estera.

A global leader in private wealth management.

We work closely with clients and their professional advisors to deliver flexible and commercially focused private wealth solutions.

With over 550 people in 11 jurisdictions on and offshore, our technical experts have the specialist skills and experience required to support individuals, families and their businesses around the world.

For more information call Conrad Proud in our Cayman office on +1 345 640 0575 or email conrad.proud@estera.com. estera.com Information about our regulators is available at estera.com

Follow us

TALKING POINTS

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TALKING POINTS

Trends in trusts

What are the important issues in the trust industry and how is Cayman well-placed to tackle them? These are the questions discussed by some of the islands’ industry experts

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ayman now faces great opportunities for advising ultrahigh net worth individuals from around the world.

This was the consensus of a recent STEP sponsored informal discussion between leading members of the Cayman private client industry.

The greatest in terms of growth prospects lay in the Asian and Latin American regions.

“I think there are synergies between the two markets,’ ’ said Henry Mander from Harneys.

“The cultures are very different and they are at different stages, but one thing that has happened in both over the last 15 years is that the wealth is phenomenal and what they also have in common is the immigration structure. Many from Hong Kong and mainland China are looking to get to the US and West Coast Canada and the same with Latin America. That’s where an offshore structure can work and where the US is so important for us and for our markets.’ ’ Sheena Thompson from Intertrust added: “Many of our Asian clients have children in the US and Canada and they want it all – white glove service, responsiveness, sophistication and they want to be involved in wealth management too. Cayman is a jurisdiction capable of offering premium service and sophisticated advice – this gives us the value-add the next-gen clients are looking for.”

The group agreed that there is a trend back towards using international financial centres like the Cayman Islands, as domestic trusts lose popularity and they feel Cayman can benefit from this.

Amanda Bako from Rawlinson and Hunter explains: “Cayman has the experience and expertise available for advising on sophisticated trusts and as there’s a shift back to using offshore, Cayman is increasingly seen as the first choice.”

“We know that we have a solid infrastructure in terms of the regulatory and judicial systems which should make Cayman their preferred jurisdiction,’ ’ said Annmarie Levien of Vistra.

Pricing was identified as an important factor in winning business, as was the recruitment of Spanish and Mandarin speakers. It was also felt that ensuring smooth and efficient processing when opening bank accounts and managing increasing compliance requirements was important.

“You want a banker who understands this and I think we need to make it clear that we have good relationships with bankers here, who understand the market and understand the kind of clients that we have,’ ’ said Marcus Parker of Genesis Trust & Corporate Services.

Members also emphasised that, in a rapidly developing marketplace, advisers had to be able to add value, with functions such as investment management being increasingly commoditised with robo advisors and passive investors.

“Advisers have to add the value on the other side, which is the planning side,’ ’ said Georgie Loxton of Liberty Wealth.

“It’s very easy with ultra-high net worth individuals to assume that they are not worried about the same things that we are worried about, but they are, the numbers are just much bigger. Very wealthy people worry about money in the same way as everybody else and planning is becoming more and more important.’ ’ The role of lawyers has changed in that they now tend to have more direct access to clients than in the past. Also, the market has become more sophisticated, with no two trusts being structured in the same way. The nature of clients has also changed, with them becoming more educated and proactive as the next generation often millennials - inherits.

“They have a completely different approach to life, how they do things, how they invest and how they interact with other people and we have to adapt to that,’ ’ said Marcus Parker.

It was also pointed out that more clients are now women. Clients are also more mobile with the freedom to locate themselves wherever in the world they want. With more younger clients, there is also a growing interest in impact and sustainable investing and, after business, philanthropy is the main interest for ultra-high net worth individuals.

“We find that they are a lot more philanthropic,’ ’ said Regina Oliver of Cayman National Bank.

Despite modern digital communications, clients still place great importance on personal service and immediate access to advisors.

With a range of skilled and experienced professionals across the trusts industry, Cayman’s offering in this regard is undoubtedly first-class.

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EXPONENTIAL GROWTH

Anthony Partridge

Cayman’s new economy A welcome mat is down for new business sectors moving to Cayman - and entrepreneurs are taking up the offer

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EXPONENTIAL GROWTH

S

ince it started operations in 2012, Cayman Enterprise City (CEC) with its special economic zones, has contributed an estimated US $210m to the islands’ economy.

Last year alone, CEC contributed an estimated US $55.3m and that was up on the previous year by a third. In September 2018, CEC welcomed its 250th company to set up a physical presence in the jurisdiction.

These new businesses are operating in the new knowledge-based sectors, including fintech, commodities, maritime, aviation, health, sciences, media and digital marketing and this year saw the setting up of Digital Cayman, a body to provide a voice for the growing sector.

Just one of the special economic zones, Cayman Tech City, now hosts more than 175 technology-focused companies, 60 of which are using blockchain technology.

In the words of CEC’s chief executive, Charlie Kirkconnell: “We’ve made very significant progress to the point where we feel that we are a very significant contributor to the economy of the Cayman Islands. We are in a very good position now for exponential growth in the years ahead.’ ’ So, does this mean we are seeing a transformation of the Cayman economy?

Probably more evolution than revolution, is the view of Jude Scott, chief executive of Cayman Finance, which represents the islands’ financial services.

“Cayman has a world-class infrastructure and is well-established as a premier global financial hub, efficiently connecting law-abiding users and providers of investment capital and financing around the world,” he says.

“So rather than a ‘new economy’ or even ‘new sectors’ what I think we are seeing is continued evolution in some key sectors in Cayman, which will position those sectors – and Cayman as a jurisdiction – as innovative leaders in the marketplace.’ ’ However, evolution can still bring about significant change and CEC ‘conservatively’ estimates that, in five years, there will be more than 600 businesses in the special economic zones.

CEC was set up because the government wanted to encourage specific business sectors that could build upon and enhance Cayman’s existing strengths.

Kirkconnell explains: “When we came forward with the idea, there was a discussion that it needed to be a knowledge and technology focused special economic zone with some selected specialised services. It’s about segregating the business of the sectors

within the special economic zone to prevent cannibalising the local economy.’ ’ Incentives include no corporate, income or capital gains taxes and easily obtained work and residency visas in the three zones: Cayman Tech City; Cayman Commodities and Derivatives; and Cayman Maritime and Aviation. Family offices which focus on one or more of these activities also qualify.

“Just one of the special economic zones, Cayman Tech City, now hosts more than 175 technologyfocused companies, 60 of which are using blockchain technology” CEC has been successful because it has been able to build on Cayman’s underlying strengths.

“One of the unique strengths of Cayman as a jurisdiction is the diversification of our financial services industry and the wide range of world-class sectors it includes. Many jurisdictions excel in one, or possibly two, sectors,’ ’ says Scott.

“Cayman excels in many. Two of those sectors which are drawing on Cayman’s sustainable competitive advantages in global financial services to innovate and grow, are fintech and family offices.

Anthony Partridge, a partner in the Cayman office of law firm Ogier, says: “We have very high calibre professionals already in the jurisdiction operating in the financial services industry and the developing market in fintech, media and medical tech is attractive to ultra-high net worth individuals and wealthy entrepreneurs who may be considering relocating to the islands.

This new economy presents opportunities for the provision of Cayman’s distinct service offerings in trusts, wills and probate and other legal and financial advice.’ ’

Jude Scott

Charlie Kirkconnell

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Kimpton Seafire Resort + Spa, and The Residences at Seafire

A short drive from Camana Bay is another Dart development, Kimpton Seafire Resort + Spa, and The Residences at Seafire. The AAA Five Diamond award winning resort shares a 12 acre property on Seven Mile Beach with The Residences at Seafire, the newest luxury condominium development ready for immediate occupancy on Grand Cayman.

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Simplicity. Safety.

Sophistication.

those organisations needing space to meet Xxxxxx economic substance requirements. Dart also announced in early 2019 that it was exploring the possibility of building a tall tower at Camana Bay, a property which if approved will establish a new standard for luxury real estate on Grand Cayman and enhance the status of the Cayman Islands globally.

A short drive from Camana Bay is another Dart development, Kimpton Seafire Resort + Spa, and The Residences at Seafire. The AAA Five Diamond award winning resort shares a 12 acre property on Seven Mile Beach with The Residences at Seafire, the newest luxury condominium development ready for immediate occupancy on Grand Cayman. The 62-unit property offers contemporary one-to-five bedroom residences that are ideally suited for residents, part-time residents and those applying for permanent residency. An optional rental program managed by the Kimpton is available to purchasers interested in renting their property when not on island.

Camana Bay

That is the essence of what attracts people to live and work in the Cayman Islands.

Ranked as the easiest place to do business

by The Global Complexity Index in 2019 this tax-neutral British Overseas Territory has earned accolades for being a straight forward place to work, where establishing a physical presence is a simple process thanks to world-class service providers, a stable and efficient government and a highly regulated financial services industry.

The Cayman Islands has also been recognised as the friendliest country in the world1, a reflection of its welcoming population long accustomed to the presence of international corporations on Grand Cayman. A low crime rate, a wellestablished judiciary and a high standard of living contribute to the safe living and business environment.

This sunny Caribbean nation is also renowned for its infrastructure, luxury resorts and residential properties, worldclass culinary scene and international community, all which contribute to a sophisticated place in which to live and work. From a new airport and extensive airlift, to modern roads, three hospitals, quality power, water and internet providers, and more, it’s small wonder that visitors 1

HSBC Expat Explorer Survey, 2012

and new residents alike often express their surprise and delight by the livability of Grand Cayman given its Caribbean address.

Dart Real Estate has made significant contributions to that sophisticated lifestyle, investing over US $1.5 billion in luxury resorts and residential properties, Class A commercial office buildings, public infrastructure projects in partnership with government and most notably its flagship development, Camana Bay. Camana Bay is a 685-acre waterfront town centre founded on the principles of New Urbanism and home to global legal and accountancy firms, as well as an array of retail boutiques, food and beverage establishments, an international school with an IB programme, and OLEA, a residential community now under construction and offering condos, townhomes and villas for sale.

Planning is underway to introduce a new commercial office building at the town centre, one which will accommodate the growing interest from prospective tenants in the family office, reinsurance and financial services sectors, including

Properties for sale at The Residences at Seafire and OLEA, as well as other luxury real estate, are represented by Provenance Properties, Dart Real Estate’s brokerage and the official Christie’s International Real Estate affiliate in the Cayman Islands.

Clients benefit from three distinct offerings: one-stop service for all commercial, residential and relocation service needs, in-depth and proprietary market analyses, and access to the privileged Christie’s Real Estate marketing programmes and network of like-minded individuals.

Beyond the role of real estate developer, Dart is committed to the Cayman Islands.

Through its thoughtful and innovative local investments and strategic partnerships with both the Cayman Islands Government and the private sector, Dart shares a vision of growth and sustainable development for the Cayman Islands which advances its position as a premier financial services jurisdiction. The Dart Real Estate team helps business owners and individuals learn about the benefits of living and working in the Cayman Islands, and assists with making the relocation process an efficient and positive experience.

Learn more about Dart Real Estate at dartrealestate.com and Provenance Properties at provenanceproperties.com

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NEW RULES

Dominic Lawton-Smith

Economic substance Economic substance rules present offshore jurisdictions with a challenge, but it’s a challenge Cayman is well-placed to turn into an opportunity

N

ew rules on economic substance have caused more than a few ripples in international financial circles with concerns being raised about the possible implications.

For Cayman, however, as the dust settles and the details are digested, it seems that the new requirements might represent an opportunity rather than a threat.

In response to the concerns raised by the EU, a number of British Overseas Territories, including Cayman and the British Virgin Islands and Crown Dependencies such as Jersey and Guernsey are introducing legislation relating to the economic substance of companies, and, in some cases, limited partnerships.

These measures are designed to discourage the use of ‘brass plate’ companies and nominee directors and to ensure that companies incorporated in international financial centres have sufficient ‘substance’, either in the jurisdiction in which they are incorporated, or another jurisdiction where they are tax resident.

Dominic Lawton-Smith of global family office, administration, management and corporate governance solutions business, Crestbridge, is confident that Cayman can take economic

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substance in its stride.

He says: “Cayman is a completely compliant jurisdiction, UK law enforcement has access to beneficial ownership records. These records are independently and professionally verified and are far more up-to-date and reliable than other databases such as, for example, UK Companies House information. The authorities in Cayman know whose assets are registered through here. A lot of lawyers, accountants and other professionals live and work in Cayman, which helps minimise the impact on clients.’ ’ Cathy Houts, a tax director with KPMG in the Cayman Islands adds: “Economic substance is not just a Cayman issue, it’s a global issue. But, private clients and those with trust structures in Cayman should be reassured that they are in the right jurisdiction to deal with this new global landscape.

“I think one really important aspect here in Cayman, which will be key in ensuring our approach to economic substance is the right one, is that those involved with drafting the law in Cayman have been really mindful of the different types of entities and structures in Cayman and how they need to differently meet economic >

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WE ARE

E V O LV I N G INTRODUCING OUR CAYMAN PRIVATE CLIENT TEAM TOM MYLOTT Partner

ANDREW PEEDOM Counsel

SALLY PEEDOM Senior Associate

We’re not afraid to break the mould and believe deeply in constantly challenging ourselves to see things from a fresh perspective. We are committed to finding simpler, faster and smarter ways to help those we work with reach their full potential. Our clients are front of mind at every stage, in everything we do, and the depth of our expertise means our clients are in safe hands.

To find out more about how we can help you, visit collascrill.com or email the team at cayman@collascrill.com BVI // Cayman // Guernsey // Jersey // London // Singapore

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NEW RULES

substance requirements – paying attention to the fact that entities will need to have different economic substance requirements depending on their activities – it is not a one-size-fits all approach.

“Government and industry both have the experience and understanding to ensure this process is done properly – and both are very aligned in terms of how they are addressing economic substance and are committed to ensuring that Cayman remains as the gold-standard when compared to other jurisdictions.”

Lawton-Smith also points out that the economic substance rules are mainly focused on large corporates, which channel profit through a scheme in a jurisdiction where they have little real presence or activity.

He says: “On the private client side we’re not in that focus area.

Trusts are outside economic substance rules.’ ’ Cathy Houts adds: “Cayman is well-versed in dealing with these types of changes and is well-positioned moving forwards. Prior to this law there have been significant regulatory changes in recent years, including FATCA and CRS where Cayman was one of the first international jurisdictions to sign an intergovernmental agreement with the US. “Then came beneficial ownership registries, changes in the AML regime and into BEPS and country by country reporting. So, when you look at all those changes, Cayman has adapted well, because the Government here is committed to making the changes and investing in what is needed in terms of people and infrastructure.

“We have a great range of high-quality professionals here with vast international experience – and when you marry those things together we are much better placed to deal with these latest changes than many other smaller, less sophisticated jurisdictions.

“We have skills, infrastructure, resident professionals... that’s our biggest advantage over a lot of other smaller jurisdictions” Cayman has all the building blocks to deal with this.”

Most countries have some form of controlled foreign company law and Cayman professional advisers are long-accustomed to conducting exercises for clients, to comply with such regulations.

Furthermore, Lawton-Smith adds, that while the economic substance rules have been largely EU driven, apart from the UK and Switzerland, estimates indicate that a very small proportion of Cayman’s business is derived from Europe.

He adds: “I expect that there may be fewer Cayman companies at the end of this, but we as a jurisdiction can manage that; we will be doing more for the ones that stay.’ ’ Houts feels there is a business case for being in a jurisdiction like Cayman. “You should definitely not avoid this issue and ignore it – you need to be mindful of the timelines and how to meet the test requirements. It’s important to know what you need to do, and work with your advisors to review your structures and establish next steps if you are have relevant entities engaging in relevant activities. Cayman has many reputable service providers 18 / TRUST CAYMAN

and professionals to deal with this – because Cayman has seen this coming and this is not a surprise to us – we are very wellinformed on the law changes and can help clients to apply them.”

Tax information exchange and CRS – essential enablers for the rules on economic substance – are already implemented in Cayman without any great disruption to business.

There will inevitably be an increased administrative and reporting burden but this is where Cayman, with its great strength in experienced professional advisors, excels.

Houts added: “Cayman has adhered to FATCA and CRS requirements for some time and is one of over 100 countries globally that participate in CRS and global tax exchange initiatives.

“Clients in Cayman don’t need to be overly concerned in relation to the information exchange related to economic substance – this is now a common global standard and not a Cayman Islands issue.

“Because we have so many structures and entities, and such an experienced and established body of providers and professionals in Cayman, we are extremely well-equipped to facilitate this process.

“We have skills, infrastructure, resident professionals, so we can actually do this and I think that’s our biggest advantage over a lot of other smaller jurisdictions,’ ’ says Lawton-Smith, concluding: “Because we have this level of development and infrastructure in a way that a lot of other jurisdictions don’t and it’s difficult to see how they can provide that structure point. I think it’s a plus for Cayman.

“Economic substance is certainly going to create some new challenges, it’s also going to crystallise a situation that we all know about in any case. We can do it and we are ready for the challenge, we understand why it’s not popular, but this is the way the world is going and Cayman has adapted to this change and is well-placed to manage it.”

ogier.com Xxxxxx

W rld-leading Ogier’s Trusts Advisory Group, a team specialising in private client, dispute resolution and corporate law, draws together experts with substantial experience across each of Ogier’s locations in the Caribbean, Asia and Channel Islands.

Services and areas our team covers: • Advising on resolving breaches of trust • BVI VISTA and purpose trusts • Cayman Foundation Companies • Cayman STAR trusts • Charitable purpose trusts • Corporate advice to private clients • Court applications concerning trusts • Discretionary trusts • Employee incentives and employee benefit trusts

• Estate planning • Family Offices • Pensions • Private trust companies • Probate and Estate administration • Regulatory • Trust advice • Trust disputes

Anthony Partridge

Giorgio Subiotto

Rachael Reynolds

Partner, Cayman Islands

Partner, Cayman Islands

Partner, Cayman Islands

“Gives top-notch advice”

“A very high-quality lawyer” Chambers Global

“A stellar advocate”

Legal 500

Jennifer Fox

William Jones

Fraser Allister

Partner, Cayman Islands

Counsel, Cayman Islands

Managing Associate, Cayman Islands

“A rising star in the legal profession”

“Highly professional”

Citywealth Leaders List

Citywealth Leaders List

“A go-to practitioner” Citywealth Leaders List

Legal Services British Virgin Islands Cayman Islands Guernsey Hong Kong Jersey London Luxembourg Shanghai Tokyo

Legal 500

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PREFERRED CHOICE

Cayman for Asia and Latin America The Cayman Islands are increasingly attractive to wealthy families from Asia Pacific and Latin America - and for good reason

A

sia Pacific and Latin American families are increasingly looking to the financial expertise of Cayman.

The HNW population of the Asia Pacific region alone is projected to increase at a compound annual growth rate of 7.6% over the next five years and, at some point before 2021, will overtake that of Europe, the Middle East and Africa.

There’s particular interest in Cayman on the part of Hong Kong’s wealthiest families.

“They are mainly big property owning families, so their assets are physically present in Hong Kong, but they don’t want to have Hong Kong based structures to hold those assets,’ ’ says Marcus Parker of Genesis Trust.

“Cayman based structures have always been the preferred choice to hold those assets.’ ’ There are long-standing links to Hong Kong. Cayman companies are often listed on the Hong Kong Stock Exchange and most of Cayman’s law firms have a significant presence there. Cayman law firm, Harneys, is the biggest offshore-based firm with a local office employing about 100 people and the Cayman Government is also planning to open a Hong Kong representative office.

Latin America is also a growing source of HNW business for Cayman, which is attractive to HNW individuals in these regions for two main reasons.

The first is pre-immigration and the desire for wealthy families to fund family members in the US or Canada in an efficient manner.

Henry Mander from Harneys explains: “It’s possible for the parents or grandparents who are in Brazil or the Far East to set up a structure in Cayman with wealth built up at home and drip feed it tax efficiently into the US.’ ’ Not only does Cayman have the proximity to the US and longestablished relationships with US institutions, but also the expertise and infrastructure.

Mander adds: “We work regularly with US lawyers, both from offshore and the US perspectives, to ensure that there is a flexible and efficient structure that not only works for the family in the short term in terms of making money available in a tax efficient manner as they develop and put down roots in the US, but also that it’s sufficiently flexible so that, if they decide that they would

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rather be in Dubai or Singapore, it can move.’ ’ Cayman’s second main attraction is its ability to deliver the skills and expertise called for by increasingly sophisticated trust structures, because new regulatory regimes and reporting requirements call for increasingly robust and wellconstructed trusts.

“There are a number of things that make for a high-quality trust jurisdiction: the longevity of its laws, the decisions of the local Courts and the quality of its trustees and lawyers. All of these factors make for a high-quality trust jurisdiction. There are now only a handful of premier jurisdictions and Cayman is right at the top of that list,’ ’ says Parker.

Mander points out that whereas 10 or 15 years ago a Cayman lawyer might be engaged by a law firm in a HNW individual’s home country to deal with a limited aspect of a structuring exercise, increasingly Cayman lawyers are such a client’s first point of contact with the common law world.

He says: “We have a much more involved role from a legal perspective of project managing and coordinating what can be a very complicated international structuring and restructuring project involving accountants and lawyers and banking people around the world. Because Cayman has people who are experienced and qualified to do that, we are strong in this field.’ ’ Not only that, but they can operate in a stable environment thanks to a Cayman government which is sympathetic to private client business and financial services. Cayman is also an attractive place and offers an enviable lifestyle, which has helped it to attract a critical mass of expert professionals. Huge investment has been made into the infrastructure, including office buildings to rival anything in New York, London or Hong Kong, and there is a rich array of restaurants, shops and leisure facilities. The island enjoys excellent connections with direct flights to London, New York, Miami and Toronto and to at least 10 other US hubs.

Parker says: “There are a lot of resident billionaire families who come and go, but many of them have property and a base here.

We are very much becoming a place where people want to live.

In the past, Monaco or Switzerland would be a top choice, but now many are thinking of the Caribbean. Cayman is top of the list because it’s such an easy and secure place to live.’ ’

PREFERRED CHOICE

Henry Mander

Marcus Parker

TRUST CAYMAN / 21

TRUST MATTERS

Refining Cayman’s Trusts Law

by Lucy Diggle: Senior Counsel at Walkers

C

ayman has long been at the cutting-edge of developments in international trusts law, cementing its place as a market-leading international financial centre (“IFC”) and jurisdiction of choice for ultra-high net worth families.

The latest amendments to its Trusts Law (the “Law”), introduced by the Trusts (Amendment) Law, 2019 (the “Amendment”) which came into force on 14 June 2019, are no exception. Designed to enhance the supervisory jurisdiction of the court in the administration of trusts, the Amendment brought with it clarity, flexibility and pragmatic refinements.

only available recourse would be to sue the advisor in what could be lengthy, complex and costly litigation.

TRUSTEE MISTAKES Clarity has been provided to those wishing to unpick mistakes made by trustees and other fiduciaries due to inadequate deliberation when exercising their powers. Previously, the Cayman court had intervened in certain circumstances to declare that the exercise of the power was invalid, pursuant to what has become known as the rule in Re Hastings Bass.

Following the decision of the English Supreme Court in Pitt v Holt and Futter v Futter in 2013, which severely curtailed the application of the rule in England and Wales, the position the Cayman court would take was untested.

Happily, the Amendment removes this concern. New s.64A confers on the court the discretion to set aside, wholly or partly, the exercise of a fiduciary power where the court is satisfied that the power-holder did so mistakenly.

There is no requirement that the power-holder should have acted in breach of trust or breach of duty in order for the remedy to be available. This is key because the English Supreme Court had held that where the fiduciary had relied on erroneous professional advice, the correct approach would be to sue the advisor rather than seek to set aside the exercise of the power on the grounds of mistake.

The introduction of this remedy in the Law provides welcome clarification and certainty to those who might otherwise fear the

COMPROMISING TRUST DISPUTES Continuing with this theme, the introduction of a new s.64B means that the court may now approve the compromise of trust litigation on behalf of any beneficiary if satisfied that the compromise is not to the detriment of the beneficiary (even though it may not be to his or her benefit).

This move to a test of no detriment provides for a less onerous and more flexible analysis to be undertaken when seeking the court’s assistance.

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VARIATION OF TRUSTS The court has long had jurisdiction under s.72 of the Law to approve a variation of trust on behalf of a minor, unborn or incapacitated beneficiary. The Amendment has made a subtle, but significant, refinement to this jurisdiction. Previously, the court had to be satisfied that the variation would be for the benefit of that person. Now, the court must instead be satisfied that the variation will not be to such individual’s detriment.

ENHANCING THE FIREWALL Cayman’s so-called ‘firewall’, which shields Cayman trusts against attack by any party on the grounds that the trust offends or denies rights arising under foreign law (for example, rights of inheritance or rights arising by virtue of marriage or divorce), has been extended. Cayman was the first IFC to introduce such legislation and this latest refinement provides even greater protection.

Historically, Cayman trusts were protected from attack by those with a personal relationship to the settlor. This now includes rights arising by reason of a personal relationship with any beneficiary, discretionary or otherwise.

In conclusion, the Amendment provides welcome enhancements helping maintain Cayman’s place at the forefront of international trusts law.

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TASTY CELEBRATION

Festival f lavour With a food scene that’s as vibrant and as colourful as the island itself, it’s no surprise that Cayman is considered the culinary capital of the Caribbean

C

ayman isn’t just a place to do business and bask in tropical beauty. It’s also a destination for food-lovers to discover the wonders of fresh Caribbean produce and flavours.

Cayman cuisine is deliciously diverse - a melting pot of traditional Caribbean, Cajun, Creole, European, Mexican and American influences - resulting in a varied culinary scene that keeps diners on their toes.

Locally-caught fish and seafood - staples in the Caymanian diet - take centre stage, but foodies can also indulge in the finest steak and burgers, Spanish tapas, vegan and vegetarian dishes and more, at a number of award-winning restaurants, cafes, delis and beachfront shacks.

Cayman’s love for food means its food scene is as lively as can be, with several festivals, celebrating local fare and the talents of local chefs, throughout the year. The biggest and most anticipated being Cayman Cookout.

Each year, a selection of the world’s most talented chefs, culinary influencers and wine and spirit experts gather at The Ritz-Carlton Grand Cayman hotel for the Caribbean’s biggest and best-loved food and drink event.

Set on the white sands of Grand Cayman’s award-winning Seven Mile beach, the four-day celebration serves up a mouthwatering itinerary for visiting and local food-lovers, from tempting tastings and inspiring demonstrations, to mouthwatering masterclasses from some of the biggest names in food and drink.

2020’s extravaganza takes place from 16-19 January, hosted by renowned French chef, Eric Ripert.

Together with over a dozen other headlining culinary masters, including Dominique Creen, José Andrés and Emeril Lagasse, and beverage experts, such as award-winning mixologist, Amba Lamb, 24 / TRUST CAYMAN

and international spirits ambassador, Ian Burrell, Ripert will take guests on an unforgettable gastronomical journey.

Highlights include…

BON VIVANT COOK-OFF BRUNCH Enjoy endless Moët & Chandon champagne and indulgent brunch fare while the islands’ most ambitious amateur chefs face a liveaction culinary competition.

THE BEACH BASH Set sail to Stingray City, chef Eric Ripert’s favourite destination, to swim, snorkel and interact with creatures of the sea. Afterwards, dig in to a grilled lunch, hosted by the Cayman Cookout chefs at Rum Point.

ESSENTIAL BAM, WITH EMERIL LAGASSE Kick-back and enjoy a live cooking demonstration from chef Emeril Lagasse, who is renowned for his passion for Creole and Cajun cooking.

OLÉJOSÉ BY CHEF JOSÉ ANDRÉS Lose yourself in chef José Andrés’s fun and inspiring storytelling, as he rustles up his famous paella, showcasing freshly-caught Caymanian fish and seafood.

BAREFOOT BARBECUE Sip cocktails and dance the night away as chefs Eric Ripert, José Andrés, Emeril Lagasse and friends get behind the grill and cook up a storm.

RIPERT, RICARD AND PETANQUE Join chef Eric Ripert and other celebrity culinary masters for a fun game of petanque, which has become Cayman Cookout’s signature event. caymancookout.com

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Private Client & Trust Advice Global Experience Local Knowledge Proven Results

LEGAL EXPERTS Conyers has one of the largest and most experienced offshore private client, trust and litigation teams.

Advising on the laws of the British Virgin Islands, Cayman Islands and Bermuda through our network of offices in the Caribbean, Bermuda, Europe and Asia ensures that the expertise of our firm is available to you in your own time zone at your own convenience Speak to one of our experts: Robert Lindley Head of BVI and Cayman Islands Private Client & Trust robert.lindley@conyers.com +1 345 814 7360 TRUST CAYMAN / 25

INTERNATIONAL MATTERS

Cayman for philanthropy

by Morven McMillan: Partner at Maples Group and Maxine Bodden: Associate at Maples Group

T

he Cayman Islands, as a blue chip international financial centre at the forefront of legislative innovation, is ideally placed to attract those individuals and families who wish to structure their charitable and philanthropic giving in an effective way. Two vehicles particularly suited to philanthropy are STAR trusts and Foundation Companies.

The terms ‘charity’ and ‘philanthropy’ are often used interchangeably, although their genesis as a matter of law has resulted in them meaning slightly different things. For the purposes of this article, we use philanthropy as describing a desire to promote the long-term wellbeing of others by the donation of money, with the strategic focus of creating permanent change.

Philanthropy has long been a common activity of the global ultra-high net worth population. As the number of billionaires and millionaires has grown, so has their philanthropic and charitable giving, not only through donations to specific projects or charities, but also in creating new philanthropic organisations with the specific aim of making a permanent social or environmental impact.

The traditional ways of investing and making money have also changed significantly. Some of the world’s wealthiest individuals and families have become more socially and environmentally conscious and are demanding it of others. There is recognition that the world has problems and there needs to be a reshaping of how society and the wealthy can responsibly apply funds to solve them. Socially responsible investing or ‘impact investing’ is by no means a new concept but the ultra-high net worth and, particularly, millennials are blazing new trails when it comes to investing their money to generate a positive social return.

STAR The Special Trusts (Alternative Regime) Law, 1997 (now part of our Trusts Law) (STAR) established an alternative trust regime in the Cayman Islands that allows for philanthropic purposes that fall outside the strict and more restrictive legal definition of ‘charity’.

STAR trusts allow for philanthropic objects to be combined with family or business objects. For example, an investor in Asia may wish to provide for succession planning in her business while securing her family’s financial future. She may also wish to use her wealth to effect social and environmental change.

She could establish a STAR trust to redirect her wealth into investments that will generate a profit and preserve her wealth, but also provide financing for businesses to tackle problems of 26 / TRUST CAYMAN

environmental devastation.

The STAR trust regime offers flexibility and allows the philanthropist the freedom to determine how settled funds are to be used. The rule against perpetuities does not apply to STAR trusts, ensuring that the benevolence of the settlor can continue indefinitely.

FOUNDATION COMPANIES The Foundation Companies Law, 2017 introduced a new form of company that offers substantial flexibility in providing for its objects, administration and supervision. The fact that the foundation is an incorporated legal entity makes it an attractive option for investors in jurisdictions that may not recognise trusts.

Similar to STAR trusts, the purposes or objects of a foundation company need not be exclusively charitable. This means that entrepreneurs with philanthropic aims can create a hybrid foundation company with a philanthropic element as well as conventional commercial objects.

The objectives can be entrenched in the by-laws to ensure the philanthropic intentions of its creator are unlikely to be frustrated by future generations of her family. In this way, the foundation company can provide a stable platform to achieve long-term altruistic objectives.

Offering investors both flexibility and longevity, STAR trusts and foundation companies can encompass a wide range of philanthropic aims, while allowing the settlor or founder to retain control over key aspects of the administration of her wealth.

In an environment that is constantly changing and investor requirements increasingly diverse, Cayman Islands vehicles can be utilised to bridge the gap between purely return-driven investment and values-driven philanthropic endeavour.

With thanks to Hailee Robinson for her assistance with this article.

Maxine Bodden

Morven McMillan

CORPORATE

FUNDS

TRUSTS

Estera.

A global leader in private wealth management.

Raises the bar in Chancery & Commercial Serle Court is widely acknowledged as a leading set for both contentious and non-contentious trustsatand Information about our regulators is available estera.com probate work, both domestically and internationally.

Chambers has a pre-eminent reputation for offshore trusts litigation and related work. Members of chambers act in significant cases across Europe, Asia, the Cayman Islands, the British Virgin Islands and other leading offshore jurisdictions.

Serle Court is described as the definite go-to chambers for Contentious Trust Work by Chambers and Partners.

We work closely with clients and their professional advisors to deliver flexible and commercially focused private wealth solutions.

With over 550 people in 11 jurisdictions on and offshore, our technical experts have the specialist skills and experience required to support individuals, families and their businesses around the world.

For more information call Conrad Proud in our Cayman office on +1 345 640 0575 or email conrad.proud@estera.com. estera.com Follow us

‘excellent set’. Members continue to be instructed in the most significant and high-profile cases, both onshore and offshore.

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Tel +44 (0)20 7242 6105

clerks@serlecourt.co.uk

BY THE BOTTLE

Raise a glass Cayman may be small, but its wine scene is mighty - and it’s growing all the time

M

ore and more connoisseurs and collectors are discovering unforgettable wines on the shores of Cayman. The demand for fine wine is greater than ever, but fortunately there are a few places on the island to discover some of the most prestigious bottles from around the world.

The Tasting Room & Wine Boutique is considered one of the top hang-outs on Cayman to not only get your hands on your favourite names, but also discover new flavours.

With renowned wine expert and merchant, Mario Lacoviello, at the helm, it has become a go-to destination for local and visiting wine-lovers. A timeless space, in which guests can shop and put their palates to the test under the expert guidance of passionate sommeliers.

Over in the Tasting Room, which can accommodate up to 18 people seated around a table, or up to 40 when standing, guests can enjoy personalised wine tasting sessions with nibbles and private dining experiences, showcasing small, perfectly-paired plates, prepared by the venue’s very own chef, Andrea.

“Our intimate dining experiences are really popular,” says Tess Hill, certified sommelier and wine expert at The Tasting Room & Wine Boutique.

“Each course is accompanied by a perfectly-paired wine and our menus cater to all kinds of tastes.

“We also offer weekly supper clubs, which give guests a chance to sample wines from a particular region, alongside a delicious fivecourse tasting menu.

“Guests love these kind of experiences because they go above and beyond your typical meal with a glass of house red. Sitting around our rustic dining table, it’s a chance to discover so many new flavours, get to know other people and relax and unwind in a comfortable and convivial setting.

“Mario is passionate about quality and community and is known and loved for his hosting skills and warm, welcoming nature.

Together, we all try to ensure each and every guest has a memorable evening.”

To keep Cayman up-to-date with the rest of the world and to keep guests on their toes, Mario regularly replenishes his wine collection with a mix of old and new world wines from some 28 / TRUST CAYMAN

of the globe’s most popular hot-spots, including Italy, France and Spain, Chile, Argentina, New Zealand, South Africa and Lebanon.

The bottles make their way to Cayman via refrigerated containers and are stored in Mario’s impressive wine cellar - also home to a range of sparkling wines, champagne and quality spirits - which guests are invited to explore during their visit.

And the fun doesn’t stop there. Alongside tempting tastings and culinary experiences, the team also host corporate dinners for Cayman’s thriving business community and deliver specially-made gift baskets to a number of offices, hotels and homes on the island.

“Cayman’s wine scene is getting bigger and better all the time,” says Tess.

“The demand for variety has never been higher and this is reflected in the outstanding wine lists you’ll discover at the island’s restaurants and bars.

“Accessing the very best wines of the world is becoming easier and easier for us, too, and many wine-makers journey to Cayman to personally show off their vintages, while soaking up the Caribbean sun.

“More and more, people are recognising Cayman as a destination for fine wine. The island is synonymous with luxury… and fine wine and luxury go hand-in-hand.” caymanwineboutique.com Tess Hill

BY THE BOTTLE

TRUST CAYMAN / 29

TRUSTED LEADERS

In the Courts

W

hen chancery barristers, Shan Warnock Smith QC and Andrew De La Rosa, swapped Lincolns Inn for Seven Mile Beach in 2010, the Cayman Islands became home to their international trust practice. Today, they are recognised across the globe and hold an unassailable position as two of the leading authorities on international trust law.

TELL US ABOUT YOUR ICT CHAMBERS TRUST PRACTICE IN CAYMAN? We both operate primarily in the trusts, private client and succession planning areas, which involves both trust litigation and non-contentious advisory work. We frequently appear in both the Financial Services Division of the Grand Court and the Court of Appeal. The Cayman Islands’ appellate system includes the Privy Council in London, and both of us have appeared in recent years on many internationally significant cases.

HOW HAVE YOU SEEN THE CAYMAN COURTS EVOLVE OVER THE LAST 17 YEARS? We have seen the development of a specialist financial services division here, which has been very beneficial to the jurisdiction in terms of its reputation, effectiveness and level of sophistication.

We have appeared before many excellent judges and the current Chief Justice, who has been in this role since 1998, has brought vast experience of trusts and related private client issues to Cayman.

30 / TRUST CAYMAN

Shan Warnock Smith QC and Andrew De La Rosa

YOU CONTINUE TO WORK ACROSS A NUMBER OF JURISDICTIONS BOTH ONSHORE AND OFFSHORE, WHAT IS IT YOU MOST ENJOY ABOUT ARGUING A CASE BEFORE THE CAYMAN COURTS? We have great attorney and solicitor support here in Cayman thanks to the islands’ many world-class law firms, as well as a highly developed civil procedure code and an excellent legal framework for trusts and related structures. We have a robust judiciary too who are not afraid to take a position. Cayman judges have been willing to provide rulings on novel issues, which have become regarded as a highly persuasive authority around the world. We enjoy being part of this precedent-setting environment and we particularly enjoy flying the flag for Cayman around the world.

CAN YOU SHARE AN EXAMPLE OF A JUDGMENT YOU HAVE OBTAINED RECENTLY IN CAYMAN THAT SHOWCASES CAYMAN’S POSITION AS A LEADING JURISDICTION IN THE TRUST WORLD? Cayman has been involved in so many significant points of law in the trust arena - protecting minor beneficiaries, blessing restructuring arrangements for well-known global families, and developing innovative legal concepts like the Cayman firewall legislation. In the recent case Re A Trust, in January 2019, Kawaley J gave a detailed analysis of the correct approach to trustee “blessing” applications, particularly when a beneficiary opposes. There are other cases of similar importance pending in which we are engaged.

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TRUST CAYMAN / 31 careyolsen.com

FAMILY FIRST

Carlos de Serpa Pimentel

Emerging trends in Global Family Office

by Carlos de Serpa Pimentel: Partner at Appleby and Esmond Brown: Senior Associate at Appleby

T

he accelerating pace of change, combined with political tensions and the potential for significant rebalancing in some previously settled jurisdictions and economies, is leading family enterprises - and the families themselves - to re-examine where they would be most optimally located.

OFFSHORE TAX AND TRANSPARENCY The global tax landscape has undergone dramatic change in recent years, and wealthy families, just like major corporations, are now under closer scrutiny than before, including from media, which poses new or greater reputational risks than previously.

These changes provide a backdrop for the increasing focus by families of wealth, with complex affairs spanning multiple jurisdictions, to review their current structures, ensuring that they are fit-for-purpose in the new environment and that compliance obligations are fully and properly met.

32 / TRUST CAYMAN

WHAT IS A FAMILY OFFICE? ‘When you have seen one family office, you have seen one family office’ is something you will quite often hear when the conversation turns to family offices. There are a variety of models that practitioners and private client professionals will likely encounter when dealing with family offices including single, multi, virtual, administrative, hybrid and fully-integrated - the list goes on.

However described and however modelled, it is generally accepted that family offices provide a variety of services to one or more wealthy families and these families will almost certainly have assets or a presence in multiple jurisdictions.

THE RISE OF FAMILY OFFICES There has been a steady increase in the frequency with which those of us involved with private clients have interfaced with one or more members of a family office in recent years. This is in part likely to be as a result of the increasingly complex way in which

FAMILY FIRST wealthy families structure their affairs across the globe.

As Joseph C Kellogg, a partner with WE Family Offices in Miami and a man who has been working with wealthy families in this space for over 22 years explains it, “the rise in publicity of family offices has resulted in a growing familiarity with them as a concept and the options they provide; don’t underestimate the effectiveness of word of mouth, even amongst the very wealthiest of individuals.”

The increasing demand for family offices is also in response to the ever-changing regulatory landscape and the consolidation of the banks across much of the Caribbean. This is doubtless placing a heavy administrative burden on the remaining service providers who, in turn, have passed on this cost pressure to clients.

DRIVERS BEHIND CHOOSING THE LOCATION OF A FAMILY OFFICE As Mr Kellogg puts it, “there are a lot of complexities around wealth and managing it effectively. It is impossible to find one person who can provide all the services a family might need.”

Such services are likely to encompass one or more of investment management, fiduciary, legal, tax, accounting and regulatory.

He went on to say, “knowing where to look can be the hardest part and when a solution is found, how can you be certain that the family’s interests are aligned with those of the professional?”

Personal relationships and good experiences, of course, play a role in finding the right advisers, but into that mix, cost is going to be the first or second consideration on the list. Almost as important, and certainly at the forefront of the minds of the second and third generation family members of the structures that were originally set up, are technology and security. Families are now placing greater and greater importance on the technological platforms that providers are using and how these interpose with the existing technological structure of the family.

Another vitally important factor for wealthy clients and their

Esmond Brown

families is how family governance principles can be adapted as the wealth passes through the generations, whilst still ensuring that firmly-held and long-established guiding principles are maintained.

It is necessary to immediately understand each individual family and its circumstances because this is not an area of wealth structuring where one size fits all.

CAYMAN AS A JURISDICTION OF CHOICE FOR FAMILY OFFICES While Cayman is well-placed geographically to engage with businesses and individuals throughout the Americas and Europe, it is its reputation, availability of world-class professional services and its trustworthy and reliable legal system that really set it apart.

Cayman is known for its progressive and evolving legislation which is developed in consultation with industry stakeholders. As well as strengthening its Trusts Law this year, of particular interest recently is the newly enacted Foundation Companies Law, 2017. This introduced a new and flexible vehicle for private clients familiar with foundations elsewhere in the offshore world, but with the significant difference of such an entity behaving in the same way as a company and possessing separate legal personality.

The many potential uses of the foundation company are still being explored, but they are increasingly being used in the private wealth context and may act as private trust companies. Cayman’s STAR legislation continues to command attention and popularity and arguably provides for the best in class non-charitable purpose trust available anywhere.

Cayman has had regulations governing the establishment of private trust companies (PTCs) since 2013, but recent changes this year to those regulations have meant that Cayman is now an even more attractive, (and cheaper) prospect for families when considering setting up such a company to act as trustee of one or more family trusts.

A further benefit of Cayman Foundation Companies is their ability to act as a private trust foundation established to provide trustee services to one or more Cayman family trusts. The advantage of this structuring option is that it does away with the purpose trust at the top of traditional structures and therefore the additional layer of structuring and associated cost.

While no one family office is exactly alike, this developing sector benefits from the pooling of knowledge and resources amongst professionals in Cayman, so that we can offer wealthy families looking at Cayman with a comprehensive and bespoke offering that few other jurisdictions can provide.

Finally, a note to those families not just considering Cayman as a place to establish a family office, but as a place to live - Cayman is a British Overseas Territory with a transparent route to residency and welcomes entrepreneurs and workers like few other places in the offshore world.

The fact that Cayman offers a tax neutral platform means that it is a favourable place for business to transact. As well as boasting a very high quality of life and one of the safest environments in the Caribbean in which to bring up a family, Cayman boasts a thriving economy and financial services market with a steadily growing tourism industry, as evidenced by the growth in GDP, population numbers and low unemployment rates.

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LAY YOUR HEAD

Kimpton Seafire - Provenance Properties

Beachfront bliss Uncovering three of the Cayman Islands’ beautiful beachfront resorts KIMPTON SEAFIRE RESORT + SPA This plush new luxury lifestyle resort on Seven Mile Beach oozes contemporary style and sophistication - blending the effortless beauty of Cayman’s white sand beaches and turquoise waters, with stunning, state-of-the-art interior design.

The resort is clean and crisp throughout, with vibrant pops of colour adding a little personality to this pristine resort sitting at the heart of Seven Mile Beach - a long crescent of coral-sand beach stretching the western side of the Island.

The resort’s open-air design brings the outdoors inside, so no matter where you are in the hotel, you’ll be breathing in the fresh sea air, experiencing water vistas at every turn and feeling at one with nature on this beautiful island.

Winding gardens take guests from one leisure facility to the next, bright blue pools offer an inviting space to relax and refresh, and the Caribbean Sea sits at the centre of the resort - in all its glory for visitors to bask, bathe and enjoy.

The Kimpton Seafire Resort + Spa is an elegant answer to those craving the extraordinary. Think far-reaching panoramic views, expertly-designed suites, boundless beach activities and top-class, coastal dining.

34 / TRUST CAYMAN

LAY YOUR HEAD

From casual family dining to tapas-style tasting and beachfront feasts, the Kimpton Seafire has it all. Ave restaurant offers vibrant, Mediterranean-style cuisine, while Avecita brings exhibition-style dining to the table - counter dining where nightly tastings and contemporary Spanish dishes are served. Coccoloba is a shabby chic beach hut inspired by Mexican street food - serving up plenty of sunshine food and stunning seafront views. The Pantry at Seafire is a great place to kickstart your day - serving speciality coffee, smoothies, pastries, croissants and all the baked goods you’ve ever dreamed of.

It’s safe to say foodies are in for a treat at Kimpton Seafire, but those looking for a bit of beachfront bliss are also in for a treat at this resort. The Spa at Seafire offers 8,500 square feet of pure tranquility. Seven state-of-the-art rooms, nourishing treatments and a grand soaking tub complete with natural light and beautiful, botanical decorations. For visitors with an eye for adventure, check out the fitness centre or enjoy one of the resort’s classes - with everything from Camana Bay bike rides to paddle board yoga.

CHECK OUT: Kimpton Seafire’s Featured Foodie Nights - from paella parties and Sunday brunch dates, to Caribbean festivals and taco and tequila Tuesdays. seafireresortandspa.com

Prime property ‘Connecting good people with great places.’ A look at the current Cayman real estate market with Michael Joseph at Property Cayman The Property Cayman team

NOW IS A GOOD TIME TO INVEST IN THE CAYMAN ISLANDS… Living in an exponentially volatile and vulnerable world, the Cayman Islands offer natural safety, lifestyle and a quality of life that not many other locations can provide. Not only is it clean, prosperous and politically stable, but the Cayman Islands are an international melting pot with great roads, restaurants, schooling and medical care - not to mention the fabulous weather all year round.

The Westin Grand

THE WESTIN GRAND CAYMAN SEVEN MILE BEACH RESORT & SPA The world-famous Seven Mile Beach is also home to The Westin Grand Cayman. A paradise for travellers looking for a bit of sand-between-the-toes, switch-off time by the beach. Whether it’s sunset dinner with a cool cocktail in hand, a rejuvenating afternoon in the Hibiscus Spa, or an action-packed day of water sports on the sparkling waters, there’s something for everyone to enjoy.

The hotel has recently undergone a luxe new makeover, introducing stylish new communal areas and splendid new suites for laying your head. The interiors are inspired by Caribbean >

THE CURRENT REAL ESTATE MAKET IS LOOKING GOOD… Like any market it ebbs and flows, but we are experiencing a new surge of activity on the real estate scene. Population growth is proposed to increase by as much as 40% in the next 10 -15 years and this makes for a developer’s dream.

We are currently finding great success selling preconstruction developments. The demand is ever-increasing and inventory inevitably decreasing.

THE OPPORTUNITIES ARE ENDLESS… The Cayman property portfolio offers anything and everything; from small plots of land, commercial buildings and multi-family apartment complexes, to high-end beach homes and vacation rental condos. From US$28,000 to US$45,000,000 there’s something for every investor.

TRUST CAYMAN / 35

LAY YOUR HEAD

beach clubs, breathing new life into this beautifully refreshing resort. The dining opportunities are endless - serving exquisite, fresh food from beach and poolside, to restaurant and room service. The Westin Grand Cayman’s wellness facilities are second to none. The WestinWORKOUT® Fitness Studio offers 24-hour facilities including cardio equipment, free weights and fitness classes. The Hibiscus Spa is a great spot to renew the body and soul - switching off and stepping into a world of pure relaxation.

CHECK OUT: Enjoy the beautiful blue waters of Seven Mile Beach with stingray, dolphin or turtle swimming; or get to know the coral reef with a snorkel trip to the Kittiwake wreck. marriott.com

THE RITZ CARLTON GRAND CAYMAN The Ritz Carlton is the jewel in the Cayman Islands’ crown when it comes to luxurious vacations. It’s a real head-turner, offering breathtaking, elegant views over the Caribbean Sea. The resort is as enchanting as it is opulent - offering a whimsical break from the everyday, with the most elegant interiors and finishing touches throughout.

The Ritz Carlton Grand Cayman has a real sense of place. It celebrates and nurtures everything about its location on this stunning Caribbean isle. Signature spa treatments are inspired by the ocean, the chefs infuse local flavours into international dishes and hotel activities make the most of the magnificent surroundings.

Whether it’s a romantic stroll along the golden sands, a challenging green day on the nine-hole golf course, a body scrub with

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diamond powder or a glimpse of underwater life from a glassbottomed boat, there are plenty of activities to help visitors get a feel for the true spirit of the Cayman Islands.

The hotel boasts six bars and restaurants, a golf club, Ritz Kids programme, luxury spa, retail boutique, a dazzling ballroom and luxurious hotel accommodation across two towers.

The resort’s restaurants are also places worth celebrating; most notably Blue by Eric Ripert, a fine-dining restaurant specialising in local seafood and seasonal flavours.

CHECK OUT: Book in for a blissful treatment at The Ritz Carlton Grand Cayman Spa. The La Prairie Signature Caviar Massage is a skin saviour - lifting and firming the skin. ritzcarlton.com The Ritz Carlton

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It’s a new day.

Welcome to the family.

Holdun Trust (Cayman) Limited 3rd Floor, Kensington House, 69 Dr. Roy’s Drive, George Town, PO Box 1092, Grand Cayman KY1-1102, Cayman Islands T. +1 345 623 7200 | info@holdun.com www.holdun.com

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NEW WEALTH

The next generation More and more high net worth and ultra-high net worth individuals, stretching from selfmade entrepreneurs and professionals, to celebrities, athletes and members of royal families, are choosing Cayman as their base - and the place to manage their wealth

H

aving grown up in a technology-rich world, the next generation are more likely to communicate through WhatsApp than email. However, despite their seemingly informal nature, they take wealth planning seriously – and are not to be underestimated.

“They are educated, intelligent, conscientious, mobile individuals that reside in a global neighbourhood,” says James Long, director at Summit Trust (Cayman) Limited.

“They require a network of advisors that can navigate them through the complexities of this landscape - people who can adapt in order to deal with their needs and wealth issues.”

But what are they looking for exactly? And what sets them apart from their forebears?

“The next generation have a different mindset to the generations before them,” says Georgie Loxton, founder of Liberty Wealth Partners.

“They are driven by a deep sense of purpose, they are more thoughtful around several key issues and they want a team of advisors that they can trust above anything else. They are looking for a proactive approach.”

It is also believed that next gen clients want to use their wealth for

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the greater good.

“They have grown up more globally-conscious than previous generations and actively seek out ways to drive positive change,” adds Sheena Thompson, business unit director at Intertrust Cayman.

“The next gen want to drive social change and they are using their voice, resources and influence to do so rapidly.”

In an age in which our lives are played out on social media, privacy has seemingly become an outdated concept. However, when it comes to protecting their wealth, Robert Lindley, head of private client and trust practice at Conyers, believes the next generation are surprisingly switched on.

“Whether the source of wealth for next gen clients has been via entrepreneurial efforts, an inheritance, taking up leadership roles within their family business, or through an inter-generational wealth transfer, asset protection plays an important role for them.

“Dealing with the next generation presents its own set of challenges for wealth planners and advisors, but in a rapidlychanging and ever-increasing technological environment, the industry must adapt to keep up with the new wave of wealth generators and a new set of demands.”

Georgie Loxton

NEW WEALTH

Robert Lindley

“The next gen are educated, intelligent, conscientious, mobile individuals that reside in a global neighbourhood”

They mean business when it comes to wealth planning...

Here’s what we know about the next gen...

They’re more mobile than ever before...

The next generation have greater global mobility than their forebears. This has increased the need to rely on digital platforms for investments and a greater reliance on online communications in order to have round the clock communication, irrespective of location.

They have a global mindset and have received an international education. They see the world as their oyster and like to travel.

They have grown up in a digital world that has allowed them to stay connected to their home base, while on the move.

They’re clued up about privacy and security...

The next generation is well-aware of the recent data hacks and leaks which have affected the industry. They are keyed into social media and the use, or misuse, of data and the threat of cyber attacks and have a better understanding of the technical side of these issues.

Cybersecurity is often the first word on their lips.

Although willing to freely share personal information online, the next generation are more wary about how their privacy is being protected. They place a high degree of accountability on their professional advisor and financial service provider firms to safeguard their confidential information.

The next generation has a greater desire to be engaged with wealth planning. They wish to be more involved with family governance and the family business. With their new wealth, they are often very receptive to implementing family constitutions and family councils at the outset of the establishment of their family trust structures.

Parenting with wealth is a key issue for the next generation. They want to nurture their children, but not create entitlement; they want them to have a sense of responsibility around their wealth and have their own work ethic. They are less conspicuous about their wealth and are more concerned about overt displays of wealth than the generation before them.

With new wealth, comes new asset classes and riskier, more bespoke, investment strategies. The next generation is more likely to have digital assets and cryptocurrencies in their portfolio, or wish to establish a trust structure to hold the proceeds from an Initial Coin Offering.

They communicate differently...

The next generation rely more on digital platforms for investments and online communications in order to have round the clock communication, irrespective of location.

They have high expectations for professional advisor and service firms to keep pace with technological advancements, but at the same time they want to be able to trust them to keep their information well-guarded and protected.

They have high expectations from their advisory firms to be digitally connected and readily available to respond. They are more used to instant tech communication and are more likely to WhatsApp their advisor than set up a Skype call. >

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NEW WEALTH

Sheena Thompson

They care about the planet and social responsibility...

The world is a smaller place and the next generation are far more connected to, aware of and involved in geopolitical issues, including environmental protection, green energy, climate change, population growth, refugee and immigration issues.

They use their self-made, or inherited, wealth to have specific, local impact on global issues. They are passionate and informed and use the power of technology to seek out the connection and support of likeminded members of the global community.

Many next generation clients, including successful entrepreneurs who have generated their own wealth, establish private charitable foundations to drive change.

They are discerning and want to work with professional, financial and legal advisory firms with core philanthropic values that align with their own.

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They know Cayman is the place to be...

The Cayman Islands is recognised as one of the top 10 international financial centres in the world, boasting stable government, robust regulatory regime, one of the highest standards of living in the world and a legal system based on English Common Law. Cayman’s proximity to the North American, European and Central and South American markets, excellent air links, low crime rate, high-end infrastructure and amenities all play a part in attracting the next generation and their families.

The Cayman Islands have married professional expertise, quality service, breadth of solutions, innovation and a global mindset, allowing professional advisors to take a holistic approach to understanding client needs and finding solutions.

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EXPERT INSIGHTS

STEP Cayman’s Wealth Structuring Forum STEP Cayman Islands’ second annual International Wealth Structuring Forum was held in January 2019 in the Cayman Islands

In 2018, STEP Cayman Islands held its inaugural International Wealth Structuring Forum.

A huge success, the event was repeated in 2019 to further positive reviews and is now a much-anticipated annual fixture in the international private wealth advisors’ calendar.

The 2020 Forum takes place on January 23 and 24 2020 on the beautiful grounds of the Ritz Carlton, Grand Cayman.

With over 280 attendees and supported by an impressive array of sponsors, the Forum is focused on promoting the Cayman Islands as a leading jurisdiction for private clients, wealth management and the administration of cross-border trust and estates.

The Forum attracts respected speakers with a wide range of experience from local and international law firms and trust companies and follows a two-day format covering a range of topics including estate planning, the benefits of offshore jurisdictions, legislation updates and practical tips on handling

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difficult clients and managing trust litigation.

In 2020, the Forum will also include fully-interactive break-out sessions, touching on hot topics such as how to run a successful family office in the Cayman Islands and successful wealth structuring in the Cayman Islands for families from the US, Canada and Asia.

Forum delegates hail from the wider Caribbean, as well as the USA, Latin America, Asia, the UK, Europe and the Channel Islands to take advantage of the extensive networking opportunities on offer - including the Form’s famed farewell beach party.

Fresh content and speakers are introduced each year, ensuring that the Forum continues to evolve together with the industry.

Full details of the 2020 Forum can be found on STEP Cayman’s website (www.cayman.step.org) and can also be obtained by emailing the Forum organisers at conferences@step.org

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Imagine lawyers who tailor solutions to your needs.

Everyone is different, and not one size fits all. Our private wealth clients trust our integrity and personal approach; we customise our services to meet your individual needs. We make sure our solutions are fit for purpose.

We’re Harneys, a global offshore law firm with entrepreneurial thinking. harneys.com

For more information, please contact: Henry Mander Partner | Cayman Islands henry.mander@harneys.com | +1 345 815 2927 TRUST CAYMAN / 43

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