Drafting Cayman Islands

Trusts

by James Kessler QC and Tony Pursall

Review by Carlos de Serpa Pimentel

The combination of Tony Pursall’s Cayman Islands trust drafting expertise with James Kessler’s now classic work on trust drafting is an invaluable addition to the library of the serious trust draftsman, and an indispensable work for any Cayman Islands trust practitioner. As Antony Duckworth says in his foreword: ‘All those who work with Cayman Islands trusts, here or abroad, should leap to their feet and applaud James Kessler and Tony Pursall for this splendid work.’

This volume replicates the approach and format of Kessler’s Drafting Trusts and Will Trusts, A Modern Approach with 25 chapters on trust drafting in part I, starting with first principles, style and principles of interpretation, moving on to chapters dealing with substantive drafting issues and Cayman-specific chapters on protectors and reserved powers trusts and STAR trusts.

There is significant reliance on Kessler’s original work, particularly in the early chapters, but Tony Pursall has focused at every opportunity on the relevant Cayman Islands drafting issues, referring to the relevant statutory framework and applicable case law. In addition to the helpful narrative, recommended drafting forms are set out and explained throughout part I and contrasted with unhelpful or otherwise unnecessary forms sometimes encountered elsewhere.

Part II comprises nine useful Cayman Islands trust precedents, which serve as an excellent starting point for the practitioner and include two forms of discretionary settlement (with or without protector), an interest in possession settlement (single adult life tenant – no protector), a charitable trust and two forms of deeds of appointment, retirement and indemnity of trustees. Significantly, the precedents also include a reserved powers settlement, and two forms of STAR trust: one for use in business succession situations and the other for the purpose of holding shares in a private trust company. The book is also accompanied by a CD ROM that includes copies of the precedents.

Breaking the law

In a salutary discussion of the formal qualifications for the draftsman in chapter 1, the authors point out that a Cayman Islands trust must be drafted by an attorney-at-law admitted to practise in the Cayman Islands and enrolled, and that a non-attorney who drafts a Cayman Islands trust commits a criminal offence. It follows that while it is common practice, the completion by a trust company or bank employee of pro forma trust instruments prepared by an attorney ‘will normally constitute an offence’. The authors are right to state that interesting questions arise where the law is broken, in particular whether an unqualified foreign firm of lawyers drafting a Cayman Islands trust could successfully sue for its fees and perhaps more significantly, whether an unqualified foreign firm of lawyers who negligently prepared a Cayman Islands trust deed would be covered by the firm’s professional indemnity insurance? While the authors correctly state the answer to the last question would depend on the terms of the insurance cover, the clear message is that drafting Cayman Islands trust deeds and other trust documentation should always properly be carried out by qualified Cayman Islands attorneys.

I have made frequent use of the book’s commentary, and I think the book will prove essential for those attorneys, accountants or trust officers not familiar with Cayman Islands law and practice acting either on behalf of a retiring foreign trustee in favour of an incoming Cayman trustee or vice versa.

I can do no more than wholeheartedly endorse Antony Duckworth’s view in

his foreword to the book that ‘its value lies in providing a systematic approach to drafting, an encouragement to clear writing (inseparable from clear thinking), and a great number of constructive ideas and suggestions.’ I am sure this work will enjoy great success and merit many future editions, and would wholeheartedly encourage anyone working with Cayman Islands trusts to purchase a copy of the book without delay.

Carlos de Serpa Pimentel is a partner at Trusts Appleby in the Cayman Islands

: 9041124888

Price: USD269.00

Here is information on how to order Drafting Cayman Island Trusts and other books by James Kessler QC.