The Role Of Enforcer - Cayman Islands STAR Trusts

Published date28 March 2023
Subject MatterCorporate/Commercial Law, Family and Matrimonial, Corporate and Company Law, Trusts, Wills/ Intestacy/ Estate Planning
Law FirmOgier
AuthorGregory Haddow and Anthony Partridge

A key feature of a Cayman Islands STAR trust is that it separates the beneficial rights from the enforcement rights. In a non-STAR trust context, a beneficiary has a right to enforce the terms of the trust against the Trustee. In a STAR trust context, a beneficiary does not have this right.

Section 100(1) of the Trust Act (2021 Revision) notes that: "A beneficiary of a [STAR] trust does not, as such, have standing to enforce the trust, or an enforceable right against a trustee or an enforcer, or an enforceable right to the trust property."

But what does this mean? Beneficiaries of a STAR trust are not able to sue a trustee or obtain information in relation to the trust from the trustee.

In this article, we answer some of the key questions on enforcers and enforcement rights.

Who has the enforcement rights?

The only person with enforcement rights in a STAR trust arrangement is the "enforcer".1 It should be noted that beneficiaries can be appointed as the enforcer of a STAR trust and therefore a beneficiary may have rights to enforce but only in their capacity as enforcer.

Who can be an enforcer?

There are no strict requirements for who can be the enforcer of a STAR trust. The enforcer can be resident anywhere in the world and doesn't have to be located in the Cayman Islands. They can be an individual, multiple individuals acting jointly, or a corporate entity.

Does a STAR trust need an enforcer?

Every STAR trust must have an enforcer appointed. If there is no enforcer in office for whatever reason (for example, the current enforcer is unable, unwilling or unfit to enforce the trust), then the trustee is under an obligation to ensure a new enforcer is appointed.

Is the enforcer a fiduciary?

Typically, the powers and duties of an enforcer will be held in a fiduciary capacity.2

Are the enforcement obligations a right or a duty?

The standing of an enforcer may be reserved as either a right or a duty.

However, unless there is at least one beneficiary (who is not incapacitated) who is an enforcer with the right (not a duty) to...

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