Landmark trust ruling hailed for clarity over forfeiture

Estate planning lawyers have hailed a recent Cayman Islands judgment as clarifying when the beneficiaries of multi-million trust funds could forfeit their cash because of unacceptable behaviour.
Clarity on forfeiting trusts

Clarity on forfeiting trusts

The ruling – handed down just before the end of last year in the off-shore jurisdiction, but revealed by the parties within the last few days – purports to draw the line over which beneficiaries should not cross when attempting to illicit information from trustees.


According to a report in today’s Times newspaper in London, the court was not able to rule specifically on the forfeiture point owing to a 1999 settlement between the parties involved in the matter, but the judge gave a strong indication that if he had been in a position to make a finding he would have ruled that the claimant’s behaviour would have triggered forfeiture.
The newspaper quotes Ziva Robertson, a specialist trust partner at London-based international law firm Withers, which acted for the trustees in the Cayman case, as saying that specialist lawyers in the field have long been frustrated by a lack of clarity around what would trigger forfeiture of benefits.
‘We know that the conduct in this case would have resulted in forfeiture,’ she said, going on to maintain that the wider case was ‘emblematic of an increasingly litigious environment in which trusts operate, requiring trustees to proceed with extra care, and factor the risk of litigation when making decisions about disclosure of information to beneficiaries.’

Privacy debate

The case also stoked the UK’s simmering debate over privacy law, with the claimants law firm – London solicitors Farrer & Co – applying to the Cayman court for an anonymity order preventing the naming of the parties. The order was granted, but the newspaper pointed out the Cayman court had no jurisdiction on that matter in England, although both law firms adhered to the order.

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