If you are searching for the star trust Cayman meaning, the short answer is this: a STAR trust is a trust created under the Cayman Islands Special Trusts (Alternative Regime) Act. It departs from the ordinary common-law trust in two ways. It may be set up for purposes, not only for people, and it does not rely on beneficiaries to hold the trustee to account. An appointed enforcer does that instead.
The term appears often when families compare a Cayman structure with a Swiss one, so the entry below is followed by the other words you are likely to meet. Each definition is general information. How a term applies to your own trust depends on where you live, where the assets sit and what the trust deed says, which is why an individual analysis matters. For the direct comparison, see Switzerland versus the Cayman Islands for a trust.
A
AEOI (automatic exchange of information)
The international system under which financial institutions report account information on foreign tax residents to their own tax authority, which passes it on to the authority of the account holder's country. For trusts, the question is usually who counts as the account holder and which controlling persons must be reported. The rules, also called the CRS, differ in detail from one seat to another.
Asset-protection trust
A trust whose governing law sets out to make it harder for a creditor of the settlor to reach the assets after transfer. The protection has limits: courts look at timing, intent and whether the settlor kept too much control. Statutes of this kind are set side by side in asset-protection statutes compared.
B
Beneficiary
A person, or in some regimes a purpose, for whose benefit the trustee manages the trust assets. Beneficiaries may have fixed entitlements or only a hope of receiving a distribution at the trustee's discretion. In a STAR trust the beneficiaries have no right to enforce the trust; that role is given to the enforcer.
C
Civil-law seat
A jurisdiction whose legal system rests on codified statutes and did not develop the trust internally. Switzerland is the best-known example in this group. Trusts are recognised there through the Hague Trusts Convention, not through a long line of domestic trust case law.
Common-law seat
A jurisdiction in which the trust grew out of case law, as in the Cayman Islands, Jersey or Delaware. Judges are used to the split between legal and beneficial ownership, and statute usually refines the case law instead of creating the concept.
CRS (Common Reporting Standard)
The model rules behind AEOI. Under them, a bank or a trustee classifies each account holder by tax residence and reports the relevant data. It is a reporting regime, not a tax, and it applies to trusts in most of the seats compared on this site.
Custody
The safekeeping of financial assets in the name of the trustee or of a trust holding company. Where a trust is governed by one law but its assets sit with a bank in another country, the custody arrangements and local banking rules matter as much as the trust law. See the Cayman comparison for how this plays out between those two places.
D
Decanting
The transfer of assets from one trust into another, usually under a power in the trust deed or in statute, so that the terms or the seat can be updated without winding up the first trust. Whether it is available, and how far, depends on the governing law.
Discretionary trust
A trust in which the trustee decides who among a class of beneficiaries receives income or capital, and when. It offers flexibility but depends on the quality of the trustee's decisions and on a clear letter of wishes.
E
Economic substance
The real presence a structure has in a jurisdiction: people, premises, decision-making. Some seats require entities to show it, and the burden varies depending on the activity carried out. It is a recurring factor when choosing between seats.
Enforcer
The person appointed in a STAR trust or a purpose trust to make sure the trustee follows the trust's terms and purposes. Where the beneficiaries are unable to act, because they are not people or have no standing, the enforcer fills the gap. The role is similar in spirit to that of a protector, but its function is supervisory.
F
FinIA (LEFin / FINIG)
The Swiss Financial Institutions Act. It treats trustees as financial institutions, alongside asset managers. A person is a trustee under the Act when they manage a separate pool of assets, or dispose of it, for a beneficiary or for a defined purpose on the basis of a trust deed within the meaning of the 1985 Hague Convention, and do so professionally. Activity is professional when it is an independent economic activity carried out to earn a regular income.
Firewall legislation
Statutory provisions telling the courts of the seat not to apply foreign rules, such as forced heirship or foreign matrimonial claims, when judging the validity of a trust. The effect is limited by the readiness of foreign courts to give it weight. See firewall legislation.
Flee clause
A clause that allows or requires the trustee to move the trust to another jurisdiction if a defined event occurs, such as political unrest or a change in the law. Used with care, it makes a trust more resilient. Read more on the flee clause page.
Forced heirship
Rules, common in civil-law countries, that reserve part of an estate for close family members. When a trust is used, the question is whether the heirs may challenge the transfer to it. See forced heirship and trusts.
G
Governing law
The legal system chosen in the trust deed to decide the validity and effect of the trust. It may differ from the place where the trust is administered. The distinction is explained in governing law versus seat of administration.
Grey list
A list of jurisdictions that an international standard-setter considers to have strategic deficiencies in fighting money laundering. Being listed can change how banks and trustees treat structures connected to that seat. The effect is on reputation and de-risking by banks, even where the local trust law has not changed.
H
Hague Trusts Convention
The 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition. It sets common rules on which law governs a trust and obliges member states to recognise trusts created under that law. It is the legal link that allows Switzerland to host trusts governed by foreign law. An overview is in the Hague Trusts Convention explained.
L
Letter of wishes
A non-binding document in which the settlor tells the trustee how to use discretionary powers. Its weight differs by seat, and courts may read it as guidance only. It should be kept up to date and consistent with the trust deed.
P
Perpetuity period
The maximum time a trust may last under the governing law. Some seats impose a fixed limit; others have abolished it or allow it to be disapplied for certain trusts. Duration limits are a classic comparison point between seats.
Proper law
Another name for the governing law of a trust: the law that determines its validity, interpretation and effects. See proper law of a trust.
Protector
A person, independent of the trustee, who holds certain powers over the trust, for example to remove or appoint the trustee or to consent to certain decisions. The scope and the legal standing of these powers vary between jurisdictions.
Purpose trust
A trust created to achieve a purpose instead of benefiting named persons. Many common-law seats allow them in limited cases, usually with an enforcer. The purpose trust entry covers the basics, and charitable and purpose trust seats looks at where they are best sited.
R
Reserved powers
Powers the settlor keeps over the trust, for example to direct investments. Too many reserved powers can lead a court to treat the trust as a sham or as still belonging to the settlor, so statutes in several seats set out what is permitted.
Revocable and irrevocable trust
A revocable trust can be undone by the settlor; an irrevocable trust cannot, or only in narrow circumstances. The distinction affects asset protection, tax treatment and the way different legal systems regard the transfer.
S
Seat
The jurisdiction in which a trust is administered and, in practice, whose courts and regulators will deal with it. It is not always the same as the governing law, and it is separate from the residence of the settlor or the beneficiaries.
Settlor
The person who creates a trust and transfers assets to it. Also called the constituant or Errichter in civil-law languages. See settlor: definition and jurisdictional rules.
Situs
The place where an asset is located, which often decides which law governs it, whatever the law of the trust. See situs of trust assets.
STAR trust
A trust established under the Cayman Islands Special Trusts (Alternative Regime) Act. Its acronym comes from the name of the Act. It can be created for purposes, for beneficiaries or both, and the settlor may exclude the beneficiaries' ability to enforce the trust, handing that task to an enforcer. A STAR trust is often used for holding the shares of a family business, where the goal is continuity and not just distributions. A comparable idea in the British Virgin Islands is the VISTA trust.
Supervisory body (organisme de surveillance)
In Switzerland, an organisation authorised by the FINMA that carries out day-to-day supervision of trustees and asset managers. Trustees are subject to FINMA supervision, which involves a supervisory body, and the FINMA authorises these bodies.
T
Trust deed
The document that creates the trust and sets out its terms: the trustee's powers, the beneficiaries or purposes, the governing law and any right to change seat. In Switzerland, a trustee must manage the separate assets, preserve their value and use them in line with their purpose.
Trust register
A confidential or partly public list of trusts, their trustees and, in some regimes, their beneficiaries. What is disclosed, and to whom, differs a good deal between seats. See trust registers and privacy.
Trustee
The person or company that holds legal title to the trust assets and manages them for the beneficiaries or the stated purpose. In Switzerland a professional trustee based there must be a sole proprietorship, a company or a cooperative entered in the commercial register. Its management must include at least two qualified people, and it must have a minimum capital of CHF 100,000, paid in cash, together with suitable security or professional liability insurance.
V
VISTA trust
A BVI trust regime that lets a trustee hold shares in a company without a duty to monitor or diversify, leaving the management of the business to its directors. It resembles the Cayman STAR trust in aim but has its own rules. See the VISTA trust entry.
Frequently asked questions
What does STAR stand for in a Cayman trust?
It stands for Special Trusts (Alternative Regime), the name of the Cayman Islands law that created this form of trust. The regime is separate from the ordinary law of trusts in the islands and is meant for structures that serve purposes or hold a family business over a long period.
Is a STAR trust available in Switzerland?
No, the STAR regime is a Cayman statute. A Swiss trustee can act for a trust governed by foreign law, such as a Cayman one, because Switzerland applies the Hague Trusts Convention, but the rules of the STAR regime stay those of the Cayman Islands. The right seat depends on your situation and calls for individual advice.
Is a STAR trust better than a discretionary trust?
Neither is better in the abstract. A discretionary trust suits a family that wants flexibility among a group of beneficiaries; a STAR trust suits a settlor who wants to fix purposes and limit what beneficiaries can demand. A review of your assets and your family's countries of residence is the way to tell them apart.
Sources
Considering a trust, or reviewing one?
Describe your situation in a few lines. A Geneva-based trustee reviews it in confidence and replies in writing.