New trends in the trusts industry

STEP Conference 2022
Discussing trends in the trusts industry during one of the panel discussions at the 2022 STEP Cayman on 28 April at Kimpton Seafire Resort + Spa were, from left, Carlos Pimentel of Appleby, Philippa Stokes of Rawlinson & Hunter, Henry Mander of Harneys and James Long of Summit Trust. Photo: Alan Markoff

WHAT IS STEP?

These days trust clients are more diverse, more educated and more likely to be living on Grand Cayman than previously.

That insight was one of the key takeaways from the STEP Cayman Islands wealth structuring conference held 28 April at Kimpton Seafire Resort + Spa.

STEP, which stands for the Society of Trust and Estates Practitioners, is an international organisation with more than 21,000 members in 96 countries.

The afternoon conference, which served as the launch event of the STEP's 2022 "Trust Cayman" magazine, featured two panel discussions with local trust practitioners, one titled "New Beneficiaries, New Frontiers" and the other named "Trends in Trusts." As it turned out, there was content crossover in the two panels because the new types of beneficiaries are very much a trend.

EDUCATED AND DIVERSE

During the first panel discussion, Rawlinson & Hunter's Philippa Stokes told a story about some of her firm's trust clients, a mother and her two sons.

"What really stood out to me was how highly educated they all were," Stokes said, adding that the mother told her she'd be reading elements of Cayman's trust legislation on the plane when she left.

Because of their high levels of education and knowledge, today's beneficiaries also want direct access to information about the performance of their trust investments, Stokes said.

"The modern beneficiary definitely wants more information and they don't want to wait for a meeting or even to pick up a phone."

ESG

Another change Cayman's trust practitioners are seeing is their clients desire for environmentally friendly assets, part of the trend known as "ESG" — which stands for "environmental, social and governance."

Stokes said that sometimes it's not just ESG investments the new trust clients want.
"Some beneficiaries are looking for ESG from the providers as well," she said, noting that her firm had some clients that were not happy to see plastic water bottles used in the boardroom in which they met.

Panel moderator Carlos Pimentel of Appleby said fiscal benefits are often not the principal driver when it comes to the younger generation of trust beneficiaries.

"There's much more awareness of social justice causes," he said.

However, Summit Trust's James Long wondered if an economic downturn might affect the way trust beneficiaries view their current ESG requirements. He noted that with the war in Ukraine raising the costs of oil significantly, it was going to have an effect on trust investment portfolios.

"Those with traditional portfolios will outperform those with ESG portfolios, so it will be interesting to see how this will play out," he said. "ESG principles may change with the economy."

MOBILE

Another new trend in beneficiaries include families that live in the Cayman Islands, something that was addressed by both panels.

During the questions segment of the first panel discussion, Bedell Cristin's Andrew Miller spoke from the audience, stating that in years past, most trust clients lived in London or New York, but that he has seen a big change in recent years.

"Beneficiaries are becoming more broad-minded as to where they want to live and we're seeing more moving here," he said.

Although the sophistication, safety and lifestyle offered on Grand Cayman play a role in attracting people to live here, there are other drivers of this trend as well.

Speaking on the second panel, Butterfield Trust's Andrew Leggatt said that jurisdictional consolidation is also a factor as families no longer want to have various trust structures in multiple jurisdictions because of strict compliance regulations in each of them.

Walkers Partner Monique Bhullar, whose firm is also seeing consolidation of trusts into the Cayman market, noted that the trend of having high-net-worth individuals relocate to Cayman is changing the roles of trust professionals because they require services beyond trust formations, like setting up businesses and advising on real estate transactions and other local law matters.

Madden noted that his firm is seeing more trust clients from the United States and that some of those clients are also choosing to live in the Cayman Islands.

"The mobility of capital today is an opportunity for us," he said.

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