The Cayman Islands – a jurisdiction of choice for ultra-wealthy Chinese families

By Emma Parker

The Cayman Islands has long been known and trusted by Chinese nationals as a jurisdiction to establish corporate and fund vehicles for outbound business investments from China or Hong Kong. In recent years, though, the Chinese have also turned to Cayman for wealth structuring and family succession planning, and Cayman Islands trusts, foundations and companies are often part of ultra-high-net-worth (UHNW) families’ personal planning.

Many Chinese families do not only operate within national borders and boundaries. Whether it is family members moving to the US, Canada, Dubai or Europe, they are often not geographically tied to their region of origin and need to ensure that all aspects of their wealth planning take their families’ increased global footprint into account. International families are looking at the broad spectrum of possibilities for wealth planning and structuring, and the Cayman Islands are increasingly becoming a jurisdiction of choice.

Monique Bhullar, a partner with Walkers law firm, which has offices in Cayman and Hong Kong explains: “As a law firm, we have seen a significant increase in the number of ultra-high-net-worth individuals and family offices either relocating or preparing a contingency plan for relocating to Cayman. This is without actively seeking this type of work, so is clearly illustrative of a global trend.

Monique Bhullar

“An uptick in high-net-worth migration from a region is often a signal of negative economic, political or societal factors influencing a region. Where clients are considering contingency planning based on such factors, they are often looking further afield to jurisdictions physically distant from their home jurisdiction or region, and often also economically or politically different, in order to mitigate risk. This applies to immigration planning as well as asset protection and estate planning and makes Cayman an attractive option for residents of Mainland China and Hong Kong.”

Contingency or ‘Plan B’ residency is something that is being considered by many wealthy, global Chinese families who are concerned about political, economic or other societal issues their home country. The recent protests in Hong Kong and the outbreak of COVID-19 have brought these issues into sharp focus.

Bhullar adds: “Where we have assisted ultra-high-net-worth individuals from China and the surrounding region to relocate to Cayman, the driving factors in those clients selecting Cayman have been (i) infrastructure – the quality and diversity of service providers in Cayman are second to none and the level of connectivity is that of any larger country, (ii) safety – Cayman is considered one of the safest countries in the region, which is a paramount issue for UHNW clients, (iii) rule of law – Cayman has a reliable and well-tested legal and judicial system, (iv) anonymity – UHNW individuals are able to maintain an unusually high degree of anonymity in Cayman, compared to other countries, and (iv) lifestyle – Cayman offers luxury real estate and facilities for other significant assets which UHNW clients are likely to be accustomed to and require in their new or contingency jurisdiction.”

Elizabeth Yang is a lawyer based in Hong Kong and for the last 17 years, has worked with clients from mainland China and Hong Kong. She has experience in China, Macau, Hong Kong and several other jurisdictions including Vanuatu, BVI, Fiji and the Cayman Islands. She has experience working with ultra-high-net-worth clientele on structuring including family office, trusts and succession planning.

Elizabeth Yang

Yang explains that the new generation of wealthy in China have specific criteria they work to when considering an alternative jurisdiction for residency, citizenship or a larger family office set-up: “It depends on what the family is looking to achieve; some are looking for a passport and alternative citizenship programme, which offers visa-free travel and access to the UK, EU or USA. For others, such a citizenship programme will be phase one of a longer-term plan, whereby the citizenship allows the family to physically relocate their family and centre of interest to a new destination in the EU or UK. In this case we commonly see families moving to locations including Malta, Monaco or London.

“The Cayman Islands offers something different. It is a larger initial investment and is more suitable for families in the very top tier of wealth looking to secure that long-term succession planning piece, as well as obtaining access to a fantastic lifestyle and residency option for their whole family. Cayman is attractive to high-net-worth Chinese individuals and families due to the fact it has zero direct taxes. Cayman has no corporate tax, income tax, inheritance or capital gains tax and there are also no withholding taxes.”

Cayman has long held its reputation for attracting the very top tier of global wealthy to its shores and this extends to Cayman’s property offering. Sue Nickason, vice president of real estate marketing and sales at Dart, explains: “When it comes to buying property in Cayman, we attract a great deal of interest from foreign investors due to Cayman’s tax-neutral status, the fact there are no restrictions on foreign ownership of property, there are no alien landholding licenses required, no recurring property taxes and, of course, our range of luxury, high-end properties for the most discerning buyers. From luxury resort-style condos on Cayman’s award-winning Seven Mile Beach to single family private estates, we have it all.”

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