In March 2026, in what is understood to be the first successful application of its kind under the new statutory jurisdiction conferred by section 20 of the Perpetuities Act (2025 Revision), Harneys successfully obtained an order from the Grand Court, disapplying the rule against perpetuities for a discretionary family trust. The order empowered the trustee to execute a deed of variation replacing the trust's fixed-term period with an indefinite duration.

Prior to the amendment effected by Act 7 of 2024 (which came into force on 22 August 2024), Cayman Islands discretionary trusts were subject to a statutory perpetuity period of 150 years from the effective date of the relevant instrument. Part 3 of the 2025 Revision, which consolidates the 2024 amendment, changes the landscape in three material ways.

First, for new trusts created on or after 22 August 2024, the instrument itself may simply provide that the rule against perpetuities does not apply (provided the trust does not hold Cayman land or any interest in Cayman land). The land carve-out is narrow in that it does not extend to income from Cayman land or to the proceeds of sale of Cayman land, and a trust that has opted out of the rule may still hold an interest in an entity that owns Cayman land for the purposes of its business.

Second, for existing trusts (whenever created), section 20 permits a trustee, settlor, enforcer, power-holder, or beneficiary to apply to the Grand Court for an order declaring that the rule does not apply. The Court may grant the order where it is satisfied that doing so would not be to the detriment of the beneficiaries.

Third, trusts of unlimited duration governed by a foreign law that has no perpetuity rule may change their governing law to Cayman without re-introducing any duration limit.

Harneys acted for a professional trustee of a discretionary family trust seeking to give effect to the dynastic objectives of the settlor through the grant of a court order.

In the absence of Cayman authority on the exercise of the section 20 jurisdiction, the Court was invited to approach its discretion by reference to persuasive Bermudian case law under section 4 of Bermuda's Perpetuities and Accumulations Act 2009, a materially analogous provision to section 20 of the Perpetuities Act (2025 Revision).

The application before the Grand Court drew on judicial guidance from the Supreme Court of Bermuda that establish clear principles guiding the exercise of the statutory power to disapply the rule against perpetuities. The Bermudian authorities establish that:

• The Court must not function as a "rubber stamp": disapplication will only be granted where it facilitates the continued efficient administration of a family trust, where no beneficiary is materially prejudiced, and where the relief accords with the best interests of the trust as a whole.
• A forced distribution at the end of a perpetuity period could give rise to significant tax liabilities and premature dissipation of assets to the detriment of future generations—this is a strong justification for disapplication.
• The potential dilution of existing beneficiaries' economic interests as a result of extending the duration of a trust will ordinarily be an irrelevant consideration.

Distilling and drawing from these Bermudian principles, the Cayman Islands Grand Court will therefore likely exercise its discretion in favour of granting relief where disapplication would: (a) accord with the settlor's wishes and the objectives of the trusts; (b) serve the best interests of those beneficially interested as a whole; (c) avoid an unwanted obligation to make enormous distributions at the end of the perpetuity period; and (d) facilitate the lawful preservation of existing and future tax benefits.

Section 20 of the Act provides a clear, court-supervised route to perpetual duration for existing trusts and our recent experience in successfully obtaining an order demonstrates yet again that the Grand Court of the Cayman Islands takes a pragmatic approach to such trust applications. We anticipate the streamlined, court-supervised route will be welcomed by settlors (as well as by a trustee, enforcer and a person with a beneficial interest in the trust who all have standing to make an application) of existing trusts to convert a fixed-term trust into perpetuity in order to preserve and distribute wealth across generations.

Harneys Partner Charles Moore and Associate Harriet Green acted for a professional trustee in confidential sealed proceedings and successfully obtained an order to this effect.