Article by Ray Davern and Alex Way

Maples and Calder

Rapidly changing concepts of the family and advances in reproductive technologies have, in recent years, presented well-publicised and much-discussed problems for legislators worldwide. These include questions of the status of children born other than as the biological issue of two married parents of the opposite sex (illegitimacy); persons in same-sex relationships (same-sex unions); children born with the assistance of a surrogate (surrogacy); and, now, children with genetic material provided by three persons (polygenetic conception). The first birth as a result of polygenetic conception took place in 2016. The child is expected to be free of the gene for Leigh syndrome, which, but for an anonymous female donor of mitochondrial DNA, he would probably have inherited from the female who provided all other DNA not provided by a male contributor. These questions have been answered in different ways in different jurisdictions. In others, they have not even been addressed, leaving judges to answer them on a case-bycase basis. These questions can arise in the context of a trust established decades, or maybe even a century or more, previously.

THE FLEXIBILITY OF THE TRUST

The trust is an institution of the private law and is – subject to a few conceptual and policy-based minimum requirements, varying between jurisdictions – a hugely flexible laissez-faire doctrine that respects settlor autonomy to a very high degree. It allows those who possess wealth to determine, with remarkably few restrictions, how it shall be applied within a family, or otherwise, over several generations. In its off shore incarnation, a trust is typically drafted in a way that allows for flexibility by creating vested interests in as yet unborn or unascertained persons only at the end of a very long trust period and, even then, only in default of exercise, or upon failure, of prior powers. Those overriding, dispositive powers will be the real engine of the trust. Although these powers are exercisable in favour of members of a class of objects comprising the settlor’s family as initially, and perhaps quite traditionally, defined, the class itself can normally be varied in a number of ways, as follows:

a power of addition of objects (allowing for the inclusion of any person within the class);

a power of exclusion of objects (either permanently or for a set period that might, in turn, be defined by reference to status); and

a power of amendment.

Indeed, even if no such express powers are conferred, an appropriately wide power of appointment may allow, in effect, the class of objects to be enlarged, reduced or otherwise redefined as the trustees see fit. It will, by exercise of such power, be possible to replicate the original discretionary trust in all respects bar the desired addition to, exclusion from or other redefinition of, the original class of objects.

What this means, for present purposes, is that would-be settlors can be confident that, whatever fresh challenges are presented by changing notions of the family and new reproductive technologies, the offshore discretionary trust is the most adaptable kind of family planning.

ILLEGITIMACY

The modern approach to illegitimacy in common-law jurisdictions is to abolish, for the most part, the distinction at common law between it and legitimacy, so far as social rules of general application are concerned (obligations of maintenance, succession to property on death, and so on). However, the ability of individuals to preserve a distinction through institutions of the private law, such as contract and trust, is left unrestricted.

Even in the British Virgin Islands, Cayman Islands and the UK, where legislators have, in recent decades, provided prospectively that terms such as ‘child’ and ‘issue’ in private instruments shall be presumed to include the illegitimate (thus reversing the common-law presumption), the new presumption is generally expressed to be subject to contrary intention. It is generally possible, therefore, to opt out of the equality-of-treatment regime, and correspondingly necessary to do so if the intention is to limit bounty to the issue of a lawful marriage. Of course, a would-be settlor who is so minded may also want to give some thought to what will, under the trust to be established, count as a lawful marriage in the first place.

SAME-SEX UNIONS

There is no doubt that same-sex unions are a divisive issue, even in jurisdictions where they have been given legal recognition as civil partnerships or marriages. This appears to be the case whether such recognition has taken the form of judicial decision giving effect to constitutional rights (as in the US), ordinary legislative provision (as in the UK) or popular vote (as in the Republic of Ireland).

The issue has split religious traditions, further entrenched political division and proved itself the action to which there has been the equal and opposite reaction of the reaffirmation of a traditional concept of marriage, sometimes by way of constitutional amendment, or by the strengthening of criminal laws designed to deter sexual activity between same-sex individuals through severe punishment, including death.

Whether viewed as a basic requirement of justice or a fundamental and detrimental change to a human institution as old and as important to a flourishing society as law itself, legal recognition of same-sex unions is, and may remain for some time, a divisive issue. The trust can live with this, and the offshore trust can do so comfortably.

Even in trust jurisdictions such as the Cayman Islands and the British Virgin Islands, where same-sex unions do not yet have direct recognition in law, nothing in either system of law prevents a settlor from stipulating who shall benefit under a trust by reference to marital status under any system of foreign law, including those that give legal recognition to same-sex unions.

Conversely, settlors who wish to restrict benefit to the (presumably only legitimate) issue of legally recognised civil unions between no more than two individuals, each of whom must be of a sex differing at birth from the other’s, can say just that – or its equivalent – by defining ‘marriage’ as ‘marriage as recognised by Cayman Islands law, excluding its rules of private international law, as at the date of this deed’ in their trust instrument. And if they really want to do so, settlors can entrench that definition, so far as it is possible to entrench any provision of a trust, by circumscribing all relevant trustee powers that might be used to alter it either with an absolute prohibition on doing so or a qualified prohibition requiring settlor consent, which can be withheld during life and cannot, in the nature of things (and whether for better or worse), be given or extracted after death.

MORE THAN TWO PARENTS?

Surrogacy, at least of the ‘host’ variety,1 and polygenetic conception have in common that there are three persons who might be said to be the biological parents of the child when born. They differ in that only with polygenetic conception is the child genetically related to all three and, ordinarily, no surrogate will host the pregnancy (although, in a case where a surrogate is needed, there may be four persons involved, but the child is genetically related to only three). Again, dealing with these developments is principally a matter of settlor preference and clarity of drafting. The birth of one seemingly healthy baby boy early last year may truly have been a momentous event, medically and ethically speaking. However, for the humble trust lawyer, the questions it raises are more of the order: what terminology should be adopted to describe those relationships hitherto referred to as being of the whole and half blood?

Footnote

1 Where a woman carries to term the fertilised egg of another couple

SOURCE: http://www.mondaq.com/caymanislands/x/583730/Trusts/Fertile+Grounds+For+Dispute