Liechtenstein’s ‘zombie trust’ woes spread to Caribbean

[Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.]

Liechtenstein’s effort to enforce Western sanctions on Russia is causing problems across the offshore wealth world. The tiny Alpine state, known for managing trusts and foundations, has seen mass resignations from fiduciaries and directors this year. As a result, hundreds of “zombie trusts” holding everything from cash to superyachts are now frozen, with no one left to manage them.

The issue is spilling into other offshore centers like the British Virgin Islands, the Bahamas, and the Cayman Islands, where many of these Liechtenstein trusts own companies. Without instructions from managers in Liechtenstein, those entities cannot pay bills, renew registrations, or make investment decisions. If fees go unpaid, assets could even end up under local government control.

Liechtenstein’s government says the problem is limited to 218 Russian-linked entities, with 71 considered “orphaned.” But lawyers believe the real number could be much higher, possibly up to 800. Efforts to take over or manage these stranded assets have largely failed, and new legal restrictions now prevent many Liechtenstein lawyers from representing Russian clients.

What started as a push to comply with sanctions has now created a global tangle of unmanaged assets, exposing how fragile the offshore trust system can be when its links are suddenly cut.

For more information see Mercedes Ruehl “Liechtenstein’s ‘zombie trust’ woes spread to Caribbean,” The Financial Times, November 3, 2025.