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The Best Offshore Trust Jurisdictions Compared

Best Offshore Trust Jurisdictions

What We’ll Discuss

In this article we’ll be talking about the best offshore trust jurisdictions for asset protection. We’ll be comparing the Cook Islands, Nevis, Belize, The Bahamas, and the Cayman Islands. In addition, we’ll discuss the laws of these jurisdictions and which one can best protect your assets from lawsuits.  

Introduction to Offshore Trusts​

Before we dive into the specific jurisdictions, let’s first discuss what an offshore trust is and why it might be beneficial. An offshore trust is a trust a settlor establishes in a foreign country. Furthermore, one typically sets up such a trust in a jurisdiction that many refer to as a tax haven. Its primary purpose for most trust settlors is protecting assets from creditors. High net worth individuals, business owners, and investors who want to protect their assets from lawsuits, divorce, or other legal issues are the most common candidates. 

So, here’s how an offshore trust works. Your local court says, “Give me the money.” Our offshore trustee company / law firm says, “No, not going to. You don’t have jurisdiction down here.” This tremendous asset protection benefit often makes it the number one asset protection tool in one’s arsenal. Usually these trusts are tax neutral so they do not increase or decrease taxes.

Domestic vs. offshore spendthrift trust

Comparison of Offshore Trust Jurisdictions

So, which offshore asset protection trust is best at protecting your assets? Now, let’s compare the laws of the Cook Islands, Nevis, Belize, The Bahamas, and the Cayman Islands. These jurisdictions are known for having strong asset protection laws. Thus, they are popular choices for establishing offshore trusts.

Cook Islands Trust the Right Way

Let’s Start With the Cook Islands Trust

The Cook Islands, located south of Hawaii, is one of the most popular jurisdictions to open an offshore asset protection trust. It has a long history of providing strong asset protection and, being part of New Zealand, it is politically very stable. Legal experts agree that the Cook Islands has the strongest asset protection case law history in the world. So, it’s not just theory, but it has withstood the test of time in protecting the client’s assets from lawsuits in actual court cases.

As such, the Cook Islands is one of the mainstay locations for the creation of offshore asset protection trusts. In fact, our organization has set up more Cook Islands trusts than any company in the world. Like one of our doctor clients told us, “My marriage is based on trust…and that trust is based in the Cook Islands.” We have been setting up Cook Islands trusts since 1996.

When you look at the Global Corruption Perceptions index, you’ll see one country that stands above the rest for the long term. That one country is the most, or one of the most trusted jurisdictions in the world out of the 180 countries listed. The country that has held the top spots more than any there country is New Zealand. As we said, the Cook Islands is part of New Zealand. We have personally witnessed a multi-decade track record of impeccable integrity among the trustee companies, the regulators and the legal system. The Cook Islands has a stellar reputation, an exceedingly low crime rate, is extremely safe, is every tightly regulated and has high regard for the rule of law. In fact, our CEO has a Cook Islands trust for himself and his family.

Cook Islands Trust and Nevis LLC

Nevis Trust

The island of Nevis in the Caribbean Sea just southeast of Florida is another popular location for offshore trusts. It has strong asset protection laws and is known for being debtor-friendly. The laws are almost identical to the Cook Islands. In fact, we know the person who wrote the Nevis trust statutes. We also know the author of its subsequent revisions. 

Amendments to the statutes added these two additional benefits that Cook Islands does not have. Number one, in order to file a case against a Nevis trust, a creditor must post a cash bond of an amount deemed feasible by the Nevis High Court. This is usually in the $100,000 range. Number two, Nevis International Trust statutes have abolished the Mareva Injunction, regarding trusts. This is roughly the UK equivalent of a US temporary restraining order. A Mareva Injunction freezes trust assets and ties the trustee’s hands from making changes to the trust. 

In other jurisdictions, a judgment creditor will commonly request such a ruling in conjunction with filling a lawsuit against a trust. Nevis has abolished this option, so your opponent cannot freeze your trust assets using this method. Thus, a trustee can continue to move funds. They can use the trust account to pay your legal bills. Plus, with your cooperation, they can make changes to the trust even during litigation. So, here is what we do if someone ever imposes a Mareva injunction on a Cook Islands trust. We will have the protector convert the Cook Islands trust into a Nevis trust. 

Converting to a Nevis Trust

Moving a trust from the Cook Islands to Nevis during litigation provides two benefits. First, it will bypasses the asset freeze imposed by the Mareva Injunction. Two, it makes your opponent have to spend another big pile of money. For example they will need to deposit, let’s say, $100,000 with the Nevis courts. Plus they’ll have to pay a huge retainer to a new attorney in Nevis.  

Belize Trust

Belize is another popular location for offshore trusts. It has strong asset protection laws. Just like the Cook Islands and Nevis, Belize trusts do not recognize judgments that originate in foreign countries, such as the United States. Your legal opponent must initiate any further litigation in the offshore jurisdiction. There is no statute of limitations on fraudulent conveyance with a Belize trust. So, what’s in the trust is protected right away, even if challenged in Belize courts. 

But it’s not all beaches and cream. Here is why we proceed with caution in Belize. We will preface this by saying that we have never seen anything but the utmost in honesty and integrity with trustees, thus far in Belize. However, what we have seen is this. In Belize, if you pay a government official, you get what you want. It the Cook Islands, you get thrown in jail.

The crime rate is also very high in Belize. Armed robberies are commonplace in Belize City, the country’s biggest municipality. Plus, out of 195 countries, Belize is in the top 15 for intentional homicides per capita. So, from an honesty and integrity standpoint and from a crime standpoint, we simply trust the Cook Islands with our money more than we trust Belize. 

The Bahamas Trust

The Bahamas is a popular location for offshore trusts due to its political stability and strong asset protection laws. In addition, The Bahamas trust is known for being a flexible and cost-effective option for asset protection. Bahamian trusts have a two year statute of limitations on fraudulent conveyance into the trust.

A slice of mango pie is $2.50 in Jamaica and $3.00 in the Bahamas. These are the pie rates of the Caribbean. Joking aside the Bahamas is where most of the movie, Pirates of the Caribbean, was filmed. 

How long can a Bahamian trust last? Most other jurisdictions around the world impose trust statutes that have, what they call a Rule Against Perpetuities. It states that a Trust cannot exist after 21 years (for example) after the death of the last-named beneficiary who was alive at the time of the trust creation. However, in the Bahamas, just like the Cook Islands, Nevis and Belize, a trust can last forever, creating a legacy for many generations to come.  

What we don’t like about the Bahamas is that a foreign judgment can be enforced there. The Bahamas will enforce it once the foreign judgment has been recognized or domesticated by Order of the Supreme Court of the Commonwealth of The Bahamas. In the other jurisdictions we just talked about, on the other hand, one must file a whole new court case and start from square one. 

Cayman Islands Trust

The Cayman Islands is one of the more popular locations to open an offshore asset protection trust. It provides extensive protection to trusts. This includes the requirement that the creditor must prove to a relatively high degree that the person who settled their trust in the Cayman Islands acted in bad faith. The problem with the Cayman Islands trust is that the assets must be in the trust for six years. That is, you must do so if you want to avoid a fraudulent conveyance challenge to assets transferred into the trust. So, for that reason alone, we don’t like Cayman Islands trusts. 

Compare Offshore Trusts

Best Offshore Trust Jurisdictions Conclusion

In conclusion, offshore trusts can be powerful tools for asset protection. The Cook Islands, Nevis, Belize, The Bahamas, and the Cayman Islands are all popular jurisdictions for establishing offshore trusts. Each jurisdiction has its own unique benefits and drawbacks. Our CEO has chosen the Cook Islands for himself and his family. This is because of the trustworthiness of the jurisdiction along with the strong asset protection laws and case law history. We also like Nevis as a second choice because of the addition protections of eliminating the Mareva injunction on trusts, which could otherwise freeze trust assets. Plus, Nevis requires one to pay what is usually a huge bond of at least $100,000 or so before filing a case against a trust. 

Belize has great asset protection laws but the jurisdiction is less trustworthy in our experience. Bahamian trust are fine except they do recognize foreign judgments once the courts approve them. We do like the banks in the Cayman Islands but we not a fans of the asset protection trusts. This is because they may not protect your assets for six years. This is not from the date of creation, but from the date one creates the trust and places the assets into the trust. 

We hope this comparison helps you understand which offshore asset protection trust might be best for you. If you want to set up a trust feel free to call and speak with one of our attorneys or consultants. Thank you for reading this article on offshore trusts. We hope to hear from you.


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