If you’ve researched how to protect your assets against lawsuits, creditors, and divorce proceedings, you
may have heard about Cook Islands Trusts. These offshore asset protection trusts have served as the
gold standard of asset defense for nearly 40 years and are still regarded as the best way to guard your
assets against various threats.
Given the effectiveness of these trusts, it’s no wonder why thousands of wealthy individuals worldwide
choose to establish them. However, creating these trusts involves much more than signing a few papers.
To set up your trust properly, you’ll need the guidance of knowledgeable asset protection professionals,
like Asset Protection Planners. We have established more Cook Islands trusts than any firm worldwide.
In this guide, we’ll show you how to set up a Cook Islands Trust with the help of experienced
professionals. Discover how this popular trust can help shield your assets from lawsuits, creditors, and
other threats.
Read on to learn more about how Cook Islands Trusts work and how to set one up:
- Who Can Establish a Cook Islands Trust?
- How to Set Up a Cook Islands Trust Correctly: A Step-by-Step Guide
- Cook Islands Trust Advantages
Who Can Establish a Cook Islands Trust?
Just about anyone can set up a Cook Islands Trust, though it’s a better fit for some people than others.
We generally recommend this sort of asset protection trust for:
- Individuals with high net worths
- Entrepreneurs and other business owners
- Professionals in high-risk fields (e.g., lawyers, doctors, and contractors)
No matter which of these categories you fit into, the most important part of establishing a Cook Islands
Trust is working with an experienced asset protection professional. You are best served using an
organization with significant experience in the field. That is because such a firm has the appropriate
relationships with reputable banks and trustee companies needed to set up a secure, effective trust.
How to Set Up a Cook Islands Trust Correctly: A Step-by-Step Guide
Once you’ve decided that a Cook Islands Trust is right for you, it’s time to set it up. To make sure you do
this properly, follow our step-by-step guide:
1. Hire a professional with experience establishing asset protection trusts
Establishing a Cook Islands Trust can be complex without proper guidance. Attempting to save money by
setting one up by yourself will end up backfiring, leaving your assets vulnerable to creditors and
lawsuits. Moreover, a trustee organization will not accept a trust that was not professionally drafted.
Experienced asset protection consultants, like those at Asset Protection Planners, will provide the
expertise, connections, and legal knowledge needed to properly create your trust.
2. Select parties for the primary roles of the trust
To establish a Cook Islands Trust, you need to identify people to serve in the following roles:
- Settlor: The person who is establishing the trust and transferring their assets into the trust.
Typically, this will be you. - Trustee: The person or entity who administers the trust and owns the legal title to the assets it
holds. A trustee company must be licensed in the Cook Islands. - Trust Protector: This position is optional. It is a person appointed by the settlor to oversee the
trustee and ensure that they are acting in the best interest of the settlor. A trust protector
should be a reliable and trustworthy individual or group, such as a fiduciary company or
attorney. Additionally, for optimal protection, this person cannot live under the jurisdiction of
your local court. - Beneficiary: The individual or individuals entitled to receive financial benefits, such as
distributions, from the trust. The settlor may designate themselves, family members, charities,
or numerous other parties as beneficiaries.
A professional asset protection trust establishment group will often have relationships with reliable local
trustees and protectors who can be assigned to those roles in your trust. This saves you the trouble of
searching for a trustee on your own and greatly reduces the likelihood of finding an unreliable trustee.
3. Create a draft of the trust deed
Work closely with your asset protection company to draft a detailed trust deed. This legal document
serves as the foundation of your Cook Islands Trust, and details the roles and responsibilities of the
settlor, trustee, protector, and beneficiaries.
4. Provide any necessary documentation
Once you have identified the parties involved in the trust, the next step is to gather the necessary
documents to form the trust. These documents include:
- Passport or driver’s license
- Evidence of funds
- Banking reference letter
- Proof of address
- Trust deed
- Deed indemnity
- Letter of wishes (optional)
- Sworn Affidavit of Solvency
Our Cook Islands Trust package has a more comprehensive list of documents and descriptions that can
be used as part of trust formation.
5. Transfer your assets into the trust
After providing all the required documents and signing the trust deed, you can now deposit your assets
into the trust. You can place countless assets in your trust aside from liquid currency. Some common
items that people put in their trusts include bank accounts, investment portfolios, company stocks or
shares and other securities. Real estate, intellectual property cars, boats, and planes require additional
measures if they are located in your home jurisdiction. Once the assets are transferred, they are legally
owned by the trust/trustee and can enjoy robust protection against legal claims and creditors.
At Asset Protection Planners, we further improve the efficacy of Cook Islands Trusts by establishing an
international limited liability company (LLC) that you use to open bank and investment accounts. We
then place the membership of the LLC inside of your trust. As the LLC manager, this gives you a tool
inside the trust that you control. When legal trouble occurs, our trust company / law firm can step in to
protect you as needed.
6. Maintain your Cook Islands Trust
While this step only takes place once your trust has been established, it’s worth remembering that your
job doesn’t end with creating the trust. Every year, you or your chosen asset protection company must
adhere to certain maintenance requirements for your Cook Islands Trust, including:
- Annual Fees: Fees must be paid each year to regulatory bodies in the Cook Islands.
- Compliance: Stay up to date on any legal and regulatory changes to trusts in the Cook Islands to
ensure that you remain compliant. - Audits and Reviews: Regularly review and audit your trust to make sure it’s always being
managed according to international standards and your preferences. - Updates: If you find something amiss during your review, update the trust to regain compliance.
Additionally, make any necessary updates to the trust to keep it in line with your current
financial situation and estate planning goals. Once you have properly carried out all of the above steps, you’ll have an effective asset protection trust that can defend your assets against lawsuits, creditors, and other threats.
Cook Islands Trust Advantages
When you’re looking to protect your assets, a Cook Islands Trust isn’t your only option. However, these
trusts have several notable advantages over those in other jurisdictions, both offshore and domestic.
Some of the biggest advantages of a Cook Islands Trust include:
Lawsuit Protection
One of the key advantages of a Cook Islands Trust is the protection it offers from lawsuits, creditors, and
court orders originating outside of the Islands. The Cook Islands is a “defendant-friendly” jurisdiction
where the legal burden is on the plaintiff to prove beyond a reasonable doubt that the defendant
established the trust with the objective to defraud a creditor. This exceptionally high standard makes it
difficult for creditors and others to successfully challenge the validity of your trust. Additionally, a Cook
Islands trustee company is not bound to U.S. court orders, which further protects your assets against
seizure.
Cook Islands Trust Statute of Limitations
Another advantage of a Cook Islands Trust is the statute of limitations on certain matters. The Cook
Islands have an extremely short statute of limitations that ranges from one to two years. The trust
protects the assets right away. Yet, this short statute gives creditors a small window in which they can
attempt to bring challenges against your trust before they are legally barred from doing so.
Trust Articles
The Cook Islands Trust Act of 1984 allows the settlor/grantor of the trust to also be the beneficiary. This
means that the person who establishes the trust can benefit from the assets within the trust, providing a
level of flexibility and control not found in other jurisdictions. This is a unique feature of Cook Islands
Trusts and can be a significant advantage for those looking to benefit from and protect their assets.
No Asset Location Requirements
A Cook Islands Trust can protect assets located outside of the Cook Islands. This is because any assets
that are held within the trust are under Cook Islands’ jurisdiction, regardless of their physical location.
This benefit is especially useful for individuals or companies that have assets in multiple jurisdictions. That said, domestic assets are under the jurisdiction of domestic courts. So, we need to take additional
measures to protect assets such as real estate.
Electronic Access to Bank Accounts
Another advantage of a Cook Islands Trust is the ability to transfer assets electronically. You can have
online assets and can wire money into and out of a foreign bank account. You can also carry a debit card
to access your offshore account. These conveniences make it easier to manage and access assets within
the trust, regardless of your location.
Flexibility
Cook Islands Trusts offer a high level of trust-structure flexibility. This gives you the ability to structure
the trust to fit specific asset protection needs and investment opportunities. For instance, you can
designate your children as beneficiaries and customize the distribution of your estate—whether as a
lump sum, lifetime income, or any other arrangement that suits your preferences.
Confidentiality
A Cook Islands Trust offers a high degree of confidentiality. Trust documents are not filed with any
public registry or disclosed to the public. This makes it even more difficult for creditors and litigants to
locate and seize the assets in your trust.
Tax Efficiency
Cook Islands Trusts are not subject to local taxes. You only need to pay the taxes that your home
country places on the asset. For example, if you have an investment account in your trust and you live in
the United States, you would only pay U.S. taxes on that account, not Cook Islands taxes.
International Recognition
Courts and legal systems around the world recognize Cook Islands Trusts. The international respect
afforded to this jurisdiction is what enables it to create such trust-friendly laws.
Independent Jurisdiction
The Cook Islands is a unique jurisdiction in the South Pacific. While it is a part of New Zealand and the
British Commonwealth, it has a distinct legal system separate from both of those jurisdictions. This
allows the Cook Islands to create trust laws that exceed the protections afforded by either of those
locations.
Long Case Law History
The Cook Islands Trusts Act of 1984 provided the legal framework for the establishment and operation
of trusts in the Cook Islands more than 40 years ago. This has led to a long-standing case history that
makes it hard for lawyers and creditors to find an effective legal strategy to attack your assets.
It is important to note that while Cook Islands Trusts offer several advantages, they are not a one-size-
fits-all solution. Consult with an experienced asset protection attorney or consultant to determine
whether these trusts are the right choice for your specific circumstances.
References:
- C.I. Trusts: An Overview, by D. H. Smith, published in the Journal of Asset Protection. [1]
- International Asset Protection: Strategies, Forms and Laws, by M. Shenkman. [2]
- The C.I. Trust: A Guide for the International Practitioner, by M.G. Pfeifer, published by Juris
Publishing. [3]
Need Help Setting Up a Cook Islands Trust? Contact Asset Protection Planners
The team at Asset Protection Planners knows how to set up a Cook Islands trust that can keep your
assets safe from countless legal threats. If you’re ready to create an asset protection trust, we’re ready
to help.
Contact us today for a complimentary consultation to see if a Cook Islands Trust is the right choice for
your asset protection needs. With our team at your side, you can rest assured that your trust will be
established properly and placed in the hands of reliable trustees.
Give us a call at +1-954-400-1050, or fill out a free consultation form on this page.