Cook Island Trust - The Best of The Best!

 

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Asset Protection Trusts

EXPERIENCE: Our source was incorporated in the Cook Islands in 1988, and is licensed as a trustee company. 

Cook Islands Law 
The Cook Islands is recognised as the world leader in formation of asset protection trusts, safeguarding the assets of high net worth clients. Cook Islands law contains a number of unique features that make the operation of an asset protection trust administratively friendly and highly protective.

 

The most important of these features relate to claims by creditors that a transfer of assets to the trust was fraudulent against them,
and therefore void. This would enable a creditor to gain access to those assets. Therefore, provisions include:
* A time limit for any actions being brought against a Cook Islands trust alleging fraudulent transfer;
* No action can be brought for "future fraud" i.e.: if the transfer of assets to the trust occurs prior to a creditor's cause of action
accruing;
* There is no bankruptcy law in the Cook Islands;
* The Cook Islands law of fraud is based on the old English law and requires proof by the creditor, of intent to defraud that particular
creditor, to a criminal standard i.e.: beyond reasonable doubt;

and
* Foreign judgments, negating a transfer of assets to a Cook Islands trust, based on foreign law, will not be recognised by a
Cook Islands court. In addition, there are numerous provisions that enable a Cook Islands trust to be administered without requiring
the settlor to give up all control over the trust assets.

Basic Structure of the Asset Protection Trust
The trust structures
that we recommend focus on ensuring that any challenge to the trust has little chance of succeeding. The way in which our source operates
and administers trusts in its role as trustee is also geared towards ensuring that the trust cannot be successfully challenged. A further,
vital point is that source maintains no presence in the US and thus is not exposed to the exercise of jurisdiction by US courts.

The Parties SETTLOR: The client, the person putting the assets into the trust. TRUSTEES: Hold the title to the assets and administer the
running of the trust. PROTECTOR: Oversees the operation of the trust, as well as removes and appoints the trustees. Often the settler,
but can be settlors attorney or family member.

 

BENEFICIARIES:
Those who are to receive the benefits (income and capital payments) from the trust. Usually settlor plus family members. Can include
any person or class of people that the client chooses.

The Structure
The US Asset Protection Trust
This is the most common structure and is adopted by a settlor who has no current concerns but is conscious that there may be some
liability in the future and wishes to establish a basic structure as a safeguard.

Parties
Three trustees are appointed, our source plus two US Domestic Trustees (can be settlor but preferably settlors attorney or
family member), and a protector. The Cook Islands trustee normally delegates its operating powers to the two US trustees. Essentially
the two US trustees then exercise all powers relating to investment of trust assets and distributions to the beneficiaries according to
the settlors "wishes", and report back to the Cook Islands trustee at an annual meeting.

The protector oversees all decisions made by the trustees and retains the ability to veto any decision made by the trustees. The
protector also has the power to remove and appoint trustees if they do not perform their duties as required by the settlor.

Assets
Assets are normally placed into a Family Limited Partnership (FLP). The settlor holds the general partners 1% share, but transfers
the limited partners 99% share to the trustees. The settlor continues to control all investments by the

(a) Receiving annual reports from the General Partner;

and
(b) Distributing any profits passed to the trustees by the FLP.

Litigation If there is a threat to the settlor (e.g. a pending law suit) then the trust structure is changed to become more like that
of a foreign asset protection trust. The US trustees are removed, the FLP is liquidated, and any liquid assets are placed with a Swiss
custodian bank. Investment is then continued under the direction of an Investment Adviser appointed by the settlor. The Cook Islands
trustee becomes responsible for any decisions to distribute to beneficiaries. Under this structure, with no assets to attack, an
attorney acting on a contingency fee for a plaintiff is much more likely to either abandon their claim or settle for significantly
less than the amount claimed. Once settlement is achieved, the previous structure with the two US trustees can be reinstated.

While this is a common structure, there are variations that can be implemented to suit individual requirements. Some settlors like
to transfer assets directly to the trustees. This is possible although the trustee itself must not be exposed to any potential
liability. Some prefer to open an investment account with a Swiss Investment bank from the outset, so that if an emergency does arise
then they already have the relationship in place. Some settlors decide at the outset not to appoint any US trustees and adopt a
structure where the protector controls the Cook Islands trustee.

There is also variation in the amount of assets transferred into the trust. Some settlors like to transfer all their assets; others
take a less aggressive stance and transfer only sufficient for a"nest egg" in the event of them losing the rest of their wealth.

The Foreign Asset Protection Trust
This structure is most commonly used for Nest Egg trusts and offers the best level of protection against threatened action by a creditor.

Parties
Our source is appointed as the sole trustee. The trust still has a protector who can veto any trustee actions and can remove the trustee
at will. The trustee also normally appoints an Investment Adviser, (normally the settlor's existing financial planner), approved by
the protector. A foreign custodian bank is also involved.

Assets
The best level of protection is offered if persons outside of the US hold title to assets. For this reason assets are often held by
a Swiss custodian bank, with the Investment Adviser directing all transactions. Funds may also be placed with the Swiss bank under
discretionary management on terms approved by the protector.

Litigation
The structure is designed to withstand litigation without further changes.

Tax Implications
Offshore asset protection trusts should not be confused with offshore tax vehicles. Both of the trust structures described above are
designed as grantor trusts. They are tax transparent for income tax purposes, and the settlor continues to be personally liable for any
income from the trust. In addition, the trusts are drafted so that all transfers to the trust are "incomplete" and therefore there
are no gift tax, estate tax, or excise tax issues arising. The trust assets are included in the settlor's estate on his or her
death. Both trusts also have US reporting requirements. The foreign asset protection trust has substantially more requirements to be met,
than the US asset protection trust.

Cook Island International Trust Cost!
Year 1
Provision of precedent trust document, assisting with drafting document, settlement of trust, initial asset transfers, appointment of trustee, trustees’ annual fee, registration of trust for first year, provision of registered office. - $4,650
Government Registration Fee - $310
Trust Administration - *
One time set up and due diligence fee - $2,000
Year 2 & Subsequent Years - $3,650
Renewal of registration of trust, provision of trustee, trustees annual fee, provision of registered office.
Government Registration Fee - $310
Trust Administration - *
Trust Protector Services – If Required
Year 1
Provision of Trust Protector - $1,500
Review of trust document (where required) - $950
Trust administration - *


Year 2 & Subsequent Years
Provision of Trust Protector - $1,500
Trust administration - *
Invoicing Policy
Invoices are usually sent monthly where the amount exceeds $500. Where a large transaction is ongoing the balance due may be carried over and invoiced at the completion of the transaction. If the balance owing is less than $500 dollars then it may be carried forward and added on to next month’s invoice.


* The fees for trust and company administration will depend on the level of involvement of the offshore trustee / Trustee Company and the level of activity of the trust / company. Work undertaken in the administration of the trust / company is charged on a time cost basis. For example the opening of an offshore bank account costs between $500 and $1500 depending on requirements of the bank and the completeness of information provided by clients. Currently charge out rates range from $50 per hour for secretarial staff to $300 per hour for senior legal staff.

 

In order to ascertain the correct, best and least expensive trust in the Cook Islands that meets your requirements, please  be kind enough to provide us with the following information so  we can provide you with a quote.

* Country of the passport you are currently holding
* Country of birth
* Country of residency
* approximate amount to be placed in a Cook islands trust  (minimum in excess of 100,000 USD/EUR.
* Do you require bank account for your trust?
* Are you now, have you been or are you expecting any kind of  civil or criminal actions against you or your assets?

 

CONTACT US HERE if you have any questions.

Thank you for your custom.

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