5 Reasons to Set Up a Cook Islands Trust

Sunrise at the beach of reasons to set up a Cook Islands trust.

The Cook Islands have become one of the most popular jurisdictions for setting up offshore trusts, and there are several good reasons for this. A Cook Islands offshore trust structure provides some of the best advantages for those who wish to safeguard their assets, pass wealth to future generations, and implement effective tax planning strategies. In addition, anyone in a high-risk profession — such as doctors, lawyers, and business owners — should consider setting up a Cook Islands trust to protect their assets from judgments and seizure by creditors. Setting up a Cook Islands trust is a strategic way to protect your assets and preserve your wealth. Contact the experienced offshore asset protection lawyers in California at White & Bright, LLP. Our attorneys have extensive experience assisting clients with matters pertaining to Cook Islands trusts and helping them safeguard their assets for future generations.

Here are the top five reasons to set up a Cook Islands trust:

1. The Cook Islands Do Not Recognize Foreign Judgments

Judgments obtained by creditors outside of the Cook Islands are not recognized. This means that if a plaintiff receives a judgment from a U.S. court, it will not be accepted in the Cook Islands. In order for a creditor to reach assets held in a Cook Islands trust, they would have to commence legal action there. This can serve as a significant deterrent to creditors — not only can it be inconvenient to bring a lawsuit in another jurisdiction, but the costs associated with doing so can be substantial.

In the event a plaintiff wishes to proceed with filing a lawsuit in the Cook Islands, they would be required to establish beyond a reasonable doubt that the trust was set up with the objective to defraud. Not only is this extremely difficult to prove, but any legal action for an allegedly fraudulent disposition must be brought within two years of the occurrence of the cause of action.

2. A Cook Islands Trust Can Protect a Wide Variety of Assets

A Cook Islands trust can safeguard a broad scope of assets, including those that are tangible and intangible. Investment portfolios, life insurance policies, intellectual property, stock options, real estate, and retirement accounts are just a few examples of assets that offshore trusts can be used to protect. Notably, the assets do not need to be located within the Cook Islands to be shielded by the structure of the trust.

Critically, developing an asset protection strategy is of the utmost importance to those in professions with high liability risks. Corporate officers, physicians, attorneys, developers, and anyone who could risk losing their acquired wealth by incurring personal liability in a lawsuit should strongly consider transferring their assets into a Cook Islands trust.

3. A Cook Islands Trust Can Benefit Multiple Generations

A Cook Islands trust can be used as part of a comprehensive estate plan to ensure your wishes are carried out and your wealth is preserved to pass on to your heirs. Not only do they offer protection, but these trusts also provide a high level of privacy and confidentiality. Another advantage in setting up a Cook Islands trust in connection with an estate plan is avoiding forced heirship laws — a trust is a tool that allows you to choose which beneficiaries will inherit your property, rather than let the intestate laws in a specific jurisdiction determine the outcome. Additionally, there is no perpetuity period for a Cook Islands trust, meaning the trust will not terminate on any set date. This can allow it to benefit multiple generations.

4. A Cook Islands Trust Can Protect Your Assets During Divorce

The Cook Islands International Relationship Property Trust Act was passed by the Parliament of the Cook Islands in December 2021. This legislation helps ensure assets held in a Cook Islands trust are preserved for the benefit of beneficiaries in the event of divorce, rather than allow them to be divided in a matrimonial action. While property is generally split 50/50 in a California divorce — including assets held in a trust — the Act helps to keep trust assets intact even if spouses decide to part ways.

5. There Are Tax Benefits in Setting Up a Cook Islands Trust

A Cook Islands trust is not meant to be used to conceal assets from the IRS or eliminate one’s tax responsibilities. Rather than being a tax-free structure, it is a tax-neutral structure and comes with many benefits. These trusts are not subject to any taxes in the Cook Islands (such as local, gift, excise, and capital gains taxes), allowing those who set up these trusts to pay the minimum amount of taxes possible. Importantly, the settlor and beneficiaries are also not subjected to any Cook Islands taxes for income earned by the trust.

Contact an Experienced Offshore Trust Attorney in California

Setting up a Cook Islands trust is a strategic way to protect your assets and preserve your wealth and we’ve given you five good reasons to set up a Cook Island trust. However, it’s essential to have knowledgeable legal counsel on your side who can advise you regarding your options and guide you through the process of establishing an offshore trust. The offshore trust attorneys at White & Bright, LLP have extensive experience assisting clients with matters pertaining to Cook Islands trusts and helping them safeguard their assets for future generations. Call (760) 747-3200 to schedule a consultation.

Categories: Offshore Trust

For More Information

  • This field is for validation purposes and should be left unchanged.