March 23rd 2017
For more than 30 years now, the Cook Islands has been leading the way in providing a trust regime which offers excellent asset protection features with all the flexibility of an English style common law trust.
The asset protection advantages offered by a Cook Islands Trust include:
- Certainty as to the time limitation periods during which creditors must commence actions in relation to “fraudulent transfers” by settlors of international trusts. In summary, a creditor must commence an action against a settlor within 12 months of the date of transfer of assets to the trust and against the trustee within 24 months of the date of transfer of assets to the trust, to have standing to argue a fraudulent transfer by the settlor.
- The creditor bears the onus of proof to show that a transfer by a settlor was done with intent to defraud creditors. The creditor must satisfy this onus of proof to a standard of “beyond reasonable doubt”
- Judgments obtained in a court other than the Cook Islands High Court cannot be enforced against the trustee, settlor, beneficiaries or protector of an International Trust. This forces creditors to argue their case against the trust under Cook Islands law
- An International Trust will continue to exist notwithstanding that the settlor of the trust may be declared bankrupt.
- If a creditor is successful in arguing that a transfer to a trust was done with intent to defraud creditors, the only remedy available to the creditor is an award of damages from the trust fund.
- Punitive damages cannot be recovered from an International Trust.
- The avoidance of forced heirship rights in the home jurisdiction of the settlor will not render an International Trust void or voidable.
- Special purpose domestic or offshore entities can be placed underneath the International Trust and take advantage of the asset protection features offered by the Cook Islands regime.
- There are several forms of trusteeship available in the Cook Islands including private trustee companies, managing trustees/custodian trustees and co-trustees. These forms of trusteeship allow for flexibility for clients in structuring control mechanisms.
The Cook Islands International Trust is an excellent choice for a client who is seeking an international investment vehicle offering a substantial level of asset protection.
We have a long-standing relationship with Asia Citi Trust company in the Cook Islands and are very happy with their service. We would be happy to make an introduction. www.asiacititrust.com