BY CONNOR STEENS
With over 40 years of experience in offshore asset protection, management and administration, Southpac has been at the forefront of the industry in one of the most popular jurisdictions for establishing offshore trusts. With purpose built legislation, a Cook Islands trust is a strategic way for high-risk professionals to protect their assets, and ultimately preserve their wealth for the future.
Below is a list of the top 5 reasons for you to establish a Cook Islands trust:
1. Foreign judgements are not recognized in Cook Islands courts
One of the most significant benefits of a Cook Islands trust is that Cook Islands courts do not recognize foreign judgements.
A creditor can have no claim against the assets of a Cook Islands trust if those assets were settled before the creditor’s cause of action accrued. This means that a Cook Islands trust offers unparalleled protection against unknown future creditors.
Existing creditors seeking to claim the assets held by a Cook Islands trust are required to initiate legal action in the Cook Islands before the two-year statute of limitation expires, making a lawsuit a matter of urgency for the plaintiff. If a plaintiff wishes to proceed they would be required to retain a local law firm in the Cook Islands, pay legal fees up front and prove beyond reasonable doubt that the trust was established with the intent to defraud them.
All of which produces a lengthy and costly process for a creditor that will almost always induce them to abandon or settle a frivolous claim.
2. Succession planning advantages
While asset protection is often the main objective of a Cook Islands trust, estate and succession planning is a significant advantage to the jurisdiction. With no rules against perpetual trusts, a Cook Islands trust can last indefinitely if a settlor wishes it to do so, making it a great legal vehicle for estate planning purposes. In addition to this, foreign inheritance laws, such as forced heirship, are not recognized in the Cook Islands with the inheritance of trust assets being determined by the terms of the trust agreement. With these advantages a Cook Islands trust can benefit multiple generations in perpetuity.
3. Tax benefits
Residents of certain jurisdictions may be able to retain a tax benefit from establishing a Cook Islands trust, either during their lifetimes of after death. The Cook Islands does not impose taxes on international trusts or their trustees. This means that a Cook Islands trust is not subject to any local taxes such as gift, income, estate or capital gains. It is, however, vital that anyone seeking to establish a Cook Islands trust obtain specific tax advice to ensure that they are aware of their tax and reporting obligations wherever they are tax resident.
4. Protection for a variety of asset classes
Medical practitioners, lawyers, developers, business owners and others who may be at risk of a future claim that have accumulated significant wealth may have gathered that wealth in a diverse range of assets. A Cook Islands trust can be utilised to protect a number of different assets including tangible assets such as yachts, vehicles, real estate and bullion; and intangible assets, such as investment portfolios, digital assets, company shares, intellectual property and life insurance policies.
5. Exposure to global financial centers
A Cook Islands trust established with Southpac can connect you to our network of financial services relationships across the globe. Providing international bank accounts with numerous banks and SEC-registered investment advisors, allowing access to global investment markets advised by recognized investment advisors, or index funds curated to preserve or build upon your wealth.
Conclusively, a Cook Islands trust offers many benefits, and those looking for the highest standard of asset protection will certainly find it in the Cook Islands. If you would like to enquire about establishing a trust with Southpac, don’t hesitate to contact us here.