Cook Islands Trust for asset protection, Does it Work??

[blancmon229]

Everyone seems to recommend a Cook Island trust for asset protection.

But in reality, how hard is it to open a bank account for the trust assets and is the trust really worth the hype?

 

[DarkRevoMan]

Everyone seems to recommend a Cook Island trust for asset protection.

But in reality, how hard is it to open a bank account for the trust assets and is the trust really worth the hype?

The Cook Islands Trust is one of the strongest asset protection structures on the planet. Its nearly impossible to get money from such a structure.

Cook Islands trusts have held their ground even when used by convicted felons to store cash from ponzi schemes. The American Federal Trade Commission went there and learned the hard way.

 

[banafinfodafuggiano]

The Cook Islands Trust is one of the strongest asset protection structures on the planet. Its nearly impossible to get money from such a structure.

Cook Islands trusts have held their ground even when used by convicted felons to store cash from ponzi schemes. The American Federal Trade Commission went there and learned the hard way.

Sounds BS to me, the most powerful government in the world cannot access funds of crooks in a tiny small island in the middle of nowhere?

 

[blancmon229]

Sounds BS to me, the most powerful government in the world cannot access funds of crooks in a tiny small island in the middle of nowhere?

I agree. Governments don't need direct access to the funds in the cook islands. If they know you are the owner they will force you to take the money out yourself to pay them or just throw you in a cell until you do. There are many cases in which that was true.

 

[banafinfodafuggiano]

I agree. Governments don't need direct access to the funds in the cook islands. If they know you are the owner they will force you to take the money out yourself to pay them or just throw you in a cell until you do. There are many cases in which that was true.

Correct. Giant Corporatist governments like the UK/US/Canada etc are nothing but powerful Mafia organisations.

 

[Sols]

Everyone seems to recommend a Cook Island trust for asset protection.

But in reality, how hard is it to open a bank account for the trust assets and is the trust really worth the hype?

Structured correctly, Cook Island trusts have proven successful in court several times with creditors giving up, losing in court, or settling rather than even try to fight.

Banking is usually not a problem. Your trustee will arrange banking for the trust, so just make sure you pick a good trustee.

Sounds BS to me, the most powerful government in the world cannot access funds of crooks in a tiny small island in the middle of nowhere?

I agree. Governments don't need direct access to the funds in the cook islands. If they know you are the owner they will force you to take the money out yourself to pay them or just throw you in a cell until you do. There are many cases in which that was true.

https://www.icij.org/investigations/offshore/paradise-untouchable-assets/https://blakeharrislaw.com/blog/trust-caselaw-of-the-cook-islandshttps://jmvlaw.com/the-anderson-decision/
That's the case @DarkRevoMan was referring to.

 

[blancmon229]

Structured correctly, Cook Island trusts have proven successful in court several times with creditors giving up, losing in court, or settling rather than even try to fight.

With creditors its definitely effective but I am guessing against big governments it still won't be effective as nothing is out of their reach. However, for the purposes of possible creditors or lawsuits it is worth setting up.

Banking is usually not a problem. Your trustee will arrange banking for the trust, so just make sure you pick a good trustee.

Does the banking depend on the nationality of the trustee and not so much the jurisdiction of the trust? If I wanted to open a bank account in Austria with an Austrian Trustee for the Cook Islands Trust would that work? Or does the safety of the trust lie in keeping the assets physically in the Cook Islands?

 

[Sols]

With creditors its definitely effective but I am guessing against big governments it still won't be effective as nothing is out of their reach. However, for the purposes of possible creditors or lawsuits it is worth setting up.

If not even the US can get through a Cook Islands trust, I'm not sure what other big government there is that could. The law is the same regardless of whether it's a typical creditor or a foreign government body trying to pierce a trust or compel trustees to take action under duress. The trustees can refuse under Cook Islands law and Cook Islands doesn't generally recognize foreign court orders.

What way in do you propose a government would take? And, if that's possible, why didn't the FTC? I'm sure it's possible but you'd have to be a very high profile case for significant geopolitical influence to be applied.

When it falls apart, asset protection usually doesn't fall apart at the legally strongest point (i.e. a proper trust) but through mistakes made elsewhere in the structure, such as the settlor keeping some wealth or assets outside of the trust which the creditors can claim instead of the assets placed in trust. Or because the trust wasn't set up properly (fraudulent conveyance, improper trustees, poor choice of jurisdiction, and so on).

Does the banking depend on the nationality of the trustee and not so much the jurisdiction of the trust?

Jurisdiction of trust matters.

If I wanted to open a bank account in Austria with an Austrian Trustee for the Cook Islands Trust would that work?

If you can find a bank in Austria willing to onboard the trust, sure. You'd generally want to bank in a jurisdiction which has a proven track record of recognizing trusts, though, which Austria does not really have. This could be an exploitable avenue for an opponent: by attacking the assets at the bank and using creative legal arguments to try to convince a court that since trusts don't exist under local law, the assets are effectively held by the settlor or beneficiary. Doesn't necessarily work, but you'd be wise to assess the risk.

Depends on your risk appetite and threat vectors.

Or does the safety of the trust lie in keeping the assets physically in the Cook Islands?

Sometimes, yes. Sometimes, no.

Asset protection isn't formula or off-the-shelf service. Each arrangement should be bespoke after taking into account the nature, type, and location of assets, the threats from which the assets are being protected, the settlor's expectations, and so much more.

A Cook Islands trust isn't always the right choice. But in situations where a trust is deemed appropriate, Cook Islands is often used.

Banking options in the Cook Islands are rather limited. Most Cook Islands trusts I have seen do not bank there.

 

[DarkRevoMan]

Sounds BS to me, the most powerful government in the world cannot access funds of crooks in a tiny small island in the middle of nowhere?

I agree. Governments don't need direct access to the funds in the cook islands. If they know you are the owner they will force you to take the money out yourself to pay them or just throw you in a cell until you do. There are many cases in which that was true.

Correct, the most powerful countries in the world cannot really access a cook islands trust. Why would a small island f**k over a great industry they have?

I don't think there is one single instance of a cook islands trust being broken via litigation. I can give countless judgments in other jurisdictions (Pugachev is a famous one for example).

As to the second part as far as the government forcing you to pay by holding you at contempt. There are hundreds of ways around this, but this is why a properly structured trust is important. Also I don't include risky clauses like a duress clause.

The most expensive but ultimate way around this is to put the whole structure in a captive insurance company. A cheaper alternative is to have multiple beneficiaries on the trust, with a spendthrift clause that beneficiaries are removed if they become the subject of lawsuits. (Ie add your kids / family as beneficiaries, the trust can continue paying them while you are sued). And like always the trust should be 100% discretionary with a third-party professional trustee (not yourself like Pugachev).

Of course backup passports and residencies could allow you to leave the country before this point too.

Three real world examples:

• "In 2009, Nadya Suleman (also known as “Octomom”) filed a lawsuit against the fertility doctor who implanted embryos in her, resulting in eight child births. However, Dr. Kamraya held assets in a Cook Islands trust, making them extremely difficult to recover.
• In 2007, the Federal Trade Commission (FTC), filed suit against Kevin Trudeau, author of The Weight Loss Cure, for “airing blatantly deceptive infomercials” and received judgement of $37.5 million. Despite the money recovered, the FTC collected nothing from Mr. Trudeau’s Cook Islands trust.
• In a years-long lawsuit, government-sponsored lender, Fannie Mae filed an action against Oklahoma real estate investor Andrew Grossman after defaulting on his loans. In waiting to collect on a $10 million judgement, Fannie Mae has been able to collect $12,000; however, remains unsuccessful in recovering anything held in Grossman’s Cook Islands trust."

 

[Konstanz]

The Cook Islands Trust is one of the strongest asset protection structures on the planet. Its nearly impossible to get money from such a structure.

Cook Islands trusts have held their ground even when used by convicted felons to store cash from ponzi schemes. The American Federal Trade Commission went there and learned the hard way.

It depends where assets are. If you keep money in european EMI , Swiss bank it still can be frozen. Even if it's the name of Cook Trust.
Especially real estate assets can easily be frozen.
Unless you keep all your assets in Cook Islands. Maybe yes not possible to freeze

 

[DarkRevoMan]

It depends where assets are. If you keep money in european EMI , Swiss bank it still can be frozen. Even if it's the name of Cook Trust.
Especially real estate assets can easily be frozen.
Unless you keep all your assets in Cook Islands. Maybe yes not possible to freeze

Why would you have a cook islands trust with EU assets?

For onshore assets like real estate its still possible to strip equity to an offshore trust via friendly liens but that is definitely not as secure.

You don't need to keep all your assets in an offshore trust. Keep enough to start over, or enough to live off the interest.

There is also the possibility of an offshore onshore hybrid pour over trust where any onshore assets are sold and invested in the offshore trust. The amazing trick about this transaction is the statue of limitation starts when the trust was originally created (for fraudulent transfer dispositions), meaning you can immediately transfer funds to the offshore trust and have them protected.

Quite a few high profile people have USA DAPT set up (as a foreign granter) with offshore pour over provisions - south dakota is great for this.

 

[JohnnyDoe]

What is the rationale for choosing between a Cook Islands trust and a Nevis trust?

 

[FreedomSearcher]

What are some trustworthy yet reasonably priced companies that help with asset protection?

 

[blancmon229]

Banking options in the Cook Islands are rather limited. Most Cook Islands trusts I have seen do not bank there.

Regardless of the Cook Islands protection, I would think the banking jurisdiction is equally if not more important.
If you have a Cook Islands trust yet bank with it in the EU, US , UK etc... I am assuming it is in reach and can be easily frozen. In that case the most solid plan would be to have a Cook islands trust with a cook islands bank account, however, I wouldn't feel comfortable keeping any significant portion of my money in a sub-par bank on a random island.

Perhaps you came accross better structures? Or at least situations in which other have cook islands trust but bank in for example more respected/protected banking jurisdictions?

Plus, I see this as being beneficial for countries that do not apply CFC reporting as there is really no way of them knowing you have the trust. Of course, if someone is a US citizen then good luck with all that reporting and "freedom".

What are some trustworthy yet reasonably priced companies that help with asset protection?

Same question. If anyone has suggestions please share.

Banking is usually not a problem. Your trustee will arrange banking for the trust, so just make sure you pick a good trustee.

In what situation would you recommend a trust company as the trustee over a individual person as the trustee. Perhaps hiring a trust company gives you more plausible deniability. Anyone have experience with a trust company?

 

[Sols]

What is the rationale for choosing between a Cook Islands trust and a Nevis trust?

There are some minute legal differences, such as fraudulent transfer limits and duration. IIRC, Cook Islands trusts have been tested more in court than Nevis trusts.

What are some trustworthy yet reasonably priced companies that help with asset protection?

"Reasonably priced" means different things to different people. Creating a trust is a fairly simple process that by itself isn't very expensive usually. It's the upkeep that can get expensive, which depends on how your trust is structured. Price comparisons are almost meaningless, since each one tends to be so bespoke. While you shouldn't be throwing money away, asset protection is only worth it if you have significant assets to protect. So shop around and see what proposals you get.

Sovereign Group, Trident Trust, Asiaciti Trust, Southpac Group, South Dakota Trust Company, Vistra, TMF, ILS. And there plenty of law firms out there that can help, too.

Regardless of the Cook Islands protection, I would think the banking jurisdiction is equally if not more important.
If you have a Cook Islands trust yet bank with it in the EU, US , UK etc... I am assuming it is in reach and can be easily frozen. In that case the most solid plan would be to have a Cook islands trust with a cook islands bank account, however, I wouldn't feel comfortable keeping any significant portion of my money in a sub-par bank on a random island.

Perhaps you came accross better structures? Or at least situations in which other have cook islands trust but bank in for example more respected/protected banking jurisdictions?

What's a better structure? For whom? Under which circumstances? If you have no threats arising from EU, US, or UK, why not bank your trust there?

US has ironclad trusts on home turf and they often bank domestically. Just look into South Dakota trusts (see The great American tax haven: why the super-rich love South Dakota for starters), which have now spread to lots of states.

The trust arrangements I have seen often bank in the usual financial centers of the world: Singapore, Switzerland, Luxembourg, Isle of Man, Liechtenstein, Hong Kong, US, and so on. Sometimes wherever the trust is formed, Mauritius, Cyprus, Malta, and other places. Have seen a handful of very exotic arrangements. It's very circumstantial and based on the needs of the settlors and beneficiaries.

Plus, I see this as being beneficial for countries that do not apply CFC reporting as there is really no way of them knowing you have the trust. Of course, if someone is a US citizen then good luck with all that reporting and "freedom".

Since trusts are not legal entities, the applicability of CFC is complicated. IIRC, there are cases where the trust itself is not in scope but the beneficiaries and/or settlor can be deemed owning a foreign corporation for their involvement in trusts.

In what situation would you recommend a trust company as the trustee over a individual person as the trustee. Perhaps hiring a trust company gives you more plausible deniability. Anyone have experience with a trust company?

With a trust company, you are less dependent on a single person. Human beings have a nasty habit of dying, being incapacitated, or otherwise be prevented from fulfilling their obligations.

Trust companies are usually regulated, which an individual trustee isn't necessarily (if you pick a family member or friend, for example).

I suppose you should also consider if the choice has any impact on potential legal disputes in other territories (i.e. your place of residence, location of assets, other relevant jurisdiction).

 

[Ancova]

Good Morning All!

Here are some details about Cook Island Trusts. Feel free to get in touch if you have more questions.

Asset protection of Cook Islands is recognized as the standard for best protection internationally.

• Forced Heirship
Trust or settlement cannot be voided if it defeats heirship rights of related individuals
Settlor's capacity cannot be questioned.
• Bankruptcy
Trust or settlement remains valid in the event of Settlor's bankruptcy in their home jurisdiction.
• Spendthrift Beneficiaries
Interests in trust assets for beneficiaries cannot be alienated, passed by bankruptcy, or seized.
• Common Law Rules
Abolishes rules against accumulations and double possibilities. Trustee has discretion to avoid the rule in Saunders v. Vautier.
• Perpetuity Period
Abolishes Common Law rule against perpetuities
Trust can exist indefinitely or terminate based on specified events or dates.
• Fraudulent Conveyance
Establishes rules for determining validity of transfers and protecting rights of potential claimants.
• Burden of Proof
Limits creditor's access to specific settlement assets, not entire trust fund Creditor must prove intention to defraud within prescribed time limits.
• Foreign Judgments
Cook Islands courts do not recognize judgments based on inconsistent laws. Claims against trust assets must be initiated in Cook Islands court.

A typical Cook Islands Wealth Protection structure has several components allowing both flexibility and protection:

• Ø TheSettlorestablishesaCookIslandsInternationalTrust.
• Ø A Cook Islands licenced trustee company provides the
  Trustee.
• Ø The Settlor and family members can be discretionary
  beneficiaries of the Trust.
• Ø A Protector can be appointed to monitor the activities of
  the Trustee, and can be granted absolute or veto powers or
  a combination of both.
• Ø The Settlor can provide a letter to the Trustee detailing
  his/her wishes in regards to the investment and
  distribution of assets both during and after his/her lifetime.
• Ø The Trust owns 100% of a limited liability company (“LLC”) incorporated in the Cook Islands, or other jurisdiction
  appropriate to the client’s circumstances.
• Ø The Settlor, or his representative, is the Manager of the LLC.
• Ø Assets are held and managed within the LLC or entities
  underlying it.
• Ø The Trustee is not required to be involved in the
  management of the LLC or its assets.
• Ø The Trustee can be granted power to remove and replace
  the Manager of the LLC in certain circumstances to protect the interests of the Manager and the assets under his/her control
• Ø The Manager is not personally liable for the debts, obligations or liabilities of the LLC.
• Ø The Trustee is not subject to foreign judgements or forced heirship rules.

Structuring Options

• Purpose trust (charitable or non-charitable)
• Discretionary trust
• Trust with fixed interest beneficiaries
• Any combination of the above
  Possible Control Elements
• Protector
  -Appointed with powers and functions defined in the trust
  instrument
  -Not held liable as a fiduciary, unless stated otherwise in the trust
  instrument
  -Settlor, Trustee, or Beneficiary can serve as the Protector if
  desired
• Co-Trustee
  -In addition to a licensed Cook Islands trust company, an
  individual or entity can be appointed as a co-trustee -Co-trustee doesn't require a license in the Cook Islands to
  engage in trust company business

• Assets held within the structure, including family businesses, can be managed and operated by the Settlor and his/her family without interference from the Trustee.
• The Settlor’s personal and business assets can be passed to the next generations in an orderly fashion in accordance with his/her wishes.
• A change in Manager of the LLC does not give rise to fraudulent conveyance claims.
• Enhanced protection of assets from unforeseen creditors.
• A Cook Islands International Trust is tax neutral in that it is not
  subject to any form of Cook Islands taxation.
• Anonymity: Each Cook Islands International Trust is registered by providing the Registrar with the names of the trust and the Trustee and the date the trust was established. There is no requirement to file the trust instrument or the names of the Settlor or Beneficiaries.

• Retention of Powers
  -Settlor can retain, possess, or acquire certain powers without
  invalidating the Cook Islands International Trust
  -Powers can include: Amending or revoking the trust; Disposing
  of trust assets; Removing or appointing a; Trustee or Protector; Directing the Trustee or Protector on any matter

 

[Konstanz]

Why would you have a cook islands trust with EU assets?

For onshore assets like real estate its still possible to strip equity to an offshore trust via friendly liens but that is definitely not as secure.

You don't need to keep all your assets in an offshore trust. Keep enough to start over, or enough to live off the interest.

There is also the possibility of an offshore onshore hybrid pour over trust where any onshore assets are sold and invested in the offshore trust. The amazing trick about this transaction is the statue of limitation starts when the trust was originally created (for fraudulent transfer dispositions), meaning you can immediately transfer funds to the offshore trust and have them protected.

Quite a few high profile people have USA DAPT set up (as a foreign granter) with offshore pour over provisions - south dakota is great for this.

What assets people keep on Cook Trust.? I imagine mostly US, EU, Canada assets (real estate, shares etc.) also yachts, private jets..
Do rich people keep Cook Islands assets? I doubt that
I said the same about Liechtenstein discretionary foundation. You can do the same in Liechtenstein. Assets cannot be frozen easily on that foundation. You can keep funds on it in Liechtenstein.
But if you keep other assets in foreign countries there are always a risk.

 

[Sols]

People in this and similar threads are acting like they're enemies of a state and need to prepare for the CIA coming after their IBKR accounts and bitcoin wallets. You don't have to worry about the full might of major countries being exerted to come after you. You just have to keep the assets out of reach of courts (in a lawful manner).

Governments aren't infinitely capable. And in most cases, the government isn't the opponent anyway. People use trusts and other asset protection vehicles to protect against civil matters and disputes. Even if your ex-wife sues you for half of that bitcoin wallet you put in a Cook Islands trust and wins in US court, that doesn't mean the US government is going to start pressure the Cook Islands to make an exception to their own laws. You're not that important.

Asset protection isn't protection from the worst threat imaginable. It's protection from current and future expected threats.

 

[Konstanz]

People in this and similar threads are acting like they're enemies of a state and need to prepare for the CIA coming after their IBKR accounts and bitcoin wallets. You don't have to worry about the full might of major countries being exerted to come after you. You just have to keep the assets out of reach of courts (in a lawful manner).

Governments aren't infinitely capable. And in most cases, the government isn't the opponent anyway. People use trusts and other asset protection vehicles to protect against civil matters and disputes. Even if your ex-wife sues you for half of that bitcoin wallet you put in a Cook Islands trust and wins in US court, that doesn't mean the US government is going to start pressure the Cook Islands to make an exception to their own laws. You're not that important.

Asset protection isn't protection from the worst threat imaginable. It's protection from current and future expected threats.

Agree is perfect for civil matters. But I would still choose LI foundation. More chance to get bank account in decent banks

 

[blancmon229]

US has ironclad trusts on home turf and they often bank domestically. Just look into South Dakota trusts (see The great American tax haven: why the super-rich love South Dakota for starters), which have now spread to lots of states.

Why would someone choose South Dakota for a trust over Wyoming, Nevada or Delaware?

Sovereign Group, Trident Trust, Asiaciti Trust, Southpac Group, South Dakota Trust Company, Vistra, TMF, ILS. And there plenty of law firms out there that can help, too.

Thank you. Any of these provide broad asset protection strategies and tax planning advisory? Looking for a descent advisor.