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

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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?
 
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.
 
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.⁢

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.
 
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.

Does the banking depend on the nationality⁢ of the trustee and not so much the jurisdiction of the trust? If I wanted︀ to open a bank account in Austria with an Austrian Trustee for the Cook Islands︁ Trust would that work? Or does the safety of the trust lie in keeping the︂ assets physically in the Cook Islands?
 
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 and︀ Cook Islands doesn't generally recognize foreign court orders.

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

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

Jurisdiction of trust matters.

If you can find a bank in︌ Austria willing to onboard the trust, sure. You'd generally want to bank in a jurisdiction︍ which has a proven track record of recognizing trusts, though, which Austria does not really︎ have. This could be an exploitable avenue for an opponent: by attacking the assets at️ 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.

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 assets︀ are being protected, the settlor's expectations, and so much more.

A Cook Islands trust isn't︁ always the right choice. But in situations where a trust is deemed appropriate, Cook Islands︂ is often used.

Banking options in the Cook Islands are rather limited. Most Cook Islands︃ trusts I have seen do not bank there.
 
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 there︀ is one single instance of a cook islands trust being broken via litigation. I can︁ give countless judgments in other jurisdictions (Pugachev is a famous one for example).

As to︂ the second part as far as the government forcing you to pay by holding you︃ at contempt. There are hundreds of ways around this, but this is why a properly︄ 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 a︅ captive insurance company. A cheaper alternative is to have multiple beneficiaries on the trust, with︆ a spendthrift clause that beneficiaries are removed if they become the subject of lawsuits. (Ie︇ add your kids / family as beneficiaries, the trust can continue paying them while you︈ are sued). And like always the trust should be 100% discretionary with a third-party professional︉ trustee (not yourself like Pugachev).

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

Three real world examples:

  • "In 2009, Nadya Suleman︋ (also known as “Octomom”) filed a lawsuit against the fertility doctor who implanted embryos in︌ her, resulting in eight child births. However, Dr. Kamraya held assets in a Cook Islands︍ trust, making them extremely difficult to recover.
  • In 2007, the Federal Trade Commission (FTC), filed︎ 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."
 
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 also︁ the possibility of an offshore onshore hybrid pour over trust where any onshore assets are︂ sold and invested in the offshore trust. The amazing trick about this transaction is the︃ statue of limitation starts when the trust was originally created (for fraudulent transfer dispositions), meaning︄ you can immediately transfer funds to the offshore trust and have them protected.

Quite a︅ few high profile people have USA DAPT set up (as a foreign granter) with offshore︆ pour over provisions - south dakota is great for this.
 
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 my︀ 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 for︂ example more respected/protected banking jurisdictions?

Plus, I see this as being beneficial for countries that︃ do not apply CFC reporting as there is really no way of them knowing you︄ have the trust. Of course, if someone is a US citizen then good luck with︅ all that reporting and "freedom".
Same question. If anyone has suggestions please︇ share.

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

"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 are︀ almost meaningless, since each one tends to be so bespoke. While you shouldn't be throwing︁ 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 firms︄ out there that can help, too.

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

US has ironclad trusts on home turf and they often bank domestically. Just️ 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.

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

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

Trust companies are usually︉ 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 on︋ potential legal disputes in other territories (i.e. your place of residence, location of assets, other︌ relevant jurisdiction).
 
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 has︀ discretion to avoid the rule in Saunders v. Vautier.
• Perpetuity Period
Abolishes Common Law︁ 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 potential︃ claimants.
• Burden of Proof
Limits creditor's access to specific settlement assets, not entire trust︄ 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 must︅ be initiated in Cook Islands court.

A typical Cook Islands Wealth Protection structure has several︆ components allowing both flexibility and protection:
  • Ø TheSettlorestablishesaCookIslandsInternationalTrust.
  • Ø A Cook Islands licenced trustee company︇ provides the
    Trustee.
  • Ø The Settlor and family members can be discretionary
    beneficiaries of the︈ Trust.
  • Ø A Protector can be appointed to monitor the activities of
    the Trustee, and︉ can be granted absolute or veto powers or
    a combination of both.
  • Ø The Settlor︊ can provide a letter to the Trustee detailing
    his/her wishes in regards to the investment︋ 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 the︍ 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 or︎ its assets.
  • Ø The Trustee can be granted power to remove and replace
    the Manager️ 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 can︀ be appointed as a co-trustee -Co-trustee doesn't require a license in the Cook Islands to︁
    engage in trust company business
  • Assets held within the structure, including family businesses, can be︂ 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 orderly︃ fashion in accordance with his/her wishes.
  • A change in Manager of the LLC does not︄ give rise to fraudulent conveyance claims.
  • Enhanced protection of assets from unforeseen creditors.
  • A Cook︅ Islands International Trust is tax neutral in that it is not
    subject to any form︆ of Cook Islands taxation.
  • Anonymity: Each Cook Islands International Trust is registered by providing the︇ Registrar with the names of the trust and the Trustee and the date the trust︈ was established. There is no requirement to file the trust instrument or the names of︉ the Settlor or Beneficiaries.
  • Retention of Powers
    -Settlor can retain, possess, or acquire certain powers︊ 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 or︌ Protector on any matter
 
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 keep︅ Cook Islands assets? I doubt that 🙂
I said the same about Liechtenstein discretionary foundation. You︆ can do the same in Liechtenstein. Assets cannot be frozen easily on that foundation. You︇ can keep funds on it in Liechtenstein.
But if you keep other assets in foreign︈ countries there are always a risk.
 
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 you︀ put in a Cook Islands trust and wins in US court, that doesn't mean the︁ US government is going to start pressure the Cook Islands to make an exception to︂ their own laws. You're not that important.

Asset protection isn't protection from the worst threat︃ 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 to︄ get bank account in decent banks
 
Why would someone choose South Dakota for a trust over Wyoming, Nevada or Delaware?

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