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What is a Cook Islands International Asset Protection Trust?

A Cook Islands International Asset Protection Trust is a trust that has been drafted in accordance with the laws of the Cook Islands. It will typically be formed in association with a Cook Islands licensed trustee company. The beneficiaries will not be residents of the Cook Islands. The law was derived from English common law and changed to provide for the asset protection needs of those it serves.

Lawsuit Protection Benefits of a Trust in the Cook Islands

The trust is registered with the Registrar of International Trusts. The public records show that the trust exists, but the trust itself is not a matter of public record.

The trusts are most often used to protect assets from lawsuits. This may be the result of a foreclosure where the value of the property is worth less than the mortgage amount, when a business fails and debt from that business may threaten personal holdings, vehicular accidents, landlord liability, employee lawsuits, etc.

Constantly evolving, the International Trust Act was amended to give settlors certainty that the vehicle can be used to preserve assets from lawsuits. Since that time, the Act has been continuously updated to make it more and more favorable for the defendant/debtor.

Here are a number of wealth protection provisions in the statutes:

  1. Judgments of a foreign court cannot be enforced in the Cook Islands against the International Trust settlor, trustee, beneficiaries or protector.
  2. Certainty with respect to the time limits in which creditors must start filings that claim "fraudulent transfer" of trust settlors. Specifically, a creditor must file against a settlor within 12 months of the date of transfer of assets to the trust. It must file against the trustee within 24 months of the cause of action, or reason why the original lawsuit was filed.
  3. The burden of proof lies upon the creditor to show that the transfer into the trust was made with intent to defraud creditors. They must show this "beyond a reasonable doubt," wish is an extremely difficult legal hurdle.
  4. An International Trust will remain in existence even if the settlor declares bankruptcy.
  5. One cannot recover punitive damages from an International Trust. (Punitive damages are paid in addition to the plaintiff's provable damages in order to deter others from engaging in similar conduct.)
  6. Specific persons or entities (such as plaintiffs and creditors) can be excluded from receiving trust proceeds.
  7. Protection is provided even if the defendant/debtor lives in a community property state.
  8. Offshore companies can be placed in the trust.

Transferring the Jurisdiction

One unique feature is that an existing trust can be amended and turned into a Cook Islands trust. For fraudulent transfer defense, the law will recognize the date that the asset were placed into the original trust.

Finally, the Cook Islands International Asset Protection is the premier legal tool for the person who is looking for secure wealth preservation. The Cook Islands are very reputable, have highly protective statutes and have a stellar track record for protecting assets.