Cook Islands Wealth Planning and
Asset Protection Solutions
Asset Protection Solutions
In 1984 the Cook Islands, a former Protectorate of New Zealand in the South Pacific, began an effort to diversify its tourist economy and attract a robust financial services industry. New laws were enacted which focused heavily in the area of asset protection.
Through these initial efforts and various modifications and court challenges over the years, it is generally acknowledged that the Cook Islands has the strongest asset protection laws in the world.
Assets in the trusts are not disclosed to the Cooks Islands authorities and the Law makes it a crime to identify who owns the trusts or to provide any information about them.
Judgments from foreign countries are not enforced in the Cook Islands against the trusts established there, assets of the trusts cannot be seized by a creditor, and the trustees are required to maintain strict secrecy regarding the owners and beneficiaries of the trusts.
The Government of the Cook Islands has no treaties or mutual assistance agreements (as the Swiss do) which would permit disclosure or cooperation with a foreign creditor or even a government agency in a collection action.
Asset Protection Trusts
The concept of using trusts to protect assets has been established for several centuries. Asset protection trusts, as they have come to be known, were created to protect beneficiaries from a wide range of potentially adverse eventualities. The common objective has been essentially to protect the assets of the Settlor against the consequences of financial disasters which may arise from the imposition of excessive death duties, the extravagance of family members, mismanagement of business ventures, or from the actions of third parties.
In recent years greater emphasis has been placed upon the need to preserve wealth from the ravages of litigation, political risk and government expropriation, marital or family breakdown, and contingent creditors.
Increasingly, wealth protection planning has become an essential consideration in the development of financial strategies of high net worth individuals, company directors and professional practitioners.
In turn asset protection trusts, particularly those based offshore have emerged as a primary component in such planning.
The starting point of any asset protection plan is a consideration of the laws of the client’s domestic jurisdiction. Laws which may be relevant would be those governing issues such as exchange controls, estate duties or inheritance taxes, capital gains taxes, bankruptcy and in particular fraudulent conveyances, and matrimonial settlements.
The relevance or otherwise of such laws will in many instances help determine the nature of the assets which the client will settle into the asset protection trust, and whether or not such trust should be located in an offshore jurisdiction.
There are a number of reasons why most advisors recommend that asset protection trusts be established offshore. Obviously assets held in a domestic trust are more susceptible to attach. However, one of the principal attractions for placing assets in an offshore trust is the legislation which has been introduced in some offshore jurisdictions specifically to facilitate asset protection.
The Cook Islands was the first offshore jurisdiction to enact such legislation under the International Trusts Amendment Act 1989. Further and latest amendments were enacted in 1991, 1996, 1999 and 2004.
As a result the Cook Islands currently has the most modern international trust legislation with particular emphasis on the protection of assets, the protection of beneficiaries and flexibility of “control” by the Settlor.
The Cook Islands international Trust law is derived from English common law but the legislation has removed some of the problem areas of the common law pertaining to trusts.
Private Trustee Companies in Cook Islands
The Cook Islands International Companies Act (1981-82) (ICA) contains special provisions for a client to form an international company (a private trustee company) for the purpose of acting as a trustee of an international trust, without being independently licensed in the Cook Islands as a trustee company.
Before registering as a Cook Islands international trust, a trust must establish a nexus with the Cook Islands jurisdiction. Section 2 of the International Trusts Act 1984 (ITA) requires a trust to appoint either a licensed trustee company, or a Cook Islands international company, as its trustee.
The international company is permitted to act as trustee for no more than three trusts, but otherwise must not carry on business as a trustee company.
When forming a trust, therefore, the client can first incorporate his own specially structured international company. That international company is eligible for appointment as trustee of the client’s trust, making the trust eligible for registration as a Cook Islands international trust.
Taxations consequences – No taxes are payable by either the private trustee company or the international trust of which it is appointed trustee.
No Local Appointments required – In other jurisdictions a local person must be appointed as a trustee in addition to the private trustee company, or as a director of the private trustee company: these appointments add cost and give opportunity for disclosure. No such appointments are required in the Cook Islands.
No Audit Required – In other jurisdictions the accounts of the private trustee company must be audited annually. In the Cook Islands the need for an audit can be dispensed with by a shareholders’ special resolution.
What separates us from our competitors is that our services don’t end with the registration of your company. We offer a wide range of additional services others can’t or just won’t offer, such as lifetime free support.
Whilst most providers either specialise on personalized consultation at relatively high rates or run bulk registration factories without any support, we want to offer the positive aspects of both types. Therefore Atrium combines professional advice, worldwide registration services, reasonable fees, customized order processing, lifetime support and fast processing. Where others see company formation services as a bulk registration with no support and no individual assistance, we do care about your business needs.