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Cook Islands – International Trust

Tamatoa Jonassen Tamatoa Jonassen

The Cook Islands has a reputation for being at the forefront of international jurisdictions that provide trusted and legitimate asset protection. In fact, it is well known in the global financial community that the Cook Islands was the first country to create legislation allowing for modern asset protection trusts. With the enactment of its International Trust Act in 1984, the Cook Islands became preeminent in the global financial industry for confidentiality and protection of wealth for high net worth individuals and businesses. Although the international trust is the Cook Islands’ flagship financial structure, it has several financial vehicles and a wealth of experience and professionalism that is tailored to the elite in wealth and affluence.

Asset Protection

Asset protection afforded by a Cook Islands trust is the golden standard to protect one’s wealth, and consequently one’s lifestyle. Several features of a Cook Islands international trust provide layers of protection to safeguard assets from potentially vexatious, frivolous, or even unforeseeable attacks.  These features include the following:

  • Non-recognition and non-enforcement of foreign judgments. In order for someone to attack the assets protected in a trust, they would need to take legal action in the Cook Islands court while court judgments from other countries would not be enforced. The cost itself in mounting a legal attack on this seemingly small remote group of islands in the middle of the Pacific Ocean can itself be a barrier to would-be attackers. Furthermore, court proceedings relating to international trusts are heard on camera and are not published in order to preserve the confidential nature of a Cook Islands international trust.
  • A two year statute of limitations in which someone may commence legal action alleging fraudulent transfer against a trust. Court proceedings must be commenced within a two year time period from the transfer.This very short time limit is often the greatest hurdle for would-be attackers to overcome, and has become a hallmark of asset protection now adopted by many jurisdictions seeking to emulate the Cook Islands.
  • A higher “beyond a reasonable doubt” burden of proof. In order to prove that a transfer into a Cook Islands trust was not done legitimately, a would-be attacker would need to meet a higher standard of proof than that in a typical civil case.

The culmination of asset protection features and provisions of confidentiality seek to prevent fishing expeditions and protect the privacy of those who have placed their trust in the Cook Islands. 

The Cook Islands international trust was not invented solely with asset protection in mind. It also allows for flexible estate and tax planning in accordance with the laws and regulations of those transferring assets into a trust. It allows for insulation planning where assets are owned by highly professional and seasoned corporate trustees and managed according to guidelines established at the inception of the trust. It allows for a variety of trust arrangements that can include a broad range of investment and management opportunities, which is often a key part of succession planning.

Succession Planning

The asset protection features of a Cook Islands international trust serve to enhance and safeguard the wealth planning essential in today’s changing economy. With the increase in wealth levels among rising countries, such as China, new legislation and practices to cope with the newly acquired wealth of its citizens have increased demand for wealth protection and preservation offered through Cook Islands entities. For those clients interested solely in family succession planning, the Cook Islands offers the most ideally located jurisdiction with experienced professionals,where protecting and preserving wealth is enormously important.

In addition to the international trust, the Cook Islands offers an array of financial products that capitalize on the jurisdiction’s wealth of experience with international trusts, including: foundations, international companies, captive insurance, limited liability companies, and international partnerships. Cook Islands advisors work closely with client’s existing advisors to create structures that meet the regulations of the client’s home country, while providing clients with the means to grow, protect, and enjoy the results of their successes for many generations to come.The Cook Islands provides a full range of corporate, trust, and financial planning services. It maintains access to premium banking services through relationships with international banks, and also has a strong Maritime Registry with representatives in countries all over the world, including China.

Ideal Location

The Cook Islands is located in the center of Polynesia, and is uniquely positioned with a six hour time difference with both Hong Kong and New York. Transactions can be commenced and wire transfers made in a timely fashion between two continents and the World’s two largest economies. Its strategic location allows the Cook Islands to tailor its services to both common law and civil law jurisdictions, acting as a Pacific bridge of financial security.

Given its ideal location it is a prime jurisdiction for incorporating holding companies for clients whose businesses operate from both the USA and Asia.

The Cook Islands is no stranger to wealth.  Its financial services industry has been tailoring itself to global demand for over 30 years, and its chief exports include precious black pearls and a major fishing industry. Just this past August the opening of exploratory licenses was announced to exploit the Cook Islands’ trove of sea bed minerals and rare earth elements, which has an estimated 25% of the world’s supply of cobalt.

Well-Established

The Cook Islands is ranked very highly for its regulations and oversight of the financial industry. It maintains compliance and is in good standing with international standards of the Financial Action Task Force (FATF), International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD).Its close ties with New Zealand allow it to access high caliber New Zealand judges to preside in its court proceedings. It has a stable parliamentary system of democratic government which just celebrated its 50th year anniversary of self-government (five days before Singapore’s Independence Day). The supportive government and proactive industry allow the Cook Islands to maintain its sophisticated legal and financial services with an outstanding level of service.

Tamatoa is the CEO of the Cook Islands Financial Services Development Authority. He has also worked in the financial industry, managing complex international corporate and trust transactions for high net worth clients.  He holds a Juris Doctor degree in Law, and a law certificate in Pacific and Asian Legal Studies.

 

 

 

 

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