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Pioneers of the first trust legislation with Asset Protection features.
The Cook Islands
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The Cook Islands is widely regarded as having the best asset protection trust legislation. Through amendments to the International Trusts Act in 1989, the Cook Islands was the first jurisdiction to include asset protection features in its trust legislation. These features give clients an extra layer of protection against the unforeseeable.
The Cook Islands International Trusts Act allows for flexible estate and tax planning. It allows clients to avoid both probate and forced heirship rules. The legislation also allows for a variety of trust arrangements such as dynasty, purpose, and charitable trusts. A broad range of investment opportunities are available to Cook Islands trusts globally and they are often a key part of business succession plans.
Key provisions related to asset protection include:
- Two year statute of limitation in which a creditor may bring an action of fraudulent transfer or conveyance against a trust.
- Non-recognition and non-enforcement of foreign judgments.
- Settlors may retain certain controls within their trust structure.
- Higher 'beyond a reasonable doubt' burden of proof.
- No punitive damages.
- Foreign bankruptcy is specifically excluded.
Asset protections trusts were originally a focus of the US market. As wealth levels increase in other countries, such as China, the level of regulatory oversight increases and many countries are adopting US-style legislation to cope with the newly acquired wealth of its citizens. This has resulted in increased demand for wealth protection and preservation offered through Cook Islands entities.
Cook Islands advisors work closely with clients' existing advisors to create a structure that meets the regulations of the home country while at the same time providing clients with the means to grow, protect, and enjoy the results of their successes for many generations to come.