The Cook Islands Trust provides the utmost in asset protection around the world. Located south of Hawaii, the Cook Islands have proven time and time again to possess the dominant asset protection trust case law history. Every case in which it has been challenged, the assets of the client have been protected. Here is an example. Who is the strongest would-be legal opponent? Many would say the United States Government. There were a total of two instances where the US Government tried to crack the trust. In both cases, the government lost and the assets remained sheltered within the trust.
It is important to note that we would not intentionally establish an asset protection trust to keep assets away from the US Government. So we are simply noting a fact to illustrate the strength of this legal tool. Thus, we are not purporting one should utilize such a vehicle in this manner.
How a Cook Islands Trust Works
Here is how a properly established Cook Islands Trust functions. Your legal opponent persuades the court demand you to, “Turn over the money.” Thus, you cooperatively write a letter to the trustee letting them know that you have been ordered to return the funds. You keep a copy of the letter and a tracking number and show the judge you have complied. The trustee, on the other hand, is required to comply with the instructions written in the Cook Islands Trust deed. It is an asset protection trust. So, we insert a”duress clause” into the trust. The clause says that the trustee is forbidden from releasing funds when the beneficiary is being compelled to act by court order.
Thus the trustee, who lives outside of your country and is outside the reach of your court, will not cooperate. You are protected from harm because you fully complied with the judge’s commands. That is, you asked the trustee to return the funds. Therefore, you are in a position where you have fully complied with the judge’s orders. The trustee, however, did not, which is a valid legal defense.
Using an offshore trust is relatively similar to a business owner establishing a corporation in Nevada or Delaware. He would do so because of their superior laws, rather than establishing the corporation in another state. Setting up a trust in the Cook Islands or in another appropriate jurisdiction in order to benefit from their favorable laws is the same. It’s a matter of choosing the jurisdiction with the best laws for your situation.
How do I know can I trust the Cook Islands trustee?
First, the trustee doesn’t need to step in until the “bad thing” happens. Second, there has never been a trustee who has taken a client’s funds. This is partially because the Cook Islands government is extremely selective as to whom they allow to have a trustee license. Furthermore, they fiercely protect their financial services industry. These legal tools are a sizable source of revenue to the region. So, the trustees are licensed, regularly audited and closely monitored. Third, an insurance company bonds the trustees, so the funds in your trust are insured. Moreover, keep in mind you are establishing this legal tool to protect assets against frivolous and unruly lawsuits.
So, would you rather have a 100% chance of your money being taken by the courts? Or would you rather have a licensed, bonded trustee, who has never taken a client’s money do what you have paid them to do: protect your money. Plus, we utilize a trust company that is nearly four decades old.
Before the “bad thing” happens, you are the one pulling the strings. You are in control of the bank accounts, etc. How? We form an offshore limited liability company (LLC), in the Caribbean island of Nevis because this jurisdiction provides superior LLC asset protection. The trust owns 100% of the LLC. You are the LLC manager. The bank accounts are held in the LLC. You are the signature on the bank accounts.
So, to review, the trust owns an offshore LLC. You are the manager of the offshore LLC. You maintain signatory control over the bank accounts.
When the “Bad Thing” Happens
When the “bad thing” happens, the trustee steps in to protect you and replaces you as manager of the LLC. So, when you are ordered to return the funds, the trustee, who resides outside of the country and is not bound by demands of your local court, stands guard over your accounts.
To reiterate, for the financial safety and peace of mind of the client, the only time the trustee typically steps in is when the courts would take your money. So, as mentioned, it is better to entrust your funds to a legal tool that has protected client funds every time than it is to be 100% sure that your legal opponent will run off with your hard-earned wealth, wouldn’t you agree?
Once the “bad thing” goes away the string of control, the management of the LLC, goes back to you and you are back in the driver’s seat will all of your funds in-tact. When you are in the midst of legal duress, your trustee can pay bills on your behalf. They can forward funds to people you trust who will, in turn, take care of you, etc. So, you are taken care of financially, but your opponents cannot get their paws on your cash. The net result is that the funds for which you have toiled and labored are safe and secure.
The Ultimate Asset Protection Tool
You only get one chance on this earth. So, enjoying the protection we are talking about here requires action on your part. Have the trust established. Put your funds into it. We have seen so many clients thanking us profoundly for helping them enjoy the benefits of this option and keeping everything for which they have worked. On the other hand, we have also seen clients lose everything through the paralysis of analysis.
There are certain self-interest groups, such as those members of the legal profession who don’t get paid if your assets are protected, who would try to dissuade you from setting up a trust. They might try to scare you and point out some very rare cases where the judge did not follow the law where the beneficiaries of such trusts got scolded. What the dissuaders will fail to tell you is the whole story. In the Anderson case, for example, the trust was set up wrong. The attorney who set up this trust made his clients both the beneficiaries of the trust and the protectors of the trust.
This was a foolish mistake on the attorney’s part because it put the beneficiary in the additional position of having influence over changing the trustees and beneficiaries. The judge said that they because the beneficiaries were also the protectors that they created their own impossibility to act. The very good news it that this case was an incredible testament that even in a case where the trust was set up wrong, the trust still protected the client’s assets.
Lawsuits Are a Part of Life
Every garden has its bugs and weeds. So, every garden must be tended. Not to think so is naive. Tending the garden takes action. Protecting your finances is no different. You need to take action to protect your financial garden or the legal bugs and weeds will take over. To keep a healthy garden, action is required.
The very strongest protection the trust offers is for liquid cash held in a safe international bank account. The bank that is utilized should not have a corresponding branch within your country. With regard to real estate, local courts can seize local real estate. So, owning real estate inside of the LLC that is owned by the trust is fine. However, when the bad thing raises its ugly head it is preferable to quickly sell real estate and secure the funds offshore than it is to lose the properties all together. As an alternative, one can record a legitimate lien against the property and lock the proceeds away in such an account within the trust/LLC structure.
We Protect Professionals
On a regular basis, we set up trusts for attorneys who, in turn, re-sell them to their own clients. We also teach asset protection seminars to members of the legal profession. In addition, we set up a multitude of trusts directly for our clients. Estate planning provisions can also be added to the trust; the legalese version of, “When I die everything goes to my spouse and when we both die everything goes in equal shares to the children,” for example.
Beware of one service provider in the marketplace whose tactic is promoting his own trust structure by disparaging every other asset protection option, including the option we are discussing herein. He promotes his own a weak local trust, that does not hold up in court, and downplays all the choices but his own. Needless to say, he doesn’t mention the multitude of cases proving the strength of the trust in the Cook Islands. He only discusses the very few rogue cases where the judges didn’t follow the law and gave a tongue lashing to the trust settlors. Moreover, he dances around that fact that the trust protected the client’s funds every time.
The glaring problem with the option he promotes is that his local trust can be swatted away like a fly under the nose of the local judge. Therefore, with the unequalled strength exhibited repeatedly by the Cook Islands, the majority of us in the asset protection field who do not have ulterior motives all agree that the trust discussed here offers, by far, the strongest asset protection available today.
Call any time, 24 hours per day, for more information about setting up a Cook Islands Trust, a Nevis LLC and an offshore account to protect your assets.