More than two dozen foreign jurisdictions now allow offshore asset protection trusts, but only a few of these have laws strong enough to keep creditors and plaintiffs far enough away from your assets.
One of these is Cook Islands. This sleepy island was transformed from a Pacific haven into a financial services Mecca of sorts, when the local administration realized that there was a huge market of individuals who wanted to protect their assets from frivolous litigation. In 1989, Cook Islands signed the first law allowing the creation of foreign Asset Protection Trusts. The laws allowed for management of asset protection from a distance.
These laws led to a boom in the Cook Islands financial services sector, and soon, other jurisdictions were ramping up their laws to lure more people interested in setting up offshore asset protection trusts in their jurisdictions.
There are several advantages to having an asset protection trust in Cook Islands. For instance, the Cooks does not recognize any court judgments in any foreign jurisdiction. For a creditor or plaintiff to access your assets in a Cook Islands asset protection trust, he has to initiate litigation in that country. Even if a creditor does bring a lawsuit in Cook Islands, he is likely to find the process intimidating. Cook Islands places on the plaintiff the burden of proving beyond reasonable doubt that the assets were transferred into a trust solely to defraud the plaintiff.
There are other advantages too. There’s a statute of limitations of two years from the underlying cause of action to setting up of a trust in Cook Islands for the creditor to claim a fraudulent transfer of assets. This means that by the time a creditor or plaintiff begins lawsuit proceedings in Cook Islands, the status of limitations would have expired.
All these advantages however doesn’t mean that a Cooks asset protection trust is ideal for just about everyone. A reliable asset protection planner will take your individual needs and concerns into consideration before suggesting an offshore trust.
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