Cook Islands Trusts are often misunderstood, and various myths have emerged about their effectiveness and legality. This article clarifies these misconceptions by analyzing key case laws associated with Cook Islands Trusts. Each case will be presented with a myth vs. fact approach to reveal the true nature of these trusts. The reality is that when your assets are controlled by a Cook Islands Trust and the assets are outside of the United States, the structure has a track record of being practically unbreakable. This robust protection is supported by the cases analyzed below.
Applicable Law:
The Cook Islands International Trusts Act of 1984 (as amended).
Analysis:
In summary, the Cook Islands International Trusts Act provides a body of law allowing for the creation of an international trust that can be used for estate planning as well as asset protection.
A Cook Islands Trust is a type of trust that many use to plan for multiple generations, to achieve jurisdiction diversification, to protect assets from lawsuits, and it allows the one who established the trust (the settlor) to also be a beneficiary and enjoy the legal protections afforded to the beneficiaries of such trusts. Additionally, there have been a number of amendments over the years, with most strengthening the asset protection provisions. The Cook Islands is progressive in creating express statutory provisions over the years to maintain its status as a leading asset protection jurisdiction.
Cook Islands International Trusts Act of 1984 (as amended):
The body of law that controls the Cook Island trust is the International Trust Act of 1984 (“the Act”). The act serves as a great vehicle for the protection of assets contained in the trust into perpetuity. Below are some key excerpts from the act:
Execution of a Trust Instrument:
This section states the parties to the trust do not need to be located in the same area or even in the Cook Islands for a Cook Islands Trust to be valid – and all the parties need not sign at the same time.
Power of Revocation:
As with most offshore asset protection trusts, the general rule is that the trust is a spendthrift trust with an independent trustee, which is what helps provide separation and protection. The trust is designed to give clients the most possible flexibility. You can add and remove property. The trust can be amended or dissolved. It is technically irrevocable so a court cannot order you to revoke it and pay your debts. However, when properly structured, it has practically all the benefits of a revocable trust.
Fraudulent Transfer:
This section states that to prove fraudulent conveyance, it is required the creditor proves beyond a reasonable doubt that the trust was formed with the intent to defraud — in addition to other elements as well. This is the highest burden of proof in law, and far more difficult to prove than a “preponderance of the evidence” standard, as used in the United States for such transfers. These elements include: (1) whether the principal intent of the settlor in settling, establishing, or disposing the trust was done to defraud that creditor of the settlor; and (2) whether when the settlement, establishment, or disposition took place it rendered the settlor insolvent or without property by which that creditor’s claim could have been satisfied. Note that both elements must be proven, whereas in the United States, a creditor only needs to prove one.
It is important to distinguish between fraudulent conveyance and fraud. Fraud involves deliberate misrepresentation or deceit with the intent to gain an unfair advantage, while fraudulent conveyance refers to a transaction intended to hinder, delay, or defraud a creditor by transferring assets. In the context of Cook Islands Trust law, the focus is on whether the transfer was made with the intent to prevent a creditor from collecting a debt, rather than on any deceit or misrepresentation.
Even if these two elements are proven beyond a reasonable doubt, a trust is not automatically deemed fraudulent and thus liable to satisfy the creditor’s claim. Due to the act’s statutory bar, a Cook Islands Trust shall not be fraudulent if: (1) it was settled, established, or the disposition takes place after the expiration of two years from the date that creditor’s cause of action accrued; or (2) the creditor fails to bring such action before the expiration of one year from the date such settlement, establishment, or disposition of property took place.
Foreign Judgements Not Enforceable:
This section limits the ability of the courts to use a foreign judgment against a Cook Islands Trust, which further goes to protect the assets of the trust. Therefore, a United States judgment is not enforceable in the Cook Islands. Suit must be brought, followed by adjudication, in the Cook Islands itself.
Exclusion of Foreign Law:
Subject to other rules, the general theme is that foreign laws cannot be used to usurp the governing body of law involving the Cook Islands Trust. Even if a foreign jurisdiction does not recognize the trust, that will not in and of itself render the trust void or voidable in the Cook Islands.
Commencement of Proceedings:
The Cook Islands Trust limits the ability to pursue a case and it is generally limited to two years but this can vary depending on the specific facts and circumstances of the situation. Lastly, not only must a plaintiff post a bond to bring the action, but the loser of the case must also pay the prevailing party’s fees.
Taxation:
A Cook Islands Trust is not subject to any form of Cook Island’s taxation. However, if the settlor or beneficiaries of the trust are subject to the tax laws of their home jurisdiction. Taken together, these provisions in the act make Cook Islands one of the most protective jurisdictions in the world, presenting the greatest hurdles for a plaintiff attempting to get at a trust’s assets.
Cook Islands Case Law
Case Law regarding Cook Islands Asset Protection Trusts (“APTs”) is relatively scarce, primarily because so few trusts are attacked or taken to trial. In addition, the Cook Islands realize that one of its main draws for international trusts is the privacy that comes along with it. As such, trust deeds in the Cook Islands are not a part of the public record. The Cook Islands are also generally known for being private when it comes to the publication of APT cases. There are very few Cook Islands cases on public record that reference the act and demonstrate the power the act holds in excluding international intervention on assets.
Case Law Analysis
FTC v. Affordable Media, LLC (“Anderson Case”)
Myth: A Cook Islands Trust can be pierced and a settlor can be held in contempt for creating a Cook Islands Trust.
Fact: Even a poorly structured Cook Islands Trust, when defended by the Cook Islands court, can shield assets from U.S. court orders due to the strong protections of the Cook Islands statute. Contempt of court does not occur from creating a trust but rather from refusing to comply with a court order, an action which an attorney would never advise.
Summary: The Anderson Case involves a Ponzi-scheme operated by Affordable Media, LLC. The Andersons were involved in a telemarketing venture, Affordable Media, LLC, which offered investors the chance to participate in the sale of things like talking pet tags and water-filled barbells through late night television. The Andersons promised an investment would provide a return of fifty percent in a mere sixty to ninety days. The investors’ money was eventually lost leading the Federal Trade Commission (“FTC”) to file suit against Affordable Media, LLC and eventually the Andersons.
The Andersons had constructed a Cook Islands Trust in 1995, three years before the FTC had filed suit and attempted to recover the Andersons’s assets. The Andersons had created their Cook Islands APT in a structure that is not recommended. The Andersons named themselves co-trustees along with a Cook Islands Trustee. By naming themselves as trustees, the Andersons retained undue control, which gives creditors an argument to pierce the trust as illusory, and lacking independence.
The FTC won the underlying Ninth Circuit appellate case in the U.S. against Affordable Media, LLC, and sought to recover the assets from the Andersons. In a properly constructed Cook Islands APT, U.S. courts would have very little chance to recover these assets, but since the Andersons were trustees, they had a potential avenue. The Andersons, even with their improperly structured APT, had a duress provision which assisted them in avoiding recovery by the U.S. courts. The duress provision of the Cook Islands APT removes the Andersons as co-trustees if there is a so called “event of duress.”
Since the Andersons were subject to a temporary restraining order as part of the preliminary injunction the U.S. courts entered into, the duress provision was enacted, and the Andersons were removed. The U.S. courts attempted to repatriate all of the assets held in the international trust which eventually led to the Andersons being found in contempt of court and jailed until they complied with the U.S. order. The Andersons were eventually released when they agreed to provide direction to the trust on three things: (1) remove the overseas Trustee and replace it with a corporation formed by the FTC, FTC, Inc.; (2) replace the Protector of the APT with FTC, Inc.; and (3) amend the trust to remove the FTC as an “Excluded Person.”
The Cook Islands Trustee did not comply, and sought a ruling from the Cook Islands court to determine the validity of the three agreements in an attempt to stay on as trustee and protect the assets. The Cook Islands court ruled in favor of the trustee and nullified the effect of the U.S.- ordered agreements, demonstrating the strength of Cook Islands statute against foreign rulings.
The Cook Islands court found: (1) the documents purporting to remove the existing Cook Islands Trustee and appoint the FTC were an invalid exercise of the Protector’s powers; (2) the attempt to amend the document would be invalid because it would be for the benefit of an “Excluded (3) the appointment of the FTC as Protector would be invalid because it would benefit an “Excluded Person”; and (4) costs were awarded against the FTC in favor of the Cook Islands Trustee.
The FTC ultimately decided to forgo its appeal rights in the Cook Islands and settle with the Cook Islands Trustee. Although there was no formal judgment from the Cook Islands High Court, the trustee determined that it was better to settle than continue to expend trust resources litigating. The FTC settled and released the trustee and the trust from any further liability.
This ruling shows that the statutory protections of the act are long reaching and can even protect the assets of an APT constructed as poorly as the Andersons’ APT, and even in a case with proven egregious criminal conduct.
Branch Banking & Trust Co. v. Hamilton Greens, LLC et al (“Bellinger Case”)
Myth: Transferring assets into a Cook Islands Trust automatically results in the assets being considered fraudulent transfers by U.S. courts and therefore accessible to a creditor.
Fact: The Cook Islands Trustee can refuse to return assets, and U.S. courts have no jurisdiction over a Cook Islands Trust company.
Summary: In the Bellinger Case, Branch Banking & Trust (“BB&T”) made a loan of $3.375 million to a company that Bellinger owned, with a personal guarantee from Bellinger. The loan went into default in February 2011 and months later in November 2011, Bellinger created a Cook Islands APT and funded it with approximately $1.7 million in assets. In January 2013, the Court entered a final judgement against Bellinger for $4.9 million, plus post-judgement interest.
Following a failure of repayment, BB&T attempted to make a claim of fraudulent transfer of assets against Bellinger in August 2013. Bellinger, as ordered by the court, contacted the Cook Islands Trustee to send back all of the funds in the APT and pay the judgement. The bank argued that these were fraudulent transfers and that Bellinger’s inability to comply with the court’s judgment was self-created. Even with the possibility of contempt of court, the Cook Islands Trustee refused to return the trust assets to Bellinger, signaling the strength of the act.
In looking at whether Bellinger was intending to defraud BB&T, the court found Bellinger’s main motive was instead to preserve assets for the purpose of retirement. The court also looked at the fact Bellinger might have been under the mistaken impression that the collateral he had used to take out the loan from BB&T was enough to cover his debts. Throughout this litigation, Bellinger had continuously testified that he could not compel payment of the trust since his Cook Islands Trustee had refused and that he could also not remove the trustee.
Nevertheless, from March 2012 through May 2013, Bellinger had received a monthly distribution from the Cook Islands APT for “overhead costs of support.” The distributions were later reclassified as being made to Bellinger’s girlfriend. Unlike a domestic trust, throughout this entire process, due to the act, Bellinger was able to continue benefiting from his trust. Also, if the U.S. court had found the transfers to be fraudulent, there would be nothing compelling the Cook Islands Trustee to honor the U.S. court and return the assets.
In re Smith
Myth: A Cook Islands Trust is automatically deemed fraudulent if established shortly before a judgment is rendered in U.S. bankruptcy proceedings.
Fact: The fraudulent transfer must be proven in the Cook Islands court, and even if a U.S. court finds the transfer to be fraudulent, this ruling does not obligate the Cook Islands Trustee to comply.
Summary: In re Smith demonstrates this difficulty. In re Smith involves an involuntary bankruptcy proceeding against Smith. The state court signed a severance order to render final judgment against Smith on March 27, 2008; but three days earlier, Smith formed a Cook Islands Trust and assigned assets valued at approximately $6 million to the trust for no consideration.
On the eve of the hearing on creditors’ post-judgment turnover application in the state court, Smith filed a “pauper’s affidavit” claiming that his net worth was “negative $2,041,486.24”
and that he only had two creditors. The bankruptcy court explained that although Smith continued paying his small recurring debts as they come due, he was not paying 99% of his debts due to his decision to place the majority of his assets into a Cook Islands Trust.
Involuntary bankruptcy proceedings generally require more than three creditors, but in the case of a person engaging in a plan to defeat the right of creditors, this becomes possible under the “special circumstances” exception. Here, the establishment of the Cook Islands Trust at the time summary judgment was obtained by creditors, the transfer of the bulk of Smith’s assets into said trust, and the insertion of a “spendthrift” provision to try to keep the assets out of the hands of the creditors signals that the “special circumstances” exception should apply. Therefore, it is clear that the entry of the order for relief was proper under United States bankruptcy law.
In re Smith demonstrates a fraudulent transfer of assets into a Cook Islands Trust. Had Smith established a Cook Islands Trust and transferred assets long before this bankruptcy proceeding, there would have been much more difficulty on the part of creditors to access these assets. Even so, this order for relief has no bearing in the Cook Islands and there is no requirement that a properly constructed Cook Islands Trust transfer Smith’s assets to creditors. In order to be effective, this fraudulent transfer must subsequently be proven in a Cook Islands court system.
Rush University Medical Center v. Sessions (“Sessions”)
Myth: Offshore trusts, such as those established in the Cook Islands, do not protect property and are ineffective against all forms of collection.
Fact: The reality is that assets held in a Cook Islands Trust are more secure from U.S. court jurisdiction compared to domestic assets. While a U.S. court can reach a U.S. trustee and control assets within the U.S., assets held offshore remain protected due to jurisdictional limitations. This highlights the importance of holding assets outside the U.S., as offshore trusts are designed to offer superior protection. Domestic trusts may not provide the same level of security and could potentially yield similar or worse results in terms of asset protection.
Summary: Rush University Medical Center v. Sessions (“Sessions”), deals with the collection of the assets of a Cook Islands Trust as well. Robert W. Sessions established the “Sessions Family Trust” and provided that it be governed by the laws of the Cook Islands. He placed into it his 99% limited partnership interest in a Colorado limited partnership and a Hinsdale, Illinois property. Sessions was the settlor, a lifetime beneficiary, and the trust protector. The trust also had a spendthrift provision that prohibited any trust assets from being used to pay creditors of Sessions or his estate.
Sessions made an irrevocable pledge to Rush University Medical Center for $1.5 million and provided that any unpaid amount at the time of his death would be paid by his estate. Rush constructed a new president’s house based on this pledge by Sessions. Ten years later, Sessions was diagnosed with late-stage lung cancer and blamed the plaintiff for not diagnosing the cancer sooner. As a result, Sessions executed a new will revoking all previous wills and codicils. Litigation ensued to enforce this original $1.5 million pledge and the circuit court entered summary judgment in favor of the enforcement of the pledge. This decision was subsequently reversed, appealed and the current review in the Supreme Court of Illinois ensued.
Plaintiffs base their claim as to Sessions’ assets on the common law rule that a person cannot settle his estate in trust for his own benefit so as to be free from liability from his debts. The Illinois Supreme Court ruled that Sessions was clearly a “debtor” due to the obligation to pay the plaintiff money, even if it was to be paid upon his death. Thus, the common law rule requires that the court rule in favor of Rush University Medical Center because Sessions cannot favor his heirs over his creditors, or else this would be fraudulent.
The main issue in this case that weakened the protections afforded by the Cook Islands Trust is that the Cook Island’s Trust owned assets that were under the court’s jurisdiction, namely a
Limited Illinois Trust, Cook Islands Trust, or its assets, and the plaintiff would have had no recourse for recovery from the Cook Islands Trust.
Rybolovlev v. Rybolovlev
Myth: Cook Islands Trusts are ineffective in protecting assets from claims made by ex-spouses in divorce cases.
Fact: Cook Islands Trusts provide robust asset protection, even in high-stakes divorce cases. While fraudulent transfer claims can be pursued, the legal safeguards of a well-structured Cook Islands Trust can prevent the enforcement of judgments against trust assets, as shown in notable cases.
Summary: The divorce between Elena and Dmitry Rybolovlev was named the “most expensive divorce in history,” but in actuality was far less than that. In 2014, a Swiss court ruled that Russian oligarch Dmitry Rybolovlev forfeit half of his nearly $8 billion in assets to his ex-wife Elena. Unfortunately for Elena, Dmitry’s assets were securely and legally held in a Cook Islands Trust, leading the Geneva Court of Appeals to overturn the judgment and force Elena to recover in other ways and for less.
Pursglove v. Oesterland
Myth: Any transfer into a Cook Islands Trust, regardless of timing or circumstances, is completely protected from claims.
Fact: Cook Islands Trusts provide significant asset protection, but transfers made under suspicious circumstances, such as in anticipation of a claim, can be challenged. However, even in such cases, the protection offered by Cook Islands statutes makes it very difficult and costly to pursue a claim successfully.
Summary: Another high-level divorce involving Sarah Pursglove and Robert Oesterland had a much different result. Pursglove went to extreme measures to collect from her ex-husband after she found him to have an extramarital affair. Pursglove wanted access to Oesterland’s LLC, which was held in his Cook Islands Trust. Since the Cook Islands does not recognize foreign judgments, Pursglove persisted by traveling to the Cook Islands to sue in its courts for fraudulent conveyance. She prevailed on the facts.
It was found that Oesterland properly structured his Cook Islands Trust, but had transferred $45 million in assets to the Cook Islands Trust on the day his wife caught him having an affair. This gave the courts reasonable cause to believe a fraudulent transfer had occurred, which led to Oesterland settling with his ex-wife. Had Oesterland transferred these assets in a manner that did not constitute a fraudulent transfer, Pursglove would have had no possible claim. Even so, it took an extremely spurned Pursglove, and millions of dollars, to find this fraudulent transfer and give Pursglove any ability of recovery.
Kevin Trudeau v. FTC
Myth: The FTC can easily recover funds from a Cook Islands Trust after obtaining a judgment.
Fact: Even with a substantial judgment, recovering assets from a Cook Islands Trust is extremely difficult. Cook Islands Trustees are committed to maintaining asset protection, making enforcement efforts by even the most powerful plaintiffs largely ineffective, as demonstrated in Kevin Trudeau’s case.
Summary: The FTC filed suit against Kevin Trudeau, the author of The Weight Loss Cure, for “airing blatantly deceptive infomercials.” The FTC received judgment against Trudeau in the amount of $37.5 million. Trudeau had moved his assets into a Cook Islands Trust, and consequently, the FTC had collected nothing from the Cook Islands APT. To that extent, Trudeau was convicted of criminal contempt and jailed for his refusal to testify about the Cook Islands APT or any of his other offshore accounts. The Cook Islands Trustee had failed to transfer any of the assets despite Trudeau’s situation and there has been no report of any collection of the $37.5 million.
Brian and Elizabeth Weese v. Bank of America
Myth: U.S. courts can easily compel the return of assets held in Cook Islands Trusts through collection actions.
Fact: U.S. courts face significant jurisdictional and practical hurdles in enforcing claims against assets held in Cook Islands Trusts. These trusts offer strong protection, as seen in the challenges Bank of America faced in the Weese case.
Summary: In another case decided in 2001, Bank of America brought a collection action against Brian and Elizabeth Weese for their failure to repay a loan. The Weese family operated several important bookstores, but eventually went bankrupt following a $17 million loan from Bank of America. The bank obtained judgment in December of 2000, but from March of 2000 through March of 2001, the Weeses had transferred an alleged $25 million into a Cook Islands Trust. In this 2001 collection action, the judge refused to take action against the Weeses to block their use of trust assets stating, “he would first need both sides to agree on a way to do that.” The court acknowledged they were concerned they did not have the requisite jurisdiction to deal with offshore assets. Ultimately, the Weeses settled for an alleged $12 million. There was no formal judgment requiring payment.
Russian Federation v. Unknown Litigant
Myth: The Cook Islands Trust cannot defend against claims of fraudulent transfers made by foreign governments.
Fact: Cook Islands Trusts offer robust protection and can effectively defend against claims from foreign governments. The Cook Islands Court requires substantial evidence of the trustee’s knowledge of the fraudulent nature of the transferred funds to enforce claims by foreign governments.
Summary: In a more recent case, decided in December of 2018, a judgment of the High Court of the Cook Islands demonstrated its tendency to side with Cook Islands Trustees. An undisclosed Russian litigant was found in the Moscow District Court to have illegally transferred funds to a Cook Islands Trust. The Russian Federation attempted to collect from the trustee due to fraudulent transfer, claiming that the transferred funds were “tainted property.” The Cook Islands court ultimately determined there was insufficient evidence that the Cook Islands Trustee was aware the funds were tainted and therefore resulted in the Russian Federation being unable to collect the transferred funds.
Andrew Grossman v. Fannie Mae
Myth: Cook Islands Trusts are always unsuccessful in evading U.S. court judgments.
Fact: While Cook Islands Trusts offer strong protection, they can still be challenged. However, enforcement of U.S. court judgments against assets held in these trusts remains highly challenging, as shown in Grossman’s case.
Summary: The last high-publicity example of a Cook Islands APT refusing to transfer assets following a U.S. court order involves Andrew Grossman and Fannie Mae. Grossman had personally guaranteed a commercial mortgage loan, failed to pay on the guarantee, and was subsequently brought to court by Fannie Mae seeking repayment. In waiting to collect the entire $10 million, Fannie Mae had collected $12,000 due to Grossman’s various offshore accounts. Grossman eventually “complied” with the court’s order and wrote a letter to his Swiss bank account requesting that $7 million be transferred to Fannie Mae. The Swiss account then wrote back that the balance was $0, and the remaining funds were transferred to a Cook Islands APT. Grossman continued to “play stupid” and sent a letter to the newly formed Cook Islands APT requesting the funds. The manager replied the funds had been invested and were no longer accessible.
Reichers v. Reichers
Myth: A Cook Islands Trust can be easily accessed by beneficiaries claiming fraud or improper transfers.
Fact: The Cook Islands Court upheld the trust’s validity despite allegations of fraudulent transfers, reinforcing the trust’s protection mechanisms against internal disputes.
Summary: Reichers v. Reichers involved a family dispute over the validity of a Cook Islands Trust. The plaintiffs alleged that the trust was established through fraudulent transfers to deprive them of their rightful inheritance. Despite these allegations, the Cook Islands Court upheld the validity of the trust. The court emphasized the trust’s protection mechanisms, which are designed to safeguard assets against internal disputes and external claims. This case demonstrated the strength of Cook Islands Trust Law in protecting trust assets from claims, even within a family setting where emotions and accusations of fraud are often heightened.
Nadya Suleman v. Dr. Kamraya
Myth: Cook Islands Trusts can be easily challenged, and their assets seized through U.S. lawsuits.
Fact: The case of Nadya Suleman v. Dr. Kamraya demonstrates the effectiveness of Cook Islands Trusts in protecting assets from U.S. lawsuits and deterring litigation even in case of egregious conduct by a trust maker.
Summary: In 2009, Nadya Suleman, known more prominently for being “Octomom,” filed suit against Dr. Kamraya for implanting embryos in her. Dr. Kamrya held assets in a Cook Islands Trust, which made them extremely difficult to reach. There are no cases on record of Suleman attempting to recover these assets, signaling that she was ultimately deterred, or there was a settlement. Although there are relatively few published cases of Cook Islands Courts upholding the act, a few high-publicity instances are showing the power of the act.
Lessons Learned
The Cook Islands International Trusts Act of 1984 is an independent statute with a body of law that creates very strong trust protections in the Cook Islands. If a trust is formed properly under the law, funded with non-domestic assets, and created without circumstances deemed a fraudulent transfer, the assets in trust are generally protected from attachment both in the Cook Islands and in other jurisdictions.
In general, Cook Islands will not recognize judgements from other jurisdictions, and any attack on a Cook Islands Trust must be done in the Cook Islands jurisdiction, often times by re-litigating the same issue in the Cook Islands (which is often beyond the Statute of Limitations, and is therefore a barred transaction).As a result of the strong protections of the Cook Islands, as well as the difficulty of recovery, many cases are never brought to collect against the Cook Islands Trust or are settled for a much lower amount.
Although there are not many cases referencing the Cook Islands Court’s application of the act, there are many instances demonstrating its power. For starters, the overall lack of public record demonstrates that not many cases are successful, either through settlement or overall lack of belief a ruling will be in one’s favor. The Anderson and Bellinger Cases show even when orders are entered in a foreign jurisdiction, a properly constructed APT will allow Cook Islands Trustees to continue managing assets through threats of contempt or other U.S. court orders. Overall, the lack of case law demonstrates the deterrent effect and just how few creditors are willing to test the act, especially when those who do test it, are generally unsuccessful.
Conclusion
The cases discussed in this article are known precisely for their complex facts that took Cook Island Asset Protection Trusts to the extreme. While the trusts ultimately held up, the settlors surely still underwent intense legal battles. These are not situations in which an asset protection attorney wants to see any of its clients; however, these cases do provide valuable information about the protection afforded by Cook Islands Trusts.
From these cases, we can conclude if a Cook Islands Trust is formed correctly under the law, properly funded with non-domestic assets, and created without circumstances that could be deemed a fraudulent transfer, the assets in the trust are generally protected both in the Cook Islands and in other jurisdictions. In their own way, these cases also show the importance of having proper counsel when establishing an asset protection trust to prevent negative factors from being exploited by a plaintiff.
In general, the Cook Islands will not recognize judgments from other jurisdictions, and any attack on a Cook Islands Trust must be done in the courts of the Cook Islands. In many cases, this requires re-litigating the same issues that were supposedly settled in the foreign court. Due to the length of time involved, the statute of limitations may have already passed, therefore making the claim a barred transaction in the eyes of the court.
As a result of the strong legal protections granted to Cook Islands Trusts, as well as the difficulty of recovery, very few cases are brought against Cook Islands Trusts or cases settle for a lower amount instead of continuing the lawsuit. In the world of asset protection, the best battles are the ones avoided altogether. A quick settlement can save hundreds of thousands in legal fees, as well as the uncertainty and other headaches that come with lengthy litigation. If you are considering whether a Cook Islands Trust or other asset protection solution is right for you, contact Blake Harris Law.
