Offshore trusts, like those established in jurisdictions such as the Cook Islands, are often considered private due to the confidentiality and asset protection legislation enacted by these jurisdictions. Trusts can help increase privacy by replacing individuals’ names from public registries with the name of the trust, which can often be nondescript.
For example, offshore trusts can be used to avoid the probate process, which is a public process to change title of assets from the deceased person to the new beneficiaries who will inherit the estate. The privacy which a trust affords is one of the key reasons trusts are used by many people who guard their privacy zealously, such as celebrities. However, the level of privacy can vary depending on the specific laws and regulations of the offshore jurisdiction in which the trust is established.
Cook Islands trusts are often considered private due to the jurisdiction’s strong asset protection and privacy laws. The Cook Islands offer robust legal frameworks that make it challenging for creditors to access assets held in trusts established there. One key feature contributing to this privacy is the strict confidentiality provisions, which safeguard the identity of settlors, beneficiaries, and trust details from public scrutiny.
The Cook Islands Trust continues to maintain strong privacy protection for the trust Settlor. Section 23 of the International Trusts Act states it is a criminal offense to divulge trust information unless certain exceptions apply, such as court authorization. It also provides that civil proceedings in the Cook Islands relating to an international trust are held privately. These are among the strongest privacy protections available for trusts anywhere in the world.
There is no publicly accessible register of trusts or parties related to them. The Cook Islands Registrar maintains a list of trust names, together with the address of the registered office for the trust, and the name and address of the Trustee. This information cannot be accessed or searched by the public, but if an individual has the name of a Cook Islands Trust, they can apply to the Registrar for confirmation as to whether the trust is currently registered and confirmation of the address of its registered office. That is the only information they can obtain. If they do not know the name of the trust, they will not be able to get any information.
Privacy is important for trusts for several reasons:
- Asset Protection: Privacy helps protect the assets held within the trust from potential threats such as lawsuits, creditors, or other legal liabilities. When trust details are kept confidential, it becomes more challenging for creditors to identify and target trust assets.
- Confidentiality: Trusts often involve sensitive personal and financial information about the settlor (the person establishing the trust) and beneficiaries. Privacy ensures that this information remains confidential and is not disclosed to the public, protecting the individuals involved.
- Estate Planning: Privacy can be essential for estate planning purposes. By keeping trust details private, individuals can maintain discretion about their wealth distribution plans and prevent potential disputes or challenges from arising among family members or other beneficiaries.
- Security: Privacy enhances the security of trust assets by reducing the risk of identity theft, fraud, or other forms of financial exploitation. When trust details are kept confidential, it becomes harder for malicious actors to target trust assets or exploit vulnerabilities in the trust structure.
- Personal Safety: In some cases, privacy may be important for personal safety reasons. High-profile individuals or those with significant wealth may seek privacy protections to safeguard themselves and their families from potential threats or unwanted attention.
Overall, the combination of strong confidentiality laws, robust asset protection measures, and flexible trust legislation makes Cook Islands trusts an attractive option for individuals seeking privacy and protection for their assets.
