A Cook Islands Trust is a type of trust that can be used to plan for multiple generations and protect assets from lawsuits and creditors. This type of trust allows the person who established the trust to also be a beneficiary and enjoy the legal protections afforded to the beneficiaries and assets of such trusts. The courts in the Cook Islands have a limited but still perfect record for protecting trust assets.

Cook Islands Trusts are generally considered the best asset protection jurisdiction by legal professionals all over the world. As with any legal solution, it is important these asset protection structures are properly established and implemented. Unfortunately,, this is not always how things play out in the real world. In this article, we will discuss what can happen with a Cook Island Trust when litigation begins and circumstances become challenging for the defendants.

FTC v. Affordable Media, LLC

judge gavel with a lawyer

  • The defendants in the Affordable Media case had been convicted of fraud.
  • They were being sued by the FTC, a government body with virtually unlimited resources.
  • Their Cook Islands trust had improperly allowed them to be co-trustees.
  • The FTC still chose to settle the case instead of litigating in the Cook Islands

There are relatively few court cases regarding Cook Islands Trusts, mainly because so few trusts are attacked or taken to trial. In addition, the Cook Islands provides a large degree of privacy to its offshore trusts registered there. Trust documents in the Cook Islands are not a part of the public record. Thanks to the cases discussed in this article we can see Cook Islands Trusts are intimidating enough to stop most from bringing a case, and excellent for protecting assets when someone does bring a case.

One of the few, and probably the most infamous court case involving a Cook Islands Trust is FTC v. Affordable Media, LLC (“Anderson Case”) 179 F.3d 1228 (9th Cir. 1999). Denyse and Michael Anderson created a business that sold media units to investors with the promise that they would receive a 50% return on their investment. The media units were supposed to be a share of the profits from products sold on late night television, which were sold through telemarketing efforts.

Unfortunately for the business and its owners, not enough of the products could be sold to match the very high returns promised to investors. Typical of a Ponzi scheme, the profit shortfalls were simply made up by paying the profits promised to earlier investors with the investments of later investors. Consequently, once there were not enough new investors to prop up the operation it quickly folded, and the so called “investment” funds were lost.

Affordable Media, LLC and its founders were ultimately sued by the Federal Trade Commission (FTC). The Andersons had established a Cook Islands Trust three years before being sued by the FTC. The fact that the offshore trust was funded using ill-gotten funds alone would be enough to place a defendant at a serious disadvantage in court, but things were about to get worse for the Andersons. In a serious lapse of judgment, the Andersons had been personally named co-trustees of their offshore trust together with a professional trustee company in the Cook Islands.

When Cook Islands Trusts go to Court

By naming themselves co-trustees, the Andersons provided a very strong argument for their creditors to argue that their trust was just a façade since they were personally authorized to control all the assets held in trust. Their trust did contain a duress provision that stated the Andersons should be removed as co-trustees in case they were ever sued. Based on this clause, the Cook Islands trustee removed them and took over as sole trustee once the litigation commenced.

The court was not convinced by this legal maneuver and maintained the Andersons they still had control over the trust. The Andersons were held in jail for contempt of court due to their failure to repatriate trust assets held offshore. They were eventually freed after they agreed to cooperate with the FTC, remove their offshore trustee, and replace it with a corporation formed by the FTC. The Andersons then wrote to their offshore trustee to inform them of this and request these changes.

In a surprising turn of events, the Cook Islands Trustee refused to comply with the Andersons’ request. The trustee believed the Andersons were acting under duress due to the pressure from the FTC and the court. They then obtained a ruling from a Cook Islands court that effectively nullified the effect of the U.S.-ordered agreements and allowed them to stay as sole trustee and continue protecting the trust assets.

Instead of appealing this decision from the Cook Islands court, the FTC decided to settle with the offshore trustee. The FTC settled and released the trustee and the trust from any further liability. While the terms of the settlement are not public, we cannot get any information regarding the amount, but we can determine settling was easier than taking the legal battle to the Cook Islands, even for the FTC.

The Lessons from Affordable Media

pulling a knot

This case shows the remarkable level of protection afforded by Cook Islands Trusts, even when all the facts appear to be damaging. The Andersons were not sympathetic defendants in the eyes of the court. They had engaged in fraudulent criminal activities as part of their business. They were being sued by a federal government body with virtually unlimited resources at their disposal, and they were relying on an improperly constructed trust as their only source of asset protection.

Even with all these facts against them, the Andersons’ Cook Islands Trust could not be defeated by a U.S. court-ordered agreement and the plaintiff chose to settle instead of fighting a court battle in the Cook Islands. While the Anderson Case is over twenty years old now, we don’t have any reasons to believe the level of protection provided by Cook Islands Trust has diminished over this period of time.

When the Source of Funds is Called into Question

In a more recent case decided in December of 2018, a judgment of the High Court of the Cook Islands again demonstrated its tendency to side with Cook Islands Trustees. This case involved an undisclosed Russian litigant in the Moscow District Court. The Russian court had determined the defendant had illegally transferred funds to a Cook Islands Trust. The Russian Federation attempted to collect from the trustee due to what they claimed was a fraudulent transfer, stating the transferred funds were “tainted property.”

Just like in the Affordable Media case, instead of simply agreeing to this foreign court ruling, the Cook Islands trustee found protection in the courts of the Cook Islands. The Cook Islands court determined there was insufficient evidence the Cook Islands Trustee was aware the funds were tainted and therefore resulted in the Russian Federation being unable to collect the funds held in trust.

Together with Affordable Media, this recent case demonstrates the strength of Cook Islands Trusts when the facts are unfavorable. Instead of the FTC, it was the government of the Russian Federation, who could be considered  an equally or more intimidating legal opponent. Instead of attacking the trust due to the settlors’ role of co-trustees, it was the source of funds that was used to try to invalidate the trust. At any rate, the offshore trustee did not back down, and the Cook Islands Trust upheld Cook Islands law.

Naturally, offshore asset protection trusts are not meant to protect ill-gotten gains or hide wealth from government bodies. In fact, the Cook Islands have robust regulations in place to make sure prospective trust funds come from a legitimate source. Professional trustee companies in the Cook Islands consistently request financial documents and information before agreeing to accept a client.

Extreme Cases

stopping a wood of blocks from fallingpulling a knot

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 situation 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 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 judgements 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 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.