By Matthew Smith, TEP – Director: Business Development, Southpac
While offshore trusts are available in many jurisdictions, none offer the levels of all-round benefit and peace of mind available in the Cook Islands and Nevis.
The Cook Islands and Nevis are mature financial services jurisdictions which have had offshore trust and/or company legislation in place for over 40 years. They are reputable jurisdictions which are committed to international regulatory standards. Each offers a suite of features which make them particularly attractive to HNWIs who are looking to engage in international wealth planning: for example, settlors may retain extensive powers without invalidating the trust, trusts and trustees are not subject to local taxes, and forced heirship laws of other jurisdictions are overridden, allowing trust settlors extensive testamentary freedom.
However, what truly sets apart the Cook Islands and Nevis apart from other jurisdictions is the gold-standard asset protection they offer, which affords tremendous peace of mind to trust settlors and beneficiaries. The following protective features are enshrined in Cook Islands and Nevis trust legislation:
- Assets placed into an international trust before a cause of action accrues – in other words, before anyone has a reason to sue the settlor for something – are completely protected from future creditors.
- Assets settled into trust more than on year after a cause of action accrues (for Nevis – two years for Cook Islands) are fully protected if no litigation is already underway.
- Where a cause of action has accrued before assets are settled into a trust, the purported creditor must bring a claim relating to that cause of action within 6-12 months of settlement, and must bring further proceedings alleging fraudulent transfer in the Nevis High Court within one year of settlement and in the Cook Islands High Court within two years.
- Neither the Cook Islands nor Nevis recognizes foreign judgments which are inconsistent with their international trust laws.
- In order to prevail in a fraudulent transfer claim, the creditor must satisfy the Cook Islands or Nevis court to the criminal standard of proof – beyond reasonable doubt – that the settlor transferred assets to the trust with the principal intent of defrauding that particular creditor, and that the transfer left the settlor unable to meet the creditor’s claim.
- Any creditor bringing proceedings against a Nevis international trust must post a bond of US$100,000 into the Nevis High Court before proceedings commence.
The above statutory protections against future creditors also apply to Nevis limited liability companies. Many of Southpac’s clients set up Cook Islands trusts which hold an underlying Nevis LLC, providing formidable additional protection while allowing clients flexibility of asset management.
In addition, Cook Islands and Nevis trust legislation protects settlors’ identities as well as their assets through world-beating privacy laws. These make it a criminal offence for any person to disclose information relating to the establishment, constitution, business or affairs of an international trust without lawful excuse.
Southpac has set the benchmark in offshore financial services and asset protection since 1982. Here are some of the key reasons clients continue to place their trust in us.
- Our pedigree: We are the oldest trustee company in the Cook Islands and have been licensed in Nevis since 2000.
- Our scale: Southpac established nearly 40% of all Cook Islands trusts registered over the last year.
- Our credibility: Our key people are highly respected and influential within the Cook Islands and Nevis financial services industries. Our voice at the table is strong.
- Our litigation experience: While it is unusual for the trusts and companies we have established to come under attack from courts and creditors, we have experienced this and know how to deal with these threats and keep assets protected.
- Our jurisdictions: We are one of the only trustee companies to be licensed in both Cook Islands and Nevis, ensuring structures spanning both jurisdictions can be set up seamlessly.
- Our people: Our world-class team of fiduciaries has over 200 years of combined experience in the offshore trust industry.
- Our resourcing: We have over 30 staff across our offices, including more than 20 based in our professional service hub in New Zealand which houses our dedicated trust services, banking and investment, business development and accounting services teams.
- Our controlling persons: No-one who exercises any effective control over Southpac is situated in or connected with the United States, so there is no risk of a US court trying to assert control over a trust through any controlling person.
- Our network: Our strength is amplified by our continually expanding ecosystem of investment advisors, custodians, CPAs, tax experts and citizenship by investment partners throughout the world.
- Our value: We offer all-inclusive trustee services at highly competitive rates, providing clients with certainty around billing as well as peace of mind.
To find out more about the Cook Islands and Nevis and the formidable protection those jurisdictions offer, and for more information about Southpac and who we are, visit https://southpacgroup.com/.
Matthew Smith, TEP, is Southpac’s Director: Business Development and is based in New Zealand. He is a dual-qualified UK-NZ attorney, a designated Trust and Estate Practitioner and the holder of three coveted STEP Excellence Awards
