Today we're joined by Blake Harris as he shares tips for how to improve your asset protection! The conversation delves into how offshore trusts differ from domestic ones. Blake also dispels misconceptions about offshore trusts, emphasizing their legality and utility for asset protection rather than tax evasion. We explore how these trusts work, the best jurisdictions for establishing them, and the practical benefits for individuals seeking robust asset protection. Today we discuss...

• Offshore trusts help protect assets from lawsuits and divorces while allowing clients to retain control over their investments.
• Asset protection trusts are designed to prevent courts from easily seizing assets.
• Offshore trusts offer stronger protection compared to domestic trusts by shifting control to foreign trustees in jurisdictions like the Cook Islands.
• Offshore trusts provide access to foreign investments and international diversification opportunities.
• Unlike older practices of hiding money offshore, these trusts comply with IRS reporting requirements and are not used for tax evasion.
• Countries like the Cook Islands, Nevis, and Belize offer asset protection laws, but the Cook Islands are regarded as the strongest jurisdiction.
• Domestic trusts are weaker because U.S. courts can compel trustees to hand over assets.
• Offshore trusts can help clients negotiate favorable settlements or avoid lawsuits altogether.
• Compliance with offshore trust regulations involves some reporting but is manageable with expert guidance.
• Asset protection trusts primarily safeguard cash, stocks, bonds, crypto, gold, and silver in Swiss bank accounts.
• Cryptocurrency can be held under a Cook Islands trust via self-custody, third-party vaults, or Swiss bank accounts.
• Real estate is typically held in LLCs tied to the trust, with options for further protection through equity stripping.
• Divorces are treated as "super creditor" cases, but Cook Islands trustees can refuse to release funds under duress.
• Clients comply with court orders but trustees protect assets by requiring sworn statements of no duress.
• U.S. courts cannot force clients to perjure themselves, further securing trust assets.
• Over 10 million lawsuits are filed annually in the U.S., creating a need for robust asset protection strategies.

How does a Cook Islands Asset Protection Trust protect me? 

by Blake Harris

A Cook Islands Asset Protection Trust is among the most secure asset protection solutions available today. It helps safeguard wealth and valuable assets from lawsuits and creditors. Below is an overview of how a Cook Islands Trust functions and its benefits.

Key Features of a Cook Islands Asset Protection Trust

The Cook Islands’ legal framework is renowned for its robust asset protection statutes, considered among the strongest globally. The laws shield assets held in the trust from lawsuits, divorce or judgments, even from powerful jurisdictions such as the United States. Here’s how it works:

• Jurisdictional Shielding: U.S. courts lack authority over Cook Islands trustees,
  preventing the enforcement of U.S. court orders to seize trust assets.
• Statutory Protections: Trust statutes mandate that trustees cannot release
  assets if the settlor is under duress, ensuring that assets remain protected.
• Retention of Control: Although assets are held in trust, the settlor can maintain beneficial ownership, transact with the assets, or request trustee actions.

If a court order demands you turn over your assets, compliance is required to the extent possible. However, since the assets are controlled by an offshore trustee, they remain inaccessible to foreign courts.

Advantages of a Cook Islands Trust

Asset Protection:

• Keeps assets beyond the reach of creditors and court orders from outside
  jurisdictions.
• Protects liquid assets, intellectual property, real estate, investment
  portfolios, cryptocurrency, and more.
  

Statute of Limitations:

• Creditors must file claims within one or two years from the cause of action.

Tax Neutrality:

• No taxes are levied on trust assets by the Cook Islands government,
  including income, estate, or capital gains taxes. However, taxes in your
  home country would still apply.

Privacy and Flexibility:

• Trust deeds do not require public registration.
• The flexible trust structure accommodates diverse investment
  opportunities.

Global Protection:

• Trust assets need not be located in the Cook Islands, allowing global
  asset protection.
• Switzerland bank accounts are commonly used in conjunction with a Cook
  Islands Trust

Uses of a Cook Islands Trust

• High-Risk Professions: Doctors, lawyers, social media influencers, business owners, and others use these trusts to protect assets against potential litigation.
• Estate and Retirement Planning: Trusts facilitate wealth preservation and assist with retirement planning.
• Wealth Sharing: They provide a structured way to distribute wealth among family members.
• Business Safeguarding: Entrepreneurs can protect their businesses and intellectual property, ensuring long-term security and growth potential.

Structure of a Cook Islands Trust

A Cook Islands trust consists of four key parties:

1. Settlor: The individual who establishes the trust and places assets under it.
   
2. Trustee: Holds legal title and administers the trust assets. Trustees are bound to act in the best interests of the beneficiaries.
   
3. Trust Protector: Oversees trustee actions and ensures they align with the
   settlor’s interests. The protector can appoint or remove trustees.
   
4. Beneficiary: The person or group who benefits from the trust, often including the settlor.

Asset Protection Mechanisms

To maximize asset protection:

• Use Non-U.S. Accounts: Deposit funds in jurisdictions like Switzerland or
  Liechtenstein to avoid U.S. court access.
  
• Shield Tangible Assets: Protect intellectual property, company shares, real
  estate, and more. Equity stripping immovable assets is often recommended.
  

Real estate within the U.S. may face limitations or require selling or equity stripping due to jurisdictional challenges. Nevertheless, most assets can be effectively safeguarded.

Legal Protections and Barriers

1. Statute of Limitations: Creditors have a limited timeframe (one to two years) to challenge asset transfers to the trust.
2. Burden of Proof: Creditors must prove beyond a reasonable doubt that the trust was established to defraud them, a high evidentiary standard.
3. Litigation Barriers: Lawsuits must be filed in the Cook Islands, a costly and time-intensive process.

Cost and Formation

Establishing a Cook Islands trust typically costs $20,000 to $50,000, with annual fees ranging from $5,000 to $10,000. These fees cover trustee expenses, account maintenance, and compliance with reporting requirements.

Required Documentation

To establish a Cook Islands trust, the following documents are needed:

• Identification: Certified passport or driver’s license.
• Proof of Address: Recent utility bill or bank statement.
• Evidence of Funds: Bank reference letters to verify asset legitimacy.
• Trust Deed: Outlines the roles and responsibilities of all parties involved.
• Letter of Wishes: Provides additional, non-binding instructions to trustees.
• Affidavit of Solvency: Confirms the settlor’s financial stability.

Common Challenges in Trust Formation

1. Trustee Selection: Choosing a reputable trustee company with proper insurance and a clean track record is essential.
2. Relinquishing Control: Settlor should work with an experienced law firm in establishing a trust to ensure proper control is transferred to a highly reputable trustee.
3. Tax Compliance: U.S. citizens and residents must report trust-held assets to the IRS to avoid compliance issues.

Offshore Alternatives

While the Cook Islands trust is a leading asset protection solution, other options include:

• Nevis LLCs: Similar protections with different jurisdictional benefits.
• Titanium Trust™: A proprietary solution combining domestic and offshore
  elements for enhanced security.

Conclusion

A Cook Islands Asset Protection Trust offers unparalleled security for individuals seeking to shield their assets from lawsuits, creditors, divorce, and economic uncertainty. By leveraging a favorable legal system, stringent privacy laws, and robust asset protection mechanisms, this trust structure remains a top choice for high-net-worth individuals. Consult an experienced Cook Islands Trust attorney to ensure proper formation and compliance tailored to your needs.