The Cook Islands, Belize, and Nevis are the most popular jurisdictions for offshore trusts. The purpose of this article is to discuss offshore trusts in general and to describe some of the specifics related to the three jurisdictions mentioned above.
It’s important to note that I almost always use portable offshore trusts in my asset protection planning. That gives clients the flexibility to move offshore if the need ever arises without the added expense and administrative burden of having a “foreign trust.” Portable trusts can be setup to move to any jurisdiction, so a portable U.S. trust can legally become a Cook Islands Trust, a Nevis Trust, or a Belize Trust.
Cook Islands Trusts – Best of the Best
I consider the Cook Islands to the be the cream of the crop when it comes to offshore trust jurisdictions. In the early 1980s, very enterprising Cook Islands and United States lawyers worked to develop the Cook Islands Trust Law. The law is actually called the International Trust Act 1984 (the “Cook Islands Trust Act”), and it has been amended several times.
The Cook Islands Trust Act was unique at the time of its creation, because it provided a safe way to protect assets from lawsuits while allowing people to maintain control over those assets.
The Cook Islands Trust law led the way in legitimizing self-settled trusts as asset protection tools. A self-settled trust is a trust where the trust creator is also a trust beneficiary. Until the passage of the Cook Islands legislation, it was very difficult to find asset protection tools that allowed people to control their assets and, at the same time, place those assets beyond the reach of future creditors. While self-settled trusts were recognized prior to the Cook Islands Trust Act, they didn’t provide asset protection in any form. Courts would simply disregard such trusts.
It’s safe to say that the Cook Islands paved the way in terms of legitimizing asset protection trusts. All the other asset protection jurisdictions–laws providing for Belize Trusts, Nevis Trusts, and even Domestic Asset Protection Trusts here in the United States–are outcroppings of the original Cook Islands Trust Act.
If you’d like to read more about Cook Islands Trusts, check out this very informative law journal article by clicking here.
Again, Belize Trust laws are an outcropping of the Cook Islands Trust Act. The difference with Belize Trusts is that there is very little common law the interpret to the Belize Self-Settled Trust law. Remember, the Cook Islands enacted their law first, so it is the most well-established, and it has been subjected to the most scrutiny in court.
While the actual text of the Belize Trusts statute provides very strong protections, I simply prefer a law that has been fully tested. This is the same reason that I typically advise against using U.S. domestic asset protection trusts (“DAPTs”). They simply haven’t been scrutinized in court, and so they present an unnecessary legal risk.
Belize does, however, have its uses. In many cases, I suggest that clients look into Belize banking services if it ever becomes necessary to move assets offshore due to a “triggering event” (i.e. a potential lawsuit).
Nevis is another jurisdiction in the Caribbean that has recently enacted a self-settled trust law. Nevis Trusts, like their cousins in the Cook Islands and Belize, offer very strong protection on paper. Again, however, the protections provided by Nevis Trusts have not been tested in court to the same extent that they have in the Cook Islands. While Nevis Trusts may very well turn out to offer a strong form of asset protection, at this point I continue to prefer the battle-tested trust jurisdictions.
Despite all that, many people like Nevis Trusts, because they simply feel comfortable having their trusts closer to home. It is nice to be able to visit your trust in the turquoise waters of the Caribbean, I must admit.
Nevis Limited Liability Companies
Even if you don’t choose a Nevis Trust, Nevis does have an incredibly important role to play in the world of asset protection. Nevis LLCs provide a strong form of protection, privacy, and predictability. The Nevis LLC statute is modeled after the Delaware limited liability company act, which is probably one of the most legally scrutinized and analyzed laws in the United States of America.
If you want to use an offshore limited liability company to operate a business enterprise and/or just to hold passive investment assets, Nevis is the preferred option.
Call If You Have Questions
If you have questions about Offshore Trusts, Nevis limited liability companies, or foreign banking, please call me. I’m here to answer your questions, analyze your individual situation, and assist you in protecting your assets in the most aggressive legal manner possible.