Cook Islands Litigation Protection

Posted on 07/11/2016 ~ Categorized as Invest
Cook Islands Litigation Protection

The Cook Islands offshore asset protection trust provides the best litigation protection available. If you’re in a business or industry that’s prone to litigation, or just want to put a nest egg outside of the reach of civil creditors, here’s why Cook Islands litigation protection is far superior to anything available in the United States.

The first and most basic form of litigation protection offered by the Cook Islands is distance from US judges and courts. Laws in the United States are constantly in flux and being interpreted by activist courts. The focus of the US litigation system to make claimants whole whenever possible. That’s great if you are the one filing the claim… not so great if you’re being sued.

Little attention is paid the rights of defendants in these cases… and some some say defendants have no rights in the US but the right to write a big check. Combine this with a legal system where lawyers work on commission (contingency) and you see why high net worth individuals seek a more “friendly” jurisdiction for their assets.

Cook Islands litigation protection means that, no matter the result of a US civil case, the creditor will be unable to reach your assets. The Cook Island offshore trust insulates those assets behind an impenetrable wall and will not honor a judgment from the US.

While any asset in the US is subject to a US judgement, offshore assets are out of the reach of US courts. A US judge might pierce a US corporation, family trust, or other domestic structure, they can’t reach foreign assets.

A few words of warning here:

  1. US government agencies, and possibly civil creditors, can reach any bank account at a bank that has a branch in the US. If you go offshore, stick to banks that do not have offices in the United States.
  2. Real estate in the United Kingdom, France, and Canada can be seized by US government agencies and possibly civil creditors.
  3. US courts and judges have control over any and all assets in the United States. Cook Island litigation protection does not extend to assets owned by the trust which are domiciled in the United States.

Offshore asset protection and Cook Island litigation protection is intended to secure cash and foreign assets from future civil creditors. If you already have a problem, it might be too late to go offshore. Asset protection required planning and foresight.

Another often overlooked benefit of the Cook Islands litigation protection trust is that it might just prevent a case from being brought in the first place. Many US lawyers work on contingency, which means they get 33% of whatever is recovered.

If a lawyer knows that your assets are well protected, they may not be willing to take a case on contingency. They’ll probably want a big retainer upfront, which often puts a chill on the case in the eyes of the prospective plaintiff.  As a result, a Cook Island trust can prevent a case from being brought or help you settle it for pennies on the dollar.

Next, litigation protection in the Cook Islands is constantly evolving. Just as lawyers and judges are rewriting US laws to favor plaintiffs, the Cook Islands is working hard to combat those changes and protect defendants.

The Cook Islands Trust Act has been and will continue to be amended to give settlors security and certainty that the trust can be used to preserve their assets from creditors. The International Trust Act has been continuously updated to make it more difficult to bring a claim and, when one is brought, to make the playing field more favorable to the defendant.

Adding even more flexibility, Cook Islands litigation protection structures are portable. We can build in clauses that allow you to move the assets and the trust if a plaintiff is making headway in the Cook Islands courts.

For example, once the person attacking you has spent a lot of money on lawyers, you can move the trust and its assets to another asset protection jurisdiction such as Belize. This will force the plaintiff to start all over with new lawyers in that country.

Here are a number of additional litigation protection components of a Cook Islands trust:

  • Judgements of a foreign court can’t be enforced in the Cook Islands. So, a plaintiff can’t just bring a judgement from a US court to get paid, as they can in most other countries. The person attempting to attack your trust will need to file and litigate the case in Cook Islands.
  • The Cook Islands does not allow contingency fees. Anyone attempting to sue you will need to pay a very large retainer to a Cook Islands attorney.
  • The only way to breach a Cook Islands offshore trust is to prove beyond a reasonable doubt that the trust was created and funded for the purpose of defrauding the plaintiff. This is a very high burden and applies to criminal cases in the US. Assuming the trust was created before the alleged harm occurred to the claimant, the trust will stand.
  • The Cook Islands doesn’t allow punitive damages. Only actual damages can be litigated in Cook Islands courts.
  • A Cook Islands case can be heard in New Zealand with the New Zealand court will appling Cook Islands law. This gives you access to a defendant friendly major jurisdiction and away from banana republic courts in completing jurisdictions like Nevis and Belize.
  • Claims against a Cook Islands trust must be filed within 12 months of the date of transfer of assets to the trust or 24 months after the cause of action (the alleged harm caused by the settlor / defendant). Considering how long it would take a case to make it through the US court system, this statute of limitations provides significant litigation protection in the Cook Islands.

I hope you have found this article on the litigation protection benefits of a Cook Islands Trust to be helpful. Please contact me at info@premieroffshore.com or call (619) 550-2743 for a free and confidential consultation.


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