Cook Islands: Cutting-Edge Wealth Protection

Somewhere far out in the South Pacific lies a network of near-perfect castaway islands. Fifteen in all, their beaches are of white-powdered sands, the waters aquamarine and turquoise, and the climate ideal. From the shores of palm-fringed lagoons rise soaring volcanic peaks clad in lush green jungle.

The locals speak English, and though this paradise is hard to get to, 100,000 people make the trip every year. But the weather, the laidback lifestyle, and the picture-perfect land and seascapes are not the biggest attraction…

Because these islands have a legacy, and I’m not talking about pirates and buried treasure. (Although what I’m about to reveal is an excellent a way of protecting your wealth.) The Cook Islands (CI) are an independent country joined in “free association” with New Zealand, which lies to the southwest. It has its own government and court system, the New Zealand dollar is the local currency, and it definitely qualifies as what used to be called a “tax haven,” now replaced by the politically correct term “offshore financial center.

The government guarantees: no taxes.”

In the 1980s, certain American asset-protection attorneys played a very active role in advising the government on asset-protection issues, actually drafting statutes for the island’s parliament. This legacy may be one of the reasons the Cook Islands trust law embodies all the best legal concepts concerning modern trusts. As such, it has served as the example for many other offshore financial centers.

Their government officially guarantees no taxes will be imposed on offshore legal entities based there and none ever have. Usually offshore transactions are in U.S. dollars, although other currencies are available. When explaining why “offshore” is the best place for maximum asset protection, I often hear complaints about long distances and time differences.

But it’s that very distance, and the stronger privacy and asset protection afforded by offshore laws, which gives important extra dimensions of safety for your cash and assets. And the place you choose to conduct your business is probably the most important basic decision you must make when going offshore.

The CI trust legislation is considered cutting edge and has been copied by many offshore financial centers. CI asset-protection trust law has now been implemented in one form or another in thirteen countries and eight U.S. states. Other laws provide for modern international business corporations (IBCs), limited liability companies (LLCs), and partnerships.

There is strict official supervision of operation of offshore banks, insurance companies, maritime shipping and trusts. And there is a trained international professional community to support these services. With a British common law tradition and English as the primary language, the Cook Islands also have an active offshore-banking sector attractive to both Asians and North Americans. Several major Pacific-area banks have offices there.

All that, plus a very strict financial-privacy law that protects you, your assets and your business—a law that even the U.S. government and the IRS have been unable to crack. Strong financial and banking secrecy provisions apply here, requiring government officials, as well as trustee company and bank employees, to observe strict secrecy backed by criminal sanctions.

In a major American legal challenge to the Cook Islands trust law, the U.S. government tried to force the repatriation of funds under a Cook Island trust and lost, even though the Americans who created the trust for a time were jailed for contempt of court. Not even a U.S. federal court could crack the Cook Island trust laws.

The Cook Islands might be just the place for your asset-protection trust. Some cautious people don’t like to put too much distance between themselves and their assets—and these islands definitely are far away. But as I said, distance between your assets and those trying to grab them are exactly what you need.

The official registrar records of foreign companies and of international trusts are not open for general search, with a few defined exceptions. Thus all parties’ information is kept private unless a local court orders release of the information. In 2009, along with almost every offshore financial center in the world, the Cook Islands government agreed to apply Article 26 of the model bank code of the Organization for Economic Cooperation and Development (OECD), which allows discretionary tax information sharing among governments.

The CI confidentiality laws prohibit the disclosure of existing trust and banking relationships except with the consent of the client. This means that no creditor or foreign government can gain access to bank or trust information except in cases of criminal money laundering or averting the financing of terrorism. These laws do prohibit information “fishing expeditions” by foreign tax authorities.

The best asset-protection plans, implemented for lawful reasons, are those implemented well before there are any claims on the horizon. Now is the time to start. For more information email here. or see:

Editor’s Note: This article was taken from a past issue of International Living’s monthly magazine. To get full access to all past and future articles and to receive the magazine in the mail or online each month, simply click on the below button to subscribe to International Living magazine at the special introductory price of $49. You will get instant access to the current issue of the magazine as well 10 years of back issues. As an added bonus, we will also send you a FREE report – How to Retire in Paradise on $30 a Day. (You can cancel your subscription at any time.)


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