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Cook Islands as preferred situs for BCI unit trusts

The Cook Islands has long been known for the asset protection features within its trust laws. It has many features which make it stand apart from other like legislations and jurisdictions looking to compete in the trust arena. With a history of trust law that dates back to the 1980s, the Cook Islands have what many jurisdictions yearn for – settled law.

The jurisdiction boasts experience, stability and legal precedence. These qualities are often expounded, but what really sets the jurisdiction apart, in my humble opinion, is the level of trustee services that you get by coming to the Cook Islands. On that level alone, and from personal experience in dealing with other jurisdictions over the last 15 years, the Cook Islands stands alone and can confidently say that it has no peers in the area of high quality responsive service.

Indeed many practitioners choose the Cook Islands, not for any of its asset protection features, nor its settled precedence, but simply because, they can ring their trustee and get an answer! If you do not get an answer from your trustee, then its time to think “Cook Islands”.

And so it is not surprising to hear that there is a steady migration of Unit Trusts to the Cook Islands from the BVI. Apart from the above pull factors, one feature that attracts these trusts is the ability to set up a Cook Islands corporation to act as a private trustee of the trust. Section 7 (3) of the International Companies Act 1981-82 specifically empowers the use of a private trustee company (“PTC”), so long as such PTC is not trustee of more than three trusts.

There are many reasons why the use of a PTC is attractive. Having your own PTC gives a certain element of “control” either through ownership or as director of the PTC. But there are laden dangers for the inexperienced who take this route. One needs to be careful that the quest for ‘control” does not compromise the PTC from any attack by a creditor. This is where the experience of practitioners in the Cook Islands come to the fore.

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