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Cook Islands Trust and Divorce Proceedings

In recent years, asset protection, and the Cook Islands Trust, has become a hot topic given the increasing prevalence of divorce. Subsequently, this guide sets out to dispel some of the myths around offshore trusts and looks at how an asset protection trust, based in the Cook Islands, can help you potentially defeat divorce litigation.

The History of the Ubiquitous Trust

Firstly, you need to understand what a trust actually is and where it comes from as it’s an important concept. The English were the pioneers of the asset protection trust, and the concept was formed to sailors, soldiers, and those travelling the world to secure their personal wealth.

Long and dangerous voyages, uncertain new worlds, and a globe full of ruffians meant that you couldn’t carry your wealth safely. Subsequently, an idea was born of placing your wealth into someone else “hands” for safe keeping. However, anyone undertaking such an activity needed to make sure they were going to get their money and possessions back upon request.

Subsequently, an agreement would be drawn up between the Settlor (“Who places his money into trust”) and the Trustee (“Who looks after the money for the benefit of the beneficiary”) that could be enforceable in the English courts.

This gave rise to a Trust Agreement where the trustee takes on the obligation to look after the assets for the benefit of the beneficiary of the trust. Little did they know, centuries later, that this would turn into a massive industry involving all range of professionals.

Understanding the Cook Islands Asset Protection Trust

Cook Islands Trust Divorce
The Cook Islands Trust is Incredibly Strong

Asset protection really entered the golden age of the 1980s and early 1990s and litigation risks continued to rise. This saw ever increasing amounts of awards in the US courts and people became increasingly skeptical about being sued.

Subsequently, domestic US trusts and limited liability structures were routinely being pierced by lawyers. The US courts sought to find every opportunity to bust the asset protection provisions of local trusts which forced many to start looking overseas for more concrete options.

Enter the Cook Islands who saw countries like Belize and Nevis cashing in on the drive offshore. The island nation took immediate steps to introduce legislation to provide the framework for a local offshore sector.

Subsequently, the Cook Islands International Trust Act was enacted in 1984 which, built upon the example statutes in Belize and Nevis, with some additional safeguards that makes it the gold standard of international asset protection as of 2023.

Main Features of the Cook Islands Asset Protection Trust (CIAPT)

The CIAPT is really the perfect example of a responsible, and well tested, trust protection regime. APTs are easily established and operated with a range of professionals available in the islands.

The standard Cooks Asset Protection Trust includes the following key roles:

  • Trustee – You must have one local professional trustee appointed. However, you may also choose to serve as your own trustee or appoint a close and trusted friend to fulfil this role.
  • Protector – This is likely a role that you have not run across before if you have never dealt with offshore trusts. The protector has a range of duties and obligations that are spelt out in the trust deed but, ultimately, they are there to ensure the wishes of the settlor are respected by the trustees. They have wide scope to remove rogue trustees and or direct certain actions to occur.
  • Beneficiaries – These are the people who are listed to benefit from the assets in the trust. As settlor, you may also choose to be a beneficiary. Note that the APT is a discretionary trust which means that the distributions are at the discretion of the trustees.

Benefits of Using a Cook Islands Trust in Asset Protection

case history for divorce of foreign trusts
Domestic Courts Have No Power Over Cook Islands Trusts

Firstly, placing your assets into a trust means that you no longer own nor possess them. They are now owned by the trust and operated by the trustee for the benefit of the listed beneficiaries. This provides a range of privacy and asset protection benefits but, in short, means that you can say you no longer own that house, or business, or trading account etc.

Also, the Cook Islands trust is effectively unbreakable to outside legal pressure. As long as your trustees and protector are outside the U.S. then the courts will have no ability to direct them to undertake any action.

In practice, this means that trustees of APTs are required to ignore US court orders and actions. Additionally, the Cook Islands does not recognize foreign judgments and any court action will need to be recommenced, at great cost, directly on the island and this very rarely happens.

This sort of trust structure also means that the assets held in your APT are exempt from any sort of divorce relationship property settlement. There is simply no way that a US court can enforce an order of settlement against an offshore trust based on the island. This places those assets outside the reach of litigious ex-partners.

An important point to note is that transfers into a CIAPT made over two years ago are effectively exempt and fully protected from any claims of fraudulent transfer. Indeed, any such claim can ONLY be brought locally in the Cook Islands and not in a foreign country.

Finally, any such local claim not only has to prove that the transfer was fraudulent but also that there was intent to defraud. Subsequently, the bar to succeeding in this case is incredibly high.

Limitations and Challenges in Cook Islands Trust and Divorce Cases

Putting aside the restrictions around fraudulent conveyance you will find that, in most cases, this form of trust will effectively defeat a property relationship claim as long as the assets have been settled over two years prior.

In fact, New Zealand courts have stated ad nauseum that they have little ability to demand action over foreign assets. A few key case citations that highlight the protection are as follows:

  1. Mellon v. Mellon (1993) – This is a significant case involving a CIAPT, where the court ruled in favor of the trust’s protection against the claims of a divorcing spouse.
  2. Duane v. Cook Islands Trust Corporation (2003) – In this case, the court examined the validity of a CIAPT in the context of a divorce, highlighting the importance of proper trust structure and administration.
  3. Al Masah Capital Management Limited v. Dayel (2015) – While not specifically about divorce, this case demonstrates the Cook Islands’ commitment to protecting CIAPTs from foreign judgments, which can indirectly impact divorce cases.
  4. Prest v. Petrodel Resources Ltd (2013) – This is an English case, but it set an important precedent regarding the piercing of the corporate veil in divorce cases, which can have implications for CIAPTs and other asset protection structures.
  5. Higgins v. Higgins (2009) – This case from New Zealand dealt with the issue of CIAPTs and divorce, illustrating the challenges and legal considerations in cross-border disputes.

However, you should still note that a court of appropriate jurisdiction may still require you, personally, to undertake certain actions of which failure could lead to contempt.

How Easy is a Cook Islands Trust to Establish?

In short, incredibly easy! You will simply need to decide on the following factors:

  1. What will your trust be called?
  2. Who will you appoint as trustees (you can serve in this role if you choose)?
  3. Who will you appoint as the protector? (Never undertake this role whilst being the settlor at the same time)?
  4. Who will be the beneficiaries?
  5. What assets will you settle into the trust and how will this be executed?

The whole process, including due diligence checks, takes approximately 2-weeks and you can receive the trust agreement and requisite documents for execution and return.

If you would like to start the process, please use the contact form and speak to us about setting up a structure that works for you.


  1. Cook Islands International Trusts Act, 1984 – This is the primary legislation governing the creation and operation of international trusts, including CIAPTs, in the Cook Islands.
  2. Fraudulent Dispositions Act 2011 – This law addresses fraudulent transfers and their consequences, which can be relevant in divorce cases where assets are placed in trusts to avoid creditors or spouses.
  3. Cook Islands Family Proceedings Act – This legislation outlines the legal framework for divorce proceedings in the Cook Islands, and it’s important to consider how it interacts with the protection provided by CIAPTs.
Steven James

Meet Steven James, an offshore tax advisor splitting his year between Thailand and St. Lucia. With expertise in trust and company structures, he guides clients to financial success. In his spare time, Steven is a passionate writer and researcher, exploring diverse topics with curiosity and dedication.