Cook Islands *
Trust
The Cook Islands, located in the South Pacific, has established itself as a prominent jurisdiction for international trusts, particularly for those seeking asset protection. Since the enactment of the International Trusts Act in 1984, the legal system in the Cook Islands has provided a robust framework that appeals to individuals and entities seeking a legally sound and secure trust structure. The jurisdiction’s early recognition of the importance of protective trust legislation has resulted in comprehensive laws tailored to meet global demand for financial privacy and legal resilience.
A distinguishing feature of Cook Islands trusts is the jurisdiction’s approach to asset protection. The law sets strict parameters for fraudulent transfer claims, typically imposing a limitation period of two years from the date of transfer. In some cases, this period may be reduced to less than a year. If a transfer of assets is made during a period in which the settlor is solvent, such transfers are generally shielded from challenge, reinforcing the legal certainty of the trust structure.
Furthermore, the Cook Islands imposes a significant evidentiary burden on claimants. Creditors seeking to challenge a trust must demonstrate their claim beyond a reasonable doubt—a much higher standard than the balance of probabilities used in many jurisdictions. Legal proceedings must be initiated within the Cook Islands itself, and foreign judgments are not recognized or enforceable. This requirement for local legal representation and adherence to stringent procedural rules acts as a substantial deterrent against frivolous or opportunistic litigation.
Trusts governed by Cook Islands law can be discretionary or fixed, revocable or irrevocable, and may benefit individuals, classes of persons, or even specific purposes. The jurisdiction imposes no rule against perpetuity, meaning trusts may be established in perpetuity, offering long-term succession planning flexibility that is increasingly restricted elsewhere. These features make Cook Islands trusts suitable for diverse personal, charitable, and commercial objectives.
Trusteeship requirements also ensure local presence. At least one trustee must be a Cook Islands resident, which can be fulfilled by a licensed trust company or a private trust company incorporated locally. While foreign co-trustees can be appointed, the inclusion of a local trustee preserves the jurisdictional integrity of the structure. This element of physical presence in the Cook Islands further fortifies the trust’s legal standing within its legislative framework.
Confidentiality is also a cornerstone of Cook Islands trust law. Banking and financial information is protected by strict privacy rules, and disclosure is only permitted with the express consent of the client. This legal safeguard complements the broader asset protection regime, offering reassurance to those prioritizing discretion in their financial affairs. Additionally, foreign bankruptcy laws and forced heirship rules from the settlor’s home jurisdiction do not apply, thereby insulating the trust from external legal influence.
A well-structured asset protection trust in the Cook Islands often incorporates specific legal clauses to maximize its effectiveness. These include anti-duress clauses, trust protector provisions, flight clauses allowing relocation to a different jurisdiction, and clear choice-of-law clauses. Such features are designed to ensure that the trust remains resilient even under pressure, including during litigation or governmental scrutiny. However, care must be taken to ensure that settlors do not retain excessive control, which could undermine the independent nature of the trust in court proceedings.
Regarding taxation, the Cook Islands does not impose any taxes on trust income, capital gains, settlements, or distributions. This tax-neutral stance allows trusts to operate without local fiscal interference, although settlors and beneficiaries must remain compliant with tax obligations in their own jurisdictions. Depending on the structure of distributions, certain jurisdictions may treat loans or benefits from the trust as taxable events.
The process for establishing a Cook Islands trust typically begins with the drafting of a trust deed, tailored to the settlor’s instructions. The timeline for finalizing the deed depends on the complexity of the terms and the number of revisions required. If a private trust company is needed to serve as trustee, its incorporation can usually be completed within a week. Overall, the establishment of the trust and its associated entities can be coordinated efficiently with professional oversight.
In comparison with other asset protection jurisdictions, the Cook Islands offers a particularly high threshold of legal protection, making it a preferred destination for long-term estate planning and risk management. The integration of strong legal defenses, privacy norms, and the exclusion of foreign legal claims situates the jurisdiction as a leader in trust law.
Legal *
Country code – CK
Legal basis – Common law
Legal framework – Cook Islands International Trust Act 1984 (Amended 1989)
Formal name – International Trust
Settlor – The settlor is the person who establishes and whose assets are put into the trust. The settlor of an International Trust in the Cook Islands may also be the beneficiary of those assets and may retain control of the trust. An international trust is not invalidated because of the subsequent bankruptcy of the settlor.
Trustee – Trustees are natural or legal persons who hold the title to the assets and manage the trust, but they cannot benefit from it. A sole or multiple trustees may be appointed. A custodian trustee is permitted, provided that the trust holds, but does not manage a property. Management of the property will be the responsibility of a managing trustee.
Trustee Liability – A trust deed’s provision may limit the liability of a trustee, or provide relief or indemnity.
Beneficiaries – Beneficiaries are those who get benefit from the trust. There are specific provisions to prevent beneficiaries from draining the trust of its assets and spending in a thrifty way. International Trusts allows avoiding both probate and forced heirship rules.
Protector – Optional figure appointed by the settlor who oversees trust’s operation and has the power to appoint trustees, and vetoes any actions that the trustee might make on behalf of the settlor.
Trust deed – The private document on which the trust is drafted is not needed to be filed with the Registrar.
Disclosure - Assets in the trusts are not disclosed to Cook Islands authorities and the law makes it a crime to identify who owns the trusts or to provide any information about them.
Protection from foreign judgments – The International Trust act provides specific provisions to ignore and not enforce judgments. The Hague Convention on Trusts does not apply in the Cook Islands.
Protection from creditors – The International Trust Act repeals the Statute of Elizabeth, so transfers by the settlor to the trust may not be set aside if the settlor transferred the property before the debt arose. The creditor must prove the fraudulent transfer of assets to the trust, which is clearly defined by the law. Creditor claims are separated and cannot be brought jointly. The Cook Islands has a one-year statute of limitations on fraudulent transfer. If a fraudulent transfer is proven, the trust may not be declared invalid.
Protection for immigrant trusts – Trusts that migrate from other jurisdictions may benefit from retroactive protection.
Community property – Community properties transferred to a Cook Islands’ international trust may retain its community property character. It is also possible to preserve the separate property status of assets held before marriage in a community property state.
Exclusion of foreign law - An international trust or disposition of property held by the trust will not be void, voidable, liable to be set aside or defective by reason that the laws of any foreign jurisdiction prohibit or do not recognize the concept of a trust, or that the laws of the Cook Islands are inconsistent with any foreign law.
Choice of law – The choice of law of the Cook Islands or any other law, to govern the trust or a particular aspect of that trust, is valid, effective and conclusive regardless of any other circumstances.
Compliance – International trusts are subject to a registration fee and an annual renewal fee.
- Settlor as a beneficiary *
- Bankruptcy protection * *
- Ignore foreign judgements * *
- Hague convention on trusts * *
- Choice of law is binding * *
- Protection from immigrant trusts * *
- Community property provisions * *
- Custodian trustee permitted * *
- Rule against perpetuities (years) * *
- Yes Specific exclusion of foreign law *
- Yes Settlor can retain control *
Protection of Settlor *
Protection from foreign judgements *
- Avoidance of forced heirship * *
- Spendthrift provisions * *
- Exclusion of Statute of Elizabeth laws * *
- Trust invalid if transfer fraudulent *
- Creditor must prove fraudulent transfer * *
- Clear definition of fraudulent transfers * *
- Separation of creditor claims * *
- Statutory limitation on fraudulent transfer * *
Protection of Beneficiary *
Transfers *
Taxes *
A trust established in the Cook Islands may not be subject to local taxes applicable to the assets and income of the trust, provided that no residents of the Cook Islands benefit from the trust and no physical assets are located there.
It must be noted that the choice of law of the trust would not be applicable to tax matters, which would be governed by the respective jurisdiction where the settlor, beneficiaries, assets or trustee are located, as applicable.
You should consult with your tax advisor or accountant to know the tax implications in your jurisdiction of residence when establishing a trust in the Cook Islands , transfer assets to it and receive profits from said assets.
- Offshore Income Tax Exemption * *
- Offshore capital gains tax exemption * *
- Offshore dividends tax exemption * *
- CFC Rules * *
- Thin Capitalisation Rules * *
- Patent Box * *
- Tax Incentives & Credits * *
- Property Tax * *
- Wealth tax * *
- Estate inheritance tax * *
- Transfer tax * *
- Capital duties * *
- - Offshore Income Tax Rate *
- - Corporate Tax Rate *
- 0% Capital Gains Tax Rate *
- 0% Dividends Received *
- 0% Dividends Withholding Tax Rate *
- 0% Interests Withholding Tax Rate *
- 0% Royalties Withholding Tax Rate *
- 0 Losses carryback (years) *
- 0 Losses carryforward (years) *
- 30% Personal Income Tax Rate *
- 12.5% VAT Rate *
- 20 Tax Treaties *
Country details *
The Cook Islands is an archipelago of fifteen small islands, located in the South Pacific Ocean, between Hawaii and New Zealand. It is a member of the Commonwealth and it is freely associated with New Zealand. Cook Islands citizens are also New Zealand citizens.
The islands have a combined area of 236 sq. km, but the Exclusive Economic Zone occupies more than 1,800,000 square kilometers of ocean.
It is populated by about 21,000 inhabitants. Most of them living in Rarotonga Island, where is found its capital Avarua and its international airport.
Its official languages are the Cook Islands Māori and English. Its official currency is the Cook Islands dollar and the New Zealand dollar, the first pegged to the second.
The Cook Islands is a dependency with a representative parliamentary democracy, where the Chief Minister is the Head of State. The islands are self-governing in free association with New Zealand and are fully responsible for internal affairs. New Zealand retains some external affairs responsibilities, in consultation with the Cook Islands.
Its economy, like other South Pacific islands economies, is hampered by its isolation, lack of exploitable natural resources, a natural disaster-prone location, and poor infrastructure. Tourism is the main source of income and, to a lesser extent, the cultivation of tropical fruits and their processing, manufacture of clothing and handicrafts.
In addition to tourism, the other main economic sector is the offshore industry. The Cook Islands has attractive legislation that makes it possible to set up tax-free international companies, offshore banks, insurance companies, and asset protection trusts.