Cook Islands Foundation
Advantages and uses
Validity of a foundation in the Cook Islands
- Foundation is a separate legal entity from its founder.
- Foundation is valid even if the law in the founder’s jurisdiction does not recognise or prohibits foundations.
Multipurpose use
Foundation can be used for charitable or non-charitable purposes, inheritance and estate planning, wealth management.
Protection from Creditors
- 2 year statute of limitations on claims to set aside the foundation or attack the transfer of an asset to the foundation.
- Courts cannot recognise or enforce a foreign judgment against the foundation.
- Stringent fraudulent transfer rules that make it difficult for creditors to bring a claim for fraudulent transfer.
- Foundation stands independent from the founder’s personal circumstances. The foundation cannot be void or voidable in the event of the founder’s bankruptcy, insolvency, or liquidation.
Cook Islands foundation management
- Founder establishes rules that govern the operation of the foundation.
- Foundation is managed by a board, allowing for input from a number of relevant persons.
Foundation supervisor or enforcer
Law recognises someone to oversee the board’s management of the foundation, an ‘enforcer’ or ‘supervisor’.
Privacy
Strict privacy laws against disclosure of the affairs of the foundation.
Cook Islands foundations investment opportunities
- Foundation can derive earning from investments/broad investment powers may be authorised in the foundation rules.
- Foundation cannot be used for regular trade or commercial activity.
Tax exemption
Foundation and its beneficiaries are exempt from paying tax in the foundation’s jurisdiction.
Application of foreign law to a Cook Islands foundation
Forced Heirship laws of another jurisdiction cannot be enforced.
Foreign law will not apply notwithstanding that a dedication of assets to a CIF has the effect of avoiding, defeating (or potentially avoiding or defeating) a right, claim interest, obligation or liability conferred by that foreign law.
Wealth preservation advantages
Certainty as to the time limitation periods in which creditors must commence actions in relation to “fraudulent transfers” against Founders of CIFs. In summary, a creditor must commence an action against a Founder within 12 months of the date of transfer of assets to the CIF and against the CIF itself within 24 months of the date of transfer of assets to the CIF, in order to have legal standing to argue a fraudulent transfer by the Founder.
The creditor bears the onus of proof to show that a transfer by a Founder was done with intent to defraud that creditor. The creditor must satisfy this onus of proof to a standard of “beyond reasonable doubt”.
A CIF will continue to exist notwithstanding that the Founder of the trust may be declared bankrupt.
In the event that a creditor is successful in arguing that a transfer to a CIF was done with intent to defraud creditors, the only remedy available to the creditor is an award of damages from the assets of the CIF.
Punitive damages cannot be recovered from a CIF.
The avoidance of forced heirship rights in the home jurisdiction of the Founder will not render a CIF void or voidable.
Special purpose domestic or offshore entities can be placed underneath the CIF and take advantage of the wealth preservation features offered by Foundations Act 2012.
Conclusion
Register your Company today!
Our Business Development Team is ready to guide and assist you to discuss all options you have and to provide you with all the support you need to enable you to take the right decision facing your specific needs!
All our Consultancy and Advisory services are completely FREE!
Packages and Prices!
Inclusions
Year 1 Incorporation and service fees.
Optional Services (Bank Account opening, Nominee services, Certification of documents, amongst others).
Annual Renewal service fees for year 2 and subsequent years, to keep your company in good standing and full Compliant at all times.
Our company licensing services
— What we do and do not do
Our company is EXCLUSIVELY engaged in assisting worldwide clients, either individuals or corporate entities, to get duly and properly licensed with local Regulators and Financial Authorities to get respective official licenses to legally carry out their cryptocurrency or financial related business activities.
TBA & Associates Tax Business Advisors does not provide or carry out any sort of Cryptocurrency or Financial services!
Disclaimer: While TBA & Associates strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact TBA Customer Services for advice on your specific cases.