10/02/2026
Do Cook Islands trusts work?
Creditors have tested Cook Islands trusts in contested litigation since the late 1990s. In that time, no creditor is known to have recovered assets from a properly structured trust. Three rules of Cook Islands law stand between a creditor and the trust assets:
1. The burden of proof. To undo a transfer, a creditor must meet the standard used in criminal cases, proving beyond a reasonable doubt that it was made to defraud.
2. The deadline and the court. The challenge must be brought in the High Court of the Cook Islands no later than two years after the transfer.
3. U.S. judgments. An American judgment carries no automatic force in the Cook Islands, so the creditor has to relitigate the whole claim under Cook Islands law.
The protection covers the assets, while U.S. courts keep jurisdiction over the settlor personally. A court can direct the settlor to repatriate the assets, and a settlor who ignores that order risks jail for civil contempt.
In the cases decided against settlors, each settlor had kept control of the trust, funded it once a lawsuit was underway, used trust money personally, or concealed assets. Setting up a trust after a suit is filed is common, and the settlor takes on a higher risk of contempt.
Most disputes involving well-built trusts end in private settlements before any judge writes an opinion, which is why the decisions on record lean toward trusts with bad facts.
https://www.alperlaw.com/offshore/cook-islands-trust/litigation/
