Cook Islands Trust vs Nevis Trust

Both Cook Islands Trusts and Nevis Trusts are among the most popular offshore trust options for our clients. They offer strong legal frameworks that protect assets from creditors and lawsuits. However, deciding which jurisdiction is the best fit depends on various factors and priorities.

What Is a Cook Islands Trust?

A Cook Islands Trust is a legal entity established under the laws of the Cook Islands, a jurisdiction renowned for its strong asset protection framework. A Cook Islands trust is a self-settled trust where the client establishes a trust for their own benefit during their lifetime and appoints an individual or corporate trustee situated in the Cook Islands.

The trustee and trust assets are beyond the jurisdiction of U.S. courts. As a result, any judgment collection efforts must be brought in the Cook Islands. Cook Islands trust law protects trust assets from foreign creditor collection. The relevant statute is the Cook Islands International Trusts Act (ITA) of 1984.

What Is a Nevis Trust?

A Nevis Trust is an offshore trust established under the laws of Nevis, a Caribbean island known for its favorable asset protection laws. Nevis based its trust laws on the Cook Islands ITA. The applicable statute is the Nevis International Exempt Trust Ordinance of 1994 (NIETO).

Like a Cook Islands trust, a Nevis trust places legal control of assets in the hands of trustees who are not subject to U.S. court jurisdiction. The NIETO protects trust assets from creditor collection and offers comparable legal defenses.

Legal Protections: Cook Islands vs. Nevis

To reverse a transfer to a Cook Islands trust based on fraudulent conveyance, a creditor must prove their case beyond a reasonable doubt—the highest legal standard. This makes it extremely difficult for creditors to succeed in such claims.

Nevis requires a lower standard—clear and convincing evidence—which is still high but not as stringent as in the Cook Islands.

The statute of limitations for bringing fraudulent transfer claims is also different. In the Cook Islands, creditors have two years to bring such claims. In Nevis, the window is one year, and the limitation applies even if the creditor has already filed a claim in the U.S. at the time of the transfer.

Cook Islands trust law has strong support in case law. In FTC v. Affordable Media (1999), the Cook Islands court upheld the validity of a trust against a U.S. civil creditor. No Nevis court has issued a similar ruling supporting a Nevis trust in a case involving U.S. creditors.

Nevis offers unique protection through a creditor bond requirement. Under NIETO, a creditor must post a $100,000 bond with the Nevis government before initiating legal proceedings involving a Nevis trust. This requirement serves as a strong deterrent.

Privacy and Confidentiality

Both jurisdictions offer excellent confidentiality protections, but there are key differences.

In the Cook Islands, trust documents are not publicly available, and court proceedings are conducted in strict confidentiality. Trustees are required to reside in the Cook Islands, which enhances local oversight and legal control.

Nevis also protects trust confidentiality. Information is not available to the public, and proceedings are private. However, Nevis does not require local trustees, allowing for more flexibility in trustee selection—including international firms. This flexibility may reduce privacy if the trustee is in a jurisdiction with weaker confidentiality laws.

Flexibility and Ease of Administration

The Cook Islands requires a local trustee, which can complicate administration for clients who want more direct control. However, in our experience, top-tier trustee companies in the Cook Islands provide excellent service and flexibility.

Nevis does not require a local trustee, offering more freedom in choosing trustees and administering the trust remotely. Any qualified individual or trustee company anywhere in the world can serve. This flexibility appeals to clients who prioritize ease of administration without sacrificing protection.

Enforcement and Legal Actions

Neither the Cook Islands nor Nevis recognizes foreign judgments, including U.S. court orders. Creditors must bring a new lawsuit in the respective jurisdiction to challenge the trust.

The most important factor in offshore asset protection is not just the jurisdiction—it’s the trustee. Protection is effective only if the trustee resists U.S. collection efforts, communicates clearly with the client, and acts as a capable fiduciary over trust assets.

Conclusion

Choosing between a Cook Islands Trust and a Nevis Trust depends largely on your priorities.

The Cook Islands offers a higher legal burden for creditors, longer limitation periods, and a stronger body of favorable court decisions. Nevis, on the other hand, has a shorter statute of limitations and a bond requirement that discourages litigation by creditors.

Both jurisdictions provide excellent asset protection, privacy, and legal safeguards. We generally prefer the Cook Islands trust because of its favorable legal precedent and the presence of established trustee firms that have consistently served our clients well.