Transferring Stocks and Investments to Cook Islands Trusts

Investment assets must be held at offshore financial institutions to achieve asset protection. Securities held at U.S. brokerage firms—even when owned by the Cook Islands trust—remain vulnerable to U.S. court orders and creditor collection efforts.

U.S. courts can order Schwab, Fidelity, Vanguard, or any domestic custodian to freeze accounts, turn over assets, or comply with collection proceedings regardless of trust ownership. The domestic custodian operates within U.S. jurisdiction and must comply. Titling accounts in the Cook Islands trustee’s name provides no protection when assets remain physically held in the United States.

Effective protection requires transferring securities to custody accounts at international banks or investment firms outside the United States—typically in Switzerland, Singapore, Luxembourg, Channel Islands, or the Cook Islands itself. These institutions operate beyond U.S. court jurisdiction and cannot be compelled to comply with U.S. court orders.

Banks vs. Brokerages Offshore

In the United States, banks and brokerages are separate. Banks offer checking and savings accounts with limited investment services. Brokerages offer investment accounts but limited banking services.

Offshore, this distinction disappears. Major international banks provide both banking (accounts, wire transfers, foreign exchange) and investment custody (stocks, bonds, mutual funds) in integrated accounts. Swiss private banks, Singapore banks, and other international institutions serve as both bank and brokerage.

The trustee coordinates with one offshore institution for all financial services rather than maintaining separate U.S. bank and brokerage relationships.

No free brokerages exist offshore. Unlike U.S. options like Robinhood, Schwab, or Fidelity offering commission-free trading and no account fees, offshore custodians charge annual custody fees, trading commissions, and wire transfer fees. These costs are unavoidable when moving assets offshore.

What Actually Transfers

You’re not transferring “accounts”—you’re transferring the stocks, bonds, mutual funds, and cash held in those accounts. The U.S. brokerage account closes after assets move out. New accounts open at the offshore custodian in the trustee’s name, and the securities transfer into those new accounts.

Bank accounts work similarly. Cash in U.S. bank accounts wires to new offshore bank accounts established in the trust’s name. The old personal accounts close; new trust accounts at offshore institutions replace them.

In-Kind Transfers vs. Liquidation

Securities can transfer to offshore custody two ways: in-kind or through liquidation.

In-Kind Transfers

In-kind transfers move existing securities directly from U.S. brokerages to offshore custody without selling. Shares transfer between custodians maintaining your cost basis and holding period.

Advantages: No capital gains realization, maintains existing positions, preserves basis for tax purposes, avoids market timing issues.

Process: The offshore custodian requests specific securities from the U.S. brokerage. Shares transfer through ACATS or international protocols. Takes 7-14 business days typically.

Limitations: Not all securities transfer internationally. U.S. mutual funds often cannot transfer to offshore accounts because they’re not registered for sale outside the United States. Proprietary investments (Vanguard funds at Vanguard, Fidelity funds at Fidelity) may not transfer. Some securities have transfer restrictions preventing international movement.

Liquidation and Cash Transfer

Liquidate securities at U.S. brokerages, wire cash to offshore accounts, and repurchase equivalent positions at the offshore custodian.

Advantages: Works for all securities including mutual funds that won’t transfer in-kind, opportunity to rebalance positions, simpler process.

Disadvantages: Realizes capital gains triggering immediate taxation, creates market timing exposure during liquidation-to-repurchase.

Tax impact: A portfolio with $1 million current value and $400,000 basis generates $600,000 in capital gains if liquidated, triggering approximately $120,000-$150,000 in federal and state capital gains taxes. This tax cost may exceed any benefit from offshore protection unless creditor exposure is substantial.

Liquidation works well when positions have minimal unrealized gains or losses. When unrealized gains are substantial, prioritize in-kind transfers where possible and evaluate whether tax costs justify offshore protection.

Opening Offshore Custody Accounts

The Cook Islands trustee coordinates with offshore banks or custodians to open accounts in the trust’s name.

Offshore institutions require extensive documentation: complete trust deed, trustee identification, beneficial owner information (the grantor), source of wealth documentation, passport copies, proof of address, and detailed questionnaires about the trust’s purpose.

Minimum account sizes: Many offshore institutions require $250,000 to $1 million minimum balances. Smaller accounts don’t justify the compliance costs and overhead.

Timeline: Account opening takes 4-8 weeks, sometimes longer if additional documentation is needed. Accounts must be approved before securities can transfer.

Offshore Custodian Options

Cook Islands trustees work with several international financial institutions:

Cook Islands Savings Bank (CSB): Located in the Cook Islands, CSB offers custody and banking services typically at lower costs than Swiss or Singapore alternatives. Being Cook Islands-based simplifies trustee coordination and reduces costs, though investment options may be more limited than larger international banks.

Swiss private banks: Sophisticated wealth management, securities custody, and banking with strong privacy protections and institutional stability. Primary offshore custody jurisdiction with developed infrastructure.

Singapore banks: Similar services with Asian time zone advantages and strong regulatory oversight. Asian equivalent of Switzerland for private banking.

Channel Islands banks: Jersey, Guernsey, and Isle of Man offer offshore custody with proximity to London markets and established regulatory frameworks.

Luxembourg: European banking center for integrated custody services, particularly for European investments.

The trustee recommends institutions based on account size, investment strategies, and cost considerations. CSB is often the most economical choice when lower fees are priority.

Investment Management After Transfer

Moving assets offshore doesn’t require changing investment strategies.

U.S. investment advisors can continue managing: Advisors provide investment direction through limited power of attorney, the offshore custodian executes trades, and portfolios are managed according to the same strategies. The advisor can’t access or transfer assets—only provide recommendations the custodian executes.

Some advisors decline offshore accounts due to compliance concerns or firm policies. Confirm with advisors before transferring.

Offshore discretionary management: Offshore banks offer portfolio management where their investment professionals manage accounts based on agreed guidelines. Simplifies coordination but requires accepting the institution’s investment approach.

Self-directed: Provide trade instructions through online platforms, email, or phone, though trading platforms are less sophisticated than U.S. retail brokerages.

Tax Reporting

Securities held offshore remain fully taxable. The Cook Islands trust provides asset protection, not tax benefits.

Grantor trust treatment: Report all investment income, capital gains, and losses on personal Form 1040 as if you owned securities directly. Track income and gains from offshore account statements—Forms 1099 may not arrive automatically.

Forms 3520 and 3520-A: Annual foreign trust reporting requires detailed trust asset information including securities holdings and income.

FBAR: Foreign accounts exceeding $10,000 aggregate require annual FBAR reporting. Report maximum account values during the year.

Form 8938: Report offshore accounts when holdings exceed thresholds ($50,000 year-end or $75,000 maximum for single filers in U.S.).

Ongoing Management

All new investments should flow through offshore accounts rather than establishing new U.S. accounts. If you receive distributions and wish to reinvest, funds should flow back offshore rather than into domestic personal accounts.

Don’t treat offshore accounts as personal checking accounts. Distributions follow proper procedures—trustee authorizes, funds wire to your U.S. personal accounts, transactions are documented.

Keep detailed records of transactions, cost basis, and income. Offshore custodians don’t provide the year-end tax summaries U.S. brokerages generate.

Offshore Custody Costs

Beyond Cook Islands trustee fees ($3,000-$8,000 annually), offshore custody adds:

Account maintenance: 0.25% to 1.0% of assets annually, with $1,000 to $5,000 minimum fees. CSB typically charges lower fees than Swiss or Singapore banks.

Trading commissions: $25-$100+ per trade depending on institution and security type. No free trading exists offshore.

Wire transfers: $25-$75 per international wire. Multiple wires accumulate costs.

Currency conversion: Foreign exchange spreads apply even for U.S. dollar accounts.

Investment management: 0.5% to 1.5% annually if using offshore discretionary management.

Total offshore custody for a $2 million portfolio might cost $10,000-$30,000 annually beyond trustee administration fees. CSB custody costs typically fall at the lower end of this range. Total protection costs include both trustee and custody fees.

For detailed guidance on other assets, see transferring real estate, LLC interest transfers, and the funding checklist. For comprehensive Cook Islands trust information, return to the Cook Islands trust overview.