Cook Islands Trusts for Non-U.S. Settlors

A Cook Islands trust is available to settlors from any country. Cook Islands law sets only structural requirements: the trust must be registered, at least one trustee must be a Cook Islands entity (in practice a licensed trustee company), and the beneficiaries must live outside the Cook Islands. It says nothing about where the settlor holds citizenship or pays tax.

An Australian, Canadian, or British settlor gets the same protection as an American one, because the protection rests on Cook Islands courts refusing to enforce judgments from any other country. What changes is the home-country side: tax treatment, reporting, and court exposure follow the settlor’s own law, and those questions need a tax adviser in the settlor’s own country before the trust is funded.

Can a Non-U.S. Person Set Up a Cook Islands Trust?

Yes—a person who is not a U.S. citizen or resident can establish a Cook Islands trust on the same terms as an American. The trust statute defines an international trust by three requirements. The trust must be registered in the Cook Islands, and at least one trustee must be a Cook Islands trustee company, an international company, or a registered foreign company. The beneficiaries must be at all times non-resident, meaning not domiciled or ordinarily resident in the Cook Islands.

The settlor’s citizenship, tax residence, and home legal system appear nowhere in the definition. An Australian surgeon and a Texas surgeon sign the same form of deed with the same trustee companies. The setup process is also identical: trustee due diligence, the trust deed, and in most structures an offshore LLC the settlor manages until a creditor threat appears.

The planning threshold is also unchanged. A Cook Islands trust fits someone with at least $1 million in total assets or $500,000 in liquid assets who faces liability exposure beyond insurance limits.

How Cook Islands Law Treats Judgments from Other Countries

The Cook Islands enforces no foreign country’s judgments against an international trust. The trust statute bars Cook Islands courts from recognizing any foreign judgment that rests on law inconsistent with the statute. A judgment of an Australian or Canadian court stands exactly where a U.S. judgment stands: the creditor must start over in the Cook Islands.

Starting over means filing a new proceeding in the Cook Islands High Court, hiring Cook Islands counsel, and proving beyond a reasonable doubt that the transfer into the trust was fraudulent. That is the criminal standard of proof, applied in a civil claim.

The deadlines are short. A transfer made more than two years after the creditor’s cause of action arose cannot be challenged as fraudulent. A transfer made inside those two years is also protected unless the creditor sued the settlor on the underlying claim, in any court, within one year after the transfer. Neither rule protects a transfer made after the creditor had already sued the settlor, although the statute does not treat that timing alone as proof of intent to defraud.

The Cook Islands action itself must be filed within two years of the transfer. No creditor is known to have recovered assets from a Cook Islands trust through Cook Islands proceedings.

Freezing Orders Arrive Before Judgment in the Settlor’s Home Courts

Courts in Australia, Canada, the United Kingdom, and New Zealand will freeze a defendant’s assets while a lawsuit is still pending. The English Court of Appeal approved the remedy in 1975 in Mareva Compania Naviera v. International Bulkcarriers, and courts throughout the Commonwealth now grant it. The order bars the defendant from selling or moving assets up to the amount claimed. Courts often grant it without notice when the case begins, and it can cover assets worldwide. Violating it is contempt of court.

American settlors do not face that remedy. In Grupo Mexicano de Desarrollo v. Alliance Bond Fund, the U.S. Supreme Court held that federal courts cannot freeze a defendant’s assets before judgment in a lawsuit for money damages. A U.S. defendant ordinarily keeps control of assets until judgment, which is why a Cook Islands trust can be established even during a U.S. lawsuit. A defendant in Sydney or Toronto cannot count on that window: in those courts the freeze often comes the same week the claim is filed.

For a settlor whose home courts grant freezing orders, planning before any claim carries more of the weight. A trust funded years before a dispute leaves nothing for a freezing order to catch: the assets sit with the trustee, and the order binds only the defendant personally. A settlor who waits until proceedings are filed may find that any later transfer out of the country violates the order.

A freezing order does not reach assets already held by a Cook Islands trustee. The trustee sits outside the issuing court’s jurisdiction, and the order would have to be recognized in the Cook Islands, whose courts are barred from enforcing foreign court orders against an international trust. Even a creditor who sues in the Cook Islands cannot get an interim freeze there: the statute forbids one unless the court is first satisfied, beyond a reasonable doubt, that the creditor can prove its fraudulent transfer claim.

Personal pressure after judgment exists in every country whose courts can hold a litigant in contempt. U.S. courts jailed the settlors in In re Lawrence and FTC v. Affordable Media after trust assets were not repatriated, and both settlors had kept practical control of their trusts. Contempt exposure runs against the settlor personally, in the settlor’s own courts, wherever those courts sit—the trustee and the assets remain beyond their reach.

Cook Islands Trusts for Australians

An Australian resident can settle a Cook Islands trust, and the Cook Islands side of the structure is identical to an American settlor’s. What differs is the Australian side. Australia taxes residents on worldwide income, and its tax legislation contains rules aimed directly at foreign trusts.

Section 99B of the Income Tax Assessment Act 1936 taxes an Australian-resident beneficiary who receives accumulated income from a non-resident trust, and an interest charge can apply on top of the tax. Separate transferor-trust rules can attribute a non-resident trust’s income, year by year, to the Australian resident who transferred property to it.

None of this weakens the trust’s protection, and none of it is something a U.S. law firm can advise on. How those rules apply to a particular trust is a question for an Australian tax adviser, and so is the capital gains treatment when appreciated assets move offshore. The answers belong before funding, while every choice about structure and timing is still open.

A Cook Islands trust gives an Australian settlor no Australian tax benefit. Income attributed or distributed to an Australian resident remains taxable in Australia, and the trust’s value lies elsewhere: a creditor holding an Australian judgment must start over in the Cook Islands High Court, against the beyond-reasonable-doubt standard and the two-year deadlines.

Cook Islands Trusts for Canadians

A Canadian resident can settle a Cook Islands trust on the same Cook Islands terms, and Canadian tax law answers with the most direct rule of the four countries: it can treat the trust as if it lived in Canada.

Section 94 of Canada’s Income Tax Act generally treats a non-resident trust that has a Canadian-resident contributor as a Canadian resident. That deemed residence brings the trust’s income into the Canadian income tax net. A Canadian who contributes property to the trust also files an annual information return, Form T1141, describing the contributions. Whether the deemed-residence rule reaches a particular trust, and what it costs in tax each year, is a question for a Canadian tax adviser before any assets move.

The deemed-residence rule changes the tax picture and leaves the protection untouched. Cook Islands courts do not enforce Canadian judgments, and a Canadian creditor faces the same new-proceeding, criminal-standard, short-deadline path as any other creditor. The Canada Revenue Agency can tax the trust’s income while the trustee and the assets stay beyond a creditor’s reach.

Cook Islands Trusts for U.K. and New Zealand Settlors

A United Kingdom resident who settles a non-resident trust comes within the U.K.’s transfer-of-assets-abroad rules, which can tax the settlor on the trust’s income and on benefits provided to close family members. Since April 2025, when the U.K. ended its non-domiciled regime, a settlor who meets the statutory conditions is assessed on the trust’s income as it arises.

New Zealand taxes trusts by the residence of the settlor rather than the trustee. A New Zealand resident who settles a trust with foreign trustees can be personally liable for New Zealand tax on the trust’s worldwide income, and settlors must disclose their settlements to Inland Revenue.

For both countries the sequence matches Australia and Canada: the trust’s protection against a British or New Zealand judgment is unchanged, the home tax treatment is the deciding variable, and a tax adviser in the settlor’s own country resolves it before funding.

Do Exchange Controls Restrict Funding the Trust?

No—neither Australia, Canada, the United Kingdom, nor New Zealand restricts a resident from transferring personal funds abroad. The United Kingdom abolished exchange control in October 1979. Australia lifted its remaining controls when it floated the dollar in December 1983, and New Zealand’s controls were gone by 1985. Canada dismantled its wartime exchange controls in 1951 and has never reimposed them.

What each country does instead is report. Australian institutions report every international funds transfer instruction to AUSTRAC, the country’s financial intelligence agency, with no minimum amount. Canadian institutions report international electronic funds transfers of C$10,000 or more to FINTRAC and to the Canada Revenue Agency. Funding a Cook Islands trust from any of the four countries requires no government approval, and the wire that funds it will be on file with the home country’s authorities.

The Trustee Reports the Trust to the Settlor’s Home Country

The Common Reporting Standard sends a non-U.S. settlor’s trust account information to the settlor’s home tax authority automatically. The Cook Islands has exchanged account information under CRS since 2018. A trust managed by a professional trustee company counts as a financial institution under the standard, so the trustee collects tax-residence certifications from the settlor, the beneficiaries, and any protector, and reports those who live in participating countries. An Australian settlor’s trust accounts are reported to Australia, and a Canadian settlor’s to Canada.

The reporting removes nothing from the protection, because the protection never depended on the home government not knowing. A tax authority and a judgment creditor are different audiences: CRS data goes to tax agencies, and a creditor gets no access to it. A creditor will learn the trust exists anyway through post-judgment discovery in the settlor’s own courts. The trust protects assets even when fully disclosed.

What a Cook Islands Trust Costs a Non-U.S. Settlor

A Cook Islands trust costs a non-U.S. settlor the same as an American one. The flat legal fee is $15,000 for the trust alone or $20,000 with an offshore LLC. The trustee’s first-year charges bring the total to establish to about $21,000 or $26,000. Each year after costs about $5,000 trust-only or $6,000 with an LLC.

The line that differs is tax compliance. A U.S. settlor pays a CPA $2,000 to $3,000 a year for the foreign-trust filings U.S. law requires. A settlor with no U.S. citizenship, green card, or U.S. tax residence has none of those U.S. filings. The annual cost instead tracks home-country filings, such as Canada’s Form T1141 or New Zealand’s settlor disclosure, plus local adviser rates.

Does a Cook Islands Trust Make Sense for a Non-U.S. Settlor?

Whether a Cook Islands trust makes sense for a non-U.S. settlor turns on one question: how the settlor’s own country will tax the trust. The protection does not vary by country. Cook Islands law disregards judgments from every foreign jurisdiction, the deadlines and the criminal standard of proof burden every creditor equally, and a freezing order from the settlor’s home court stops at the trustee.

Each of the four countries can tax its residents on a foreign trust’s income or distributions, and for some settlors that annual tax cost will outweigh the protection. That judgment cannot be made from the Cook Islands side: it requires an Australian, Canadian, U.K., or New Zealand tax adviser working through the settlor’s numbers before the trust is funded. A settlor whose home-tax answer is workable gets the same structure, the same cost, and the same protection an American settlor gets.