Nevis Trusts

A Nevis trust is an irrevocable trust established under the Nevis International Exempt Trust Ordinance (NIETO), administered by a licensed Nevis trustee for the benefit of non-resident settlors and beneficiaries. For U.S. residents seeking offshore asset protection, Nevis is the second most commonly used trust jurisdiction after the Cook Islands, and the two share a similar statutory philosophy: short limitation periods, elevated burdens of proof, non-recognition of foreign judgments, and a legal framework designed to make creditor enforcement expensive and unlikely to succeed.

Nevis enacted its original trust legislation in 1994, a decade after the Cook Islands established its International Trusts Act. The statute has been amended several times since then, most recently with NIETO 2020, which modernized the framework while preserving its core asset protection features. The result is a jurisdiction with strong statutory protections, lower costs than the Cook Islands, and a growing track record of favorable outcomes for settlors in U.S. litigation.

How the Nevis Trust Works

The mechanics of a Nevis trust are similar to those of other offshore trusts. A U.S. person (the settlor) executes a trust deed governed by Nevis law, appointing a Nevis-based trustee to hold and administer assets for the benefit of named beneficiaries. The settlor is typically also the primary beneficiary. The trustee must be a Nevis corporation, a Nevis LLC, a licensed Nevis trust company, or a Nevis-licensed attorney. At least one trustee must be a Nevis resident entity at all times.

The trust deed is a private document. It is not filed publicly and its terms are not disclosed to any government registry. The only registration requirement is filing Form T-1 with the Nevis Registrar within 30 days of execution, which records the trust’s name, the registered office, and the trustee’s identity. Beneficiary information, asset details, and the substantive terms of the trust remain confidential.

Most Nevis trust structures incorporate a Nevis LLC owned by the trust. The settlor serves as LLC manager during ordinary times, maintaining day-to-day control over investments and financial accounts. When a creditor threat materializes, the trustee removes the settlor as manager and assumes control of the LLC, placing the assets beyond the practical reach of any U.S. court order. This layered approach provides both functional control in peaceful periods and structural protection under pressure.

The settlor may also appoint a protector, an independent party who oversees the trustee’s conduct without assuming fiduciary responsibility for the trust’s assets. The protector can remove and replace trustees, approve or veto distributions, and ensure the trust is administered consistently with the settlor’s intentions. Nevis law expressly authorizes the protector to direct the trustee on investments and distributions, and provides statutory protection to trustees who act in accordance with a protector’s directions absent willful misconduct.

Statutory Protections

The NIETO contains several provisions that create substantial barriers to creditor enforcement.

Foreign judgments obtained against the settlor or the trust are not enforceable in Nevis. A creditor holding a U.S. judgment cannot register or domesticate that judgment in Nevis courts. Instead, the creditor must retain local Nevis counsel on a non-contingent fee basis and initiate an entirely new proceeding under Nevis law. This requirement alone eliminates most creditor claims, because the cost and complexity of foreign litigation exceeds what most judgment creditors are willing to undertake.

Before filing any action against trust property, the creditor must post a bond with the Nevis court. The statutory minimum is $25,000, and courts have discretion to require bonds of $100,000 or more depending on the circumstances. The bond is forfeitable if the creditor’s claim fails.

The burden of proof for fraudulent transfer claims under Nevis law is beyond a reasonable doubt, the criminal standard. This is a significantly higher threshold than the preponderance of the evidence or clear and convincing evidence standards that apply in U.S. fraudulent transfer litigation. The creditor must prove that the settlor established or funded the trust with the specific intent to defraud that particular creditor, not creditors generally.

The statute of limitations is short. A creditor whose claim existed at the time of the transfer has one year from the date of the transfer to bring a fraudulent disposition action. A creditor whose claim arose after the transfer has two years. Once these periods expire, the transfers are beyond challenge regardless of the settlor’s intent. The Statute of Elizabeth, the historical foundation of Anglo-American fraudulent transfer law, has been expressly abolished in Nevis and does not apply to international trusts.

Nevis trusts may have unlimited duration. The rule against perpetuities does not apply to international exempt trusts, which allows the structure to operate across multiple generations without the time limitations that constrain domestic U.S. trusts in most states.

Nevis Trust vs. Cook Islands Trust

The two jurisdictions share the same structural philosophy, and both are effective asset protection vehicles. The differences are in degree rather than in kind.

The Cook Islands has a longer track record. Its trust legislation dates to 1984, and Cook Islands trusts have been tested in U.S. litigation more extensively than trusts from any other offshore jurisdiction. The Cook Islands trustee market is larger, with more licensed institutional trustees offering longer operating histories and deeper institutional resources. The regulatory infrastructure is more developed, with mandatory professional indemnity insurance, independent audits, and active supervision by the Financial Supervisory Commission.

Nevis offers lower costs. Setup fees for a Nevis trust are typically $3,000 to $5,000 less than a comparable Cook Islands structure, and annual trustee fees tend to be modestly lower as well. The bond requirement creates an additional deterrent that the Cook Islands does not impose. For clients whose primary concern is cost efficiency rather than maximum institutional depth, Nevis can be the better choice.

The burden of proof is the same in both jurisdictions (beyond a reasonable doubt). The limitation periods differ slightly: one year for existing creditors and two years for future creditors in Nevis, compared to a uniform two-year period in the Cook Islands. Nevis requires the creditor to post a bond; the Cook Islands does not. Both jurisdictions refuse to recognize foreign judgments and require creditors to re-litigate locally.

For a detailed statutory comparison covering burden of proof, limitation periods, trustee markets, regulatory oversight, and litigation history, see Cook Islands trust vs. Nevis trust.

Costs

A Nevis trust typically costs $10,000 to $18,000 to establish, including U.S. legal fees, Nevis trustee onboarding, and formation of any ancillary entities. Annual maintenance costs run $2,500 to $5,000 for trustee administration, plus the same U.S. tax compliance costs that apply to any foreign trust structure ($3,000 to $5,500 for Forms 3520, 3520-A, FBAR, and Form 8938 preparation).

These costs are lower than a Cook Islands trust but still substantial enough to require a meaningful asset base to justify the structure. Clients with transferable liquid assets below $500,000 should evaluate whether a standalone Nevis LLC provides sufficient protection at a lower cost before committing to a full trust structure.

Tax Treatment and Reporting

Nevis imposes no income tax, capital gains tax, estate tax, or withholding tax on international exempt trusts. But this local tax neutrality is irrelevant for U.S. persons. A Nevis trust established by a U.S. settlor is classified as a foreign grantor trust, and all income, gains, and deductions flow through to the settlor’s individual U.S. tax return. The trust does not reduce or defer any U.S. tax obligation.

The reporting requirements are identical to those for any foreign trust. The settlor must file Form 3520 annually with the IRS, and the trust must file Form 3520-A. Foreign financial accounts held by the trust or its subsidiary entities must be reported on FinCEN Form 114 (FBAR) and Form 8938 under FATCA. Penalties for non-compliance start at $10,000 per form per year and can escalate to 5% of the trust’s gross assets for continued failures.

For a complete discussion of offshore trust reporting obligations, see IRS reporting requirements.

Limitations

A Nevis trust shares the same structural limitations that apply to all offshore trusts. The settlor must give up direct control over assets for the impossibility defense to function. The structure performs well in state court but is more vulnerable in bankruptcy, where federal courts have broader jurisdictional reach and the Bankruptcy Code’s ten-year lookback for self-settled trust transfers applies. Transfers made when the settlor is insolvent or in anticipation of a specific claim are exposed to fraudulent transfer challenge regardless of the jurisdiction.

The Nevis-specific limitation is the smaller trustee market. The Cook Islands has approximately a dozen licensed institutional trustees with decades of operating history. Nevis has fewer active licensed trustees serving international clients, and most have shorter track records. This does not mean Nevis trustees are inadequate, but it does mean fewer options and less competitive pressure on service quality and fees. Clients who prioritize maximum institutional depth and the most tested litigation track record should evaluate the Cook Islands trust before committing to Nevis.

The litigation track record is the other difference. Nevis trusts have produced favorable outcomes in U.S. proceedings, but the volume of reported cases is substantially lower than the Cook Islands. The statutory protections are comparable on paper, but they have been tested less frequently under real adversarial pressure.

When a Nevis Trust Makes Sense

A Nevis trust is appropriate for U.S. residents with significant litigation exposure and transferable liquid assets who want offshore protection at a lower cost than the Cook Islands. The structure works best for clients whose risk profile does not require the maximum institutional depth and litigation-tested track record that the Cook Islands provides, but who need more protection than a domestic trust or standalone Nevis LLC can deliver.

Clients choosing between jurisdictions should focus on three variables: the size of the asset pool (larger pools justify Cook Islands costs), the severity of the anticipated threat (higher-stakes litigation favors the more tested jurisdiction), and the client’s comfort level with the trustee options available in each market. For many clients with $500,000 to $2 million in transferable assets, Nevis offers the strongest protection available within their budget.