Why Cook Islands Trusts Can Be Unsuccessful in U.S. Courts

Cook Islands trusts are often described as legally robust under offshore law—yet some have still ended badly for settlors in U.S. courts. In this episode, we explain why these outcomes occur, what courts are actually enforcing, and where the real risks lie.

🔎 What You’ll Learn in This Episode:

1️⃣ Why the Assets Often Remain Protected—Yet the Settlor “Loses”

In many U.S. cases, the trust assets themselves remained protected under Cook Islands law and were not seized by creditors.

The problem arose because U.S. courts focused on the conduct of the individual within their jurisdiction, not on the offshore trust. Enforcement targeted the person—not the trust.

2️⃣ Contempt of Court Is the Real Risk

When a U.S. court believes a settlor has the ability to retrieve or influence assets but refuses to comply with a repatriation order, the court may impose coercive sanctions.

These can include:

• Fines

• Daily penalties

• Imprisonment for contempt

This is the most common reason these cases are labeled “unsuccessful” in the United States.

3️⃣ Control and Timing Are Decisive Factors

Courts consistently rule against settlors where they find:

• Excessive retained control (e.g., acting as co-trustee, appointing or replacing protectors)

• Inconsistent behavior, such as personal use of trust assets

• Late transfers, made after a lawsuit or legal threat has already emerged

Such facts are often treated as evidence of intent to defraud a specific creditor.

4️⃣ The Core Takeaway

Cook Islands trusts do not fail because the offshore law collapses. They fail when:

• Planning is done too late

• Control is retained in substance, not just on paper

• Settlor behavior contradicts the structure’s legal design

In these situations, the risk becomes personal enforcement—not loss of the trust assets themselves.

This episode provides a clear, reality-based explanation of why outcomes in U.S. courts hinge on behavior, timing, and control, and why compliant, early planning is essential for any asset-protection strategy.