Please contact us if you have any questions that you would like to discuss further.
Southpac can help you establish a trust, limited liability company, international business company or foundation in either the Cook Islands or Nevis. We also offer New Zealand Foreign Trusts.
Other services we can provide include: corporate managers and directors; trust protectors; foundation council members and enforcers; nominee members and shareholders; and accounting services.
The Cook Islands and Nevis have some of the strongest asset protection trust laws in the world. They also offer flexible and protective international companies, limited liability companies and foundations and have robust privacy laws.
New Zealand foreign trusts provide an opportunity for clients to benefit from the economic and political stability and trusted reputation of New Zealand as a base to manage their assets, without the imposition of New Zealand tax on non-New Zealand sourced income.
Assets placed into a Cook Islands or Nevis trust before anyone has a reason to sue you are completely protected from unknown future creditors. Even if a potential creditor has a cause of action against you when you settle the trust, they will need to bring proceedings in the Cook Islands or Nevis within 1–2 years. In these proceedings they need prove to a court beyond reasonable doubt that your principal intent in setting up the trust was to defraud them and that setting up the trust left you unable to pay them. Neither the Cook Islands nor Nevis recognise foreign judgments, and the Cook Islands, Nevis and New Zealand do not recognise forced heirship legislation either. If you live in a forced heirship jurisdiction then establishing a trust with Southpac can provide you with the freedom to leave your assets to whoever you want to on your death.
LLCs in both the Cook Islands and Nevis have strong protective features, with Nevis LLCs also enjoying the fraudulent transfer provisions found in its trust laws. Any creditor wishing to attack the membership interest of an LLC must bring proceedings in the Cook Islands or Nevis and the sole remedy available is a non-renewable charging order which expires after 3-5 years and does not empower the creditor to exercise any powers or control enjoyed by members.
If you are tax resident in a jurisdiction which does not recognise trusts, both the Cook Islands and Nevis have enshrined strong asset protection features similar to those found in the trust legislation in their foundation laws.
A 15-minute presentation by our Group General Manager of the products we offer in the Cook Islands and its advantages as a jurisdiction is available here. Many of these advantages are also available in Nevis.
The principal differences between an International Business Company (IBC) and a Limited Liability Company (LLC) relate to flexibility and tax treatment. IBCs generally have their own separate identity for tax purposes, whereas LLCs are treated as passthrough entities in many jurisdictions (including the US), with tax liability passing through to their members. LLCs are generally regarded as being more flexible and easy to operate, as membership interests can be divided, shared and transferred with relative ease. The situation is more complex with IBCs as additional shares need to be issued. IBCs are generally more heavily regulated than LLCs. In the Cook Islands, IBCs which are tax-resident in the Cook Islands are liable for tax there whereas LLCs are not.
Not at all. Depending on where you live and are tax resident, setting up a foreign trust can provide tax advantages, both during your lifetime and afterwards, and can be an important part of your estate plan. For example, if used properly a foreign trust can: avoid probate and reduce inheritance/estate taxes; allow people who live in ‘forced heirship’ jurisdictions more freedom as to how to distribute their assets; safeguard business assets for future generations; protect family wealth from being dissipated by children and grandchildren rather than accumulated for future generations; and allow access to foreign investments that wouldn’t otherwise be available. A foreign trust has many uses beyond asset protection.
Yes. There is nothing illegal about establishing an offshore trust. However, you must appropriately report on any offshore trust or other entity to the tax authorities wherever you are tax resident. Failing to report the existence of a foreign trust or bank account held by one can have serious consequences.
A CPA or tax adviser can explain your filing obligations, and the tax implications of setting up an offshore trust, to you in more detail. If you would like us to refer you to a CPA in your jurisdiction who can help you with this please let us know.
Opinions vary on this, and different experts recommend different setups. In our experience, the best asset protection is gained by appointing a foreign trustee as the sole trustee of the trust. This means that the courts where the trust settlor lives will not have any jurisdiction over the trustee and cannot compel the trustee to transfer trust assets to a creditor. For additional protection, a trust protector in a different jurisdiction from both the settlor and the trustee is recommended. Trust assets should be domiciled outside of the settlor’s home jurisdiction and settlor powers over the trust fund should be limited. If a settlor can exercise too much power over the trust then there is a risk that the trust can be ruled invalid and the settlor could even be imprisoned for contempt of court in certain circumstances.
Some clients and attorneys prefer to set up trusts with both a Southpac trustee, which holds the trust assets and keeps the trust registered as a foreign trust, and a domestic trustee, who manages the trust fund and is sometimes referred to as a managing trustee. For some, this allows the trust to be treated as a domestic trust for tax purposes. We can accommodate this setup but generally need to charge a higher fee for it because of the additional risk and administrative work involved. The Southpac trustee must be informed of all trust assets and every decision taken by the managing trustee so that it can acknowledge and record these.
Not necessarily. Depending on the circumstances, it may be possible to set up a trust which includes an Exceptions to Trust Clause (also known as a Jones Clause). A Jones Clause enables the trustee to pay out funds from the trust to the person who is suing you if they obtain a final and non-appealable judgment against you. This power needs to be available to prevent the transfer of assets to the trust as being fraudulent. However, those funds are only available to the creditor where you have insufficient assets outside of the trust to meet the judgment, and will be protected from any other potential future creditor. Holding assets in an international trust can be a valuable bargaining chip for settlors involved in litigation and can be used to leverage better settlements.
Almost anything, provided it is transferred to or acquired by the trustee properly: bank accounts, investment accounts, precious metals, company shareholdings and membership interests, insurance policies, intellectual property, personal possessions and real estate are all commonly held trust assets. There are some exceptions depending on the laws of where you live. For example, real estate in some countries cannot be owned by a foreign trust, and an S-corp in the US cannot be either.
If asset protection is your priority then having real estate owned by a trust can be problematic because the real estate is still situated in (and subject to) the jurisdiction of the courts where it is located. However, it may be possible to enter into an arrangement where a loan is secured against the property and the loan proceeds are settled into the trust. This makes the real estate less attractive to potential future creditors as it is encumbered.
Cryptocurrency and other virtual assets can be held in a trust (or by a company owned by a trust). Some of the custodians we work with can offer managed cryptocurrency accounts.
Yes, many of our clients set up trusts which hold shares or membership interests in companies domiciled in Nevis, the Cook Islands or elsewhere. These companies are then used as holding or operating companies. This kind of structure offers clients additional flexibility and control as they can manage underlying companies and the assets they hold.
If you manage a company owned by a trust you need to remember that the trustee is the owner of the company and has the same rights as any other owner or shareholder. You are effectively managing the company’s assets for the trustee, and must keep the trustee informed of any major transactions and asset movements. You must also provide annual company accounts to the trustee. Our accounting services team can help you prepare these if you wish. Furthermore, any transactions you enter into must be for the benefit of the company. You cannot make distributions to yourself without obtaining the trustee’s consent. Doing this would probably make the trust invalid.
For additional protection clients may choose to appoint a Southpac corporate manager to manage an underlying company. The corporate manager will manage the company in accordance with the client’s wishes provided these are in the best interests of the company and are not issued under duress.
Many trusts have a trust protector appointed. This is a person or company which oversees the trustee and ensures the trustee is doing its job properly. Like trustees, they must uphold the beneficiaries’ best interests. The protector is sometimes a trusted advisor or associate of the trust settlor, or sometimes a company which has experience in acting as a protector and understands the role. A settlor can be the protector of their own trust, but we do not recommend this as it can give the settlor too much control, especially if they fall under duress.
The protector usually has the power to remove and replace the trustee and to change the governing law/jurisdiction of the trust. They also usually have a right of veto over important trustee actions such as making distributions.
Southpac can provide corporate protector services through its protector companies domiciled in the Cook Islands, Nevis and New Zealand.
An irrevocable trust is one from which the settlor cannot reclaim their assets. Almost all of the trusts we administer are irrevocable because they would not offer effective asset protection if settlors were able to revoke them – the settlor would still retain too much power over the assets and could retrieve them from the trust if a court ordered them to.
If the settlor is a beneficiary of the trust, they can still receive assets from it if the trustee agrees to make a distribution to them.
While some irrevocable trusts cannot be altered, most of the ones we work with can, and have flexible trust agreements which can be amended if necessary.
If you would like to establish a trust or other entity with Southpac, please contact us to register your interest and a member of our Commercial Services Team will be in touch. They will let you know what application forms need to be completed and also what due diligence we will need from you.
Once you have provided the application forms and due diligence documentation, our compliance team will review what you have sent. We may need to request further information from you, such as the source of any assets you are looking to settle into a trust.
After initial compliance is passed and you have paid the entity establishment fees, we will provide a trust agreement (or equivalent document for other entities), for your review. If you are using your own attorney to draft documentation for the entity please send this to us before you sign it so that we can review it first.
When the entity documentation has been agreed and executed the entity is then forwarded to our trustee office for final review and, should no issues arise, registration.
The registration process can be completed in 2-3 weeks. This is assuming all due diligence is submitted in a timely manner and passes compliance, payment is made when requested and there are no unforeseen issues or changes required to entity documentation.
Please note that opening a bank account for an entity is a separate process which takes place after the entity has been established. This usually takes anything from two weeks to three months, depending on the bank involved.
Please contact us for full information on our fees. We offer inclusive full-service fixed fee trust packages starting at US$7,000 per year, but individually-priced products are also available at lower cost depending on your needs. We are also happy to negotiate bespoke all-inclusive packages.
All of our application documentation can be signed electronically or via digital signature. Affidavits of solvency may be digitally signed provided they also have a valid digital or physical witness. Digital signatures are permitted on LLC operating agreements and IBC Memorandum and Articles do not need to be signed. Only Trust and Foundation Agreements require ‘wet ink’ signatures.
Please note that some of the banks we work with require original, wet ink, signatures on account opening documentation and bank instructions.
‘Controlling persons’ of trusts, foundations and companies (this can include trust settlors and beneficiaries) may be subject to tax depending on what transactions take place, what assets are involved and where those persons are tax resident. This is a complex area so please seek tax and legal advice before proceeding. We cannot provide this to you.
The tax position for these entities as far as the Cook Islands, Nevis and New Zealand are concerned is as follows:
Southpac is required by law to obtain and maintain individual due diligence on all trust settlors, co-trustees, protectors and certain beneficiaries, as well as information on the assets and transactions of all trusts, foundations and companies that are registered with us. We carry out client and entity risk reviews every 1-3 years and must sometimes request updated due diligence in connection with this process. We appreciate clients’ co-operation in providing all information requested.
If we hold due diligence on you and you change your residential address, please let your regular point of contact know so that we can obtain an updated proof of address from you.
If you have a trust, company or foundation registered with us you will need to provide us with entity accounts once per year. These can either be prepared by your CPA or we can prepare these for an additional fee. Please contact our accounting services team for more information.
Southpac has spent over 40 years crafting its reputation as a responsible fiduciary and wealth planner. That hard-earned reputation would be destroyed overnight if any of its staff or trustee companies were to mismanage or misappropriate trust assets. We do not wish to sink our own ship.
Clients can increase their comfort levels by using a trusted advisor or professional fiduciary (ideally in a different jurisdiction from both the client and the trustee) to act as a trust protector. The protector provides oversight over the trustee. In many cases, the trustee is not allowed to act without the protector’s consent. For example, in many trusts, the trustee may only make a distribution if the protector consents to it.
All Southpac companies are covered by professional indemnity insurance for additional peace of mind.
Initially you will deal with a member of our Commercial Services Team who will help you get your entity set up. On or before establishment you will be connected with a Trust and Legal Services Officer, who is a qualified attorney, from our Legal and Client Services Team. This person will be your primary point of contact afterwards.
If you would like to open a bank account for your entity or another entity owned by it we will put you in touch with our Head of Banking, Investment and Commercial Services at some point during the establishment process. They can provide you with information about the custodian banks and SEC-registered investment advisors Southpac works with, help you identify the best fit and make introductions.
Most of our client-facing staff are based in Southpac’s New Zealand office and are usually available between 6am–3pm Monday-Friday NZ time. These persons act as a point of liaison between clients and Southpac’s trustee offices. They are not themselves trustee officers and all trustee decisions and actions are taken in the jurisdiction where the trust is registered.
Depending on the time of year, NZ is 4-5 hours ahead of China and South East Asia, 8-9 hours ahead of Dubai, 10-12 hours ahead of mainland Europe, 11-13 hours ahead of the UK, 16-18 hours ahead of the US East Coast and 19-21 hours ahead of the US West Coast.
It depends on the entity type and how you use it. All entities have an annual renewal fee which is itemised in our fee schedule, but there can be some additional costs.
If you have set up a trust with us, you will need to pay additional fees if you need to ask the trustee to perform transactions involving that trust, such as accepting assets into it, opening a bank account for it, entering into an agreement with a third party or making a distribution. Most charges for this kind of work are between US$700 and US$950 per transaction depending on the level of complexity.
Establishing a bank account costs around US$1,500 to US$2,000 depending on the bank we are working with. There is also an annual account maintenance fee which can vary between US$500 and US$1,200 depending on the custodian.
If you have a company or foundation and Southpac only serves as the registered agent you will not generally need to pay additional fees. However, these may be incurred on an hourly rate basis if, for example, we need to provide corporate due diligence for a bank account for an underlying company; if we are providing corporate management services for the company or foundation; or if you wish us to file a Simplified Tax Return on behalf of a Nevis company.
We don’t bill for reasonable email correspondence. If you have a question, feel free to ask it. We won’t answer and then bill you $100 for the privilege. If the question is more complex and answering it will take time, expertise and research that we need to charge you for, we’ll let you know first so that you can choose if you want to go ahead. If you have an all-inclusive fixed fee agreement in place with us then this will include all correspondence.
This can be achieved through a Cook Islands or Nevis private trustee company. This is a company established in one of those jurisdictions which is authorised to act as the trustee of a trust in the same jurisdiction. If you would like to pursue this option Southpac can act as both a registered office for the trust and a registered agent for the private trustee company.
It depends on the property, but it must be added properly to ensure the transfer is legally effective. All property added to a trust must be accepted by the trustee in order to form part of the trust fund and be protected. This includes property added to a company owned by the trust. When you are ready to add property to a trust or underlying company, you can liaise with your point of contact who can walk you through the process and let you know what is required and what the likely fees will be.
Any beneficiary who wants to request a trust distribution should reach out to their point of contact who can clarify what they will need to provide and what the likely cost of dealing with the request will be. The trustee needs to be satisfied that any distribution requested is appropriate and for the benefit of the beneficiary, and not for any unlawful purpose. As a result, we ask beneficiaries to provide supporting information for distributions. Please do not be offended by these requests. Our trustee companies are heavily regulated and client files are reviewed to ensure that trustee companies are dealing with distribution requests appropriately.
If you want to make a distribution from a company owned by the trust which you control, you will need the trustee’s consent to make this. Please get in touch with your point of contact to work through this process.
We normally advise clients to allow 5-10 working days to complete any trust transaction (including any addition or distribution of trust assets), depending on complexity. The trustee will always need some kind of supporting information so that it can be satisfied that the transaction is in the best interests of the beneficiary concerned, and is for lawful reasons. This is to help the trustee discharge its fiduciary duties and also to satisfy local regulatory laws. It does not mean we do not trust our clients and we appreciate your co-operation in providing everything we ask for.
All transactions must be fully recorded and evidenced so that we have a record of the trustee’s decision and reasons for it. Gathering and considering the information we need can take time and this is why we recommend allowing 1-2 weeks.
If you anticipate that a transaction will need to be completed urgently please let your point of contact know at the earliest possible opportunity so that we can let you know what we will need to complete it and can minimise the time it takes to finalise.
Yes. Our accounting team can prepare annual or more frequent accounts which comply with generally accepted accounting principles for any Southpac entity. If you would like to use this service please contact us. We recommend that trust accounts are produced annually.
