A trust is formed by a settlor who transfers assets to a trustee to manage those assets under certain conditions specified in the trust agreement, for the benefit of the beneficiaries of that trust. Based on this assertion, the trustee needs to be an independent person or entity to whom the settlor will relinquish possession and management of the assets intended for the trust, relying on the trustee to do so in a proper manner for the benefit of the beneficiaries.
Relinquishing possession and control of the assets may be a difficult step for the settlor when creating a trust. The settlor must be confident that the trustee will manage those assets in an efficient and trustworthy manner.
A common requirement in offshore jurisdictions is that a trust must have a corporate trustee registered within that jurisdiction where the trust is being established in order to take advantage of favorable trust laws. This is the case with any international trust settled in the Cook Islands or Nevis. This condition requires that settlors not only relinquish possession and management of the assets in favor of the trustee but also choose a corporate offshore trustee that they may not personally know or trust sufficiently to manage those assets.
However, alternatives are available for the settlor or those they trust to indirectly maintain certain control or input on how the assets should be managed while simultaneously complying with offshore regulations that require a corporate trustee in the designated jurisdiction. This article provides details on the benefits of using Private Trustee Companies (PTCs) to act as trustees in these situations.
Nevis and the Cook Islands are favored jurisdictions for their wealth management and asset protection laws, making them attractive options for establishing such structures. These jurisdictions also allow the creation and use of PTCs. Simply put, a PTC is a company created by a person to act as trustee of a trust. In having control of that company, that person, usually the settlor, can maintain full indirect control of assets within a trust without acting as trustee in their personal capacity.
In Nevis, Limited Liability Companies (LLCs) are frequently employed for organizing business and investment endeavors, offering members protection from personal liability. Additionally, they can be utilized to act as a PTC. Settlors can establish an LLC with the specific intent for it to function as a PTC. The settlor will often serve as the member and manager of the PTC; alternatively, a trusted advisor or family office may assume either or both of these roles. Once the PTC is in place, the settlor can then create a Nevis trust and designate the PTC as the sole trustee of the trust. This aligns with the Nevis International Trust Ordinance 1994, which permits the use of a PTC to act as a trustee. By setting up an LLC as a PTC, settlors can protect their assets from creditors or legal disputes by enjoying the asset protection benefits provided by the Ordinance without needing a specific trustee license and still control trust assets through their position as manager of the PTC.
While in our experience LLCs are most commonly used as PTCs in Nevis, the Ordinance also permits Nevis International Business Companies (IBCs) or Nevis Multiform Foundations to act as PTCs.
Like Nevis, the Cook Islands is well-known for the exceptional asset protection features available through its international trusts. Under the Cook Islands International Trusts Act 1984, a Cook Islands international trust must have at least one Cook Islands-based company acting as a trustee. While in most cases this will be a licensed Cook Islands trustee company, an alternative option is for settlors to form a Cook Islands IBC with the specific intent for it to act as a PTC. The settlor or their advisor would serve as the shareholder and/or director of the PTC. Once the PTC is established, the settlor can then create a Cook Islands trust and designate the PTC as its sole trustee.
A Cook Islands PTC can act as the trustee of up to three Cook Islands international trusts. Changes to Cook Islands legislation which would enable LLCs, as well as IBCs, to act as Cook Islands PTCs are currently under discussion.
Another important benefit of using PTCs is that settlors can enjoy enhanced privacy. Nevis and the Cook Islands do not maintain public registers of beneficial ownership, nor do they have centralized registers of managers and members of LLCs or shareholders and directors of IBCs.
In summary, utilizing a PTC in Nevis or the Cook Islands provides a powerful tool for asset protection, privacy, and wealth management while maintaining compliance with the relevant legislation. These jurisdictions offer a secure and confidential environment for structuring international arrangements, making them ideal for individuals looking to secure their assets and legacy for future generations.
Southpac can assist with the creation of PTCs and trusts in both Nevis and the Cook Islands. We invite you to reach out to us today to explore how we can assist you in securing your assets and legacy. We are the go-to company for those seeking the best offshore strategies for wealth protection, management, and succession, providing all the means and structures you need in one convenient location. Please do not hesitate to contact us to learn more about the various types of structures and services we offer.
Disclaimer: the article above is for information purposes only. It is not intended to constitute legal or tax advice. If you are planning to establish or place assets into an offshore structure, please consult beforehand with legal and tax professionals in your jurisdiction(s) of tax residence.
