Cook Islands International Trust Act 1984

Summary of Cook Islands International Trust Act 1984

1. Introduction

The International Trusts Act 1984 (Cook Islands) sets out a specialized framework for the creation, registration, and management of international trusts, aiming to offer significant benefits in terms of asset protection, confidentiality, and flexible legal structures.

2. Definition and Scope

Under the Act, a trust is considered “international” if at least one of its trustees (or certain key power-holders) is a foreign or international company or a trustee company, and all the beneficiaries are non-resident in the Cook Islands. While the Act preserves existing Cook Islands trust laws, it modifies various traditional rules to facilitate the use of the jurisdiction by international clients.

3. Key Modifications to Traditional Trust Rules

The Act relaxes and updates historical common law constraints. It permits a perpetuity period of up to 100 years, introduces a “wait-and-see” rule to prevent premature invalidation under the rule against perpetuities, abolishes the rule against double possibilities, and eliminates certain limitations on the accumulation of income. It also includes provisions clarifying the application of the rule in Saunders v. Vautier, allowing extended accumulations if expressly stated in the trust instrument.

4. Registration and Administration

A dedicated Registrar oversees international trust registration. The process involves filing specific documents, such as a certificate from a trustee company affirming the trust’s international status and a notice indicating the trust’s registered office. Once registered, the trust receives an annual certificate of registration that must be renewed each year. The Act also sets requirements for displaying the trust’s name and providing an address for service at its registered office.

5. Confidentiality and Asset Protection

Strict confidentiality provisions protect information about international trusts. Proceedings (except criminal cases) generally take place in private (in camera), and case details cannot be published without court authorization. The Act offers robust asset protection, stating that a trust is not void or voidable due to the settlor’s bankruptcy or liquidation unless it was clearly established with the intent to defraud creditors. This places a significant burden of proof on those alleging fraudulent intent.

6. Interaction with Other Legislation

To encourage international use of Cook Islands trusts, the Act limits the application of certain local laws that would otherwise impose fees, taxes, or additional reporting requirements. However, some core statutes—such as the Cook Islands Monetary Board Act, the Offshore Banking Act, the International Companies Act, the Offshore Insurance Act, and the Trustee Companies Act—remain applicable. Additionally, the Development Investment Act 1977 may apply if the trust conducts business or acquires assets within the Cook Islands.

7. Ministerial Powers

The Minister of Finance retains broad authority to prohibit the registration of any trust or to direct an existing international trust to cease carrying on its business. In special cases, the Minister may grant exemptions from certain requirements, and these exemptions may be revoked or varied at any time.

8. Offences and Penalties

Breaches of the Act—such as failing to meet registration requirements or disclosing confidential trust information—carry significant penalties. Offenders may face fines of up to US$10,000 or imprisonment for up to one year, or both, reflecting the seriousness of maintaining compliance and confidentiality.

Conclusion

Overall, the International Trusts Act 1984 provides a modernized and internationally oriented legal framework. By facilitating extended perpetuity periods, granting considerable asset protection, ensuring confidentiality, and limiting the reach of certain local regulations, it positions the Cook Islands as a favorable jurisdiction for establishing and managing international trusts.

Full Version of the Cook Islands International Trust Act 1984

SECTION 1
International Trusts Act 1984 (No. 14) – Title and Contents

Title
An Act to provide for International Trusts.
Date of Assent: 27 July 1984

PART I – PRELIMINARY

1. Short Title
2. Interpretation
3. Saving of existing laws
4. Registrar and Deputy Registrar
5. Application of this Act

PART II – MODIFICATION OF THE LAWS APPLICABLE TO INTERNATIONAL TRUSTS
6. Power to specify perpetuity period
7. Necessity to wait and see
8. Abolition of the rule against double possibilities
9. Abolition of the rule against accumulations
10. Application of the rule in Saunders v Vautier
11. Presumption against avoidance of trusts
12. Charitable and Purpose Trusts
13. Investments

PART III – REGISTRATION
14. Application for registration
15. Registration
16. Annual certificate of registration
17. Registration of trust instrument
18. Registered office
19. Proceedings by or against

PART IV – APPLICATION OF OTHER ACTS
20. Interpretation
21. Application of other Acts to international trusts

PART V – MISCELLANEOUS
22. Resident beneficiaries
23. Secrecy
24. Translations
25. No action to lie against certain persons
26. Power of Exemption
27. Prohibitions by Minister
28. Penalties
29. Regulations

SECTION 2
International Trusts Act 1984 (No. 14) 

PART I – PRELIMINARY

1. Short Title
(1) This Act may be cited as the International Trusts Act 1984.

2. Interpretation
In this Act, unless the context otherwise requires:

• “Court” means the High Court of the Cook Islands.
• “Disposition” includes the disposal of an interest in or right over property by the exercise of a power of appointment, power of maintenance, power of advancement, or other authority, and includes conferring such powers or authority.
• “Foreign company” means a foreign company under the International Companies Act 1981–82.
• “Instrument” means any deed, will, codicil, or document giving effect to a disposition.
• “International Trust” means a trust or disposition of property registered under this Act in respect of which:
  (a) At least one of the trustees, donors, or holders of a power of appointment, maintenance, or advancement is either:
      (i) a registered foreign company; or
      (ii) an international company; or
      (iii) a trustee company; and
  (b) The beneficiaries are at all times non-resident.
• “Minister” means the Minister of Finance.
• “Monetary Board” means the Cook Islands Monetary Board established under the Cook Islands Monetary Board Act 1981.
• “Non-resident” means:
      (i) a foreign company; or
      (ii) a trustee company; or
      (iii) a subsidiary of a trustee company that is either an international company or a foreign company.
• “Power of appointment” includes a discretionary power to transfer, grant, or create a beneficial interest in property (with or without valuable consideration from the beneficiary of the power), and may be subject to the consent of a third party.
• “Prescribed” means prescribed by regulation, or if there is no relevant regulation, as determined by the Registrar.
• “Property” includes any estate or interest in real or personal property and anything in action.
• “Registrar” means the Registrar of International Trusts and includes a Deputy Registrar.
• “Registered foreign company” means a foreign company registered under Part V of the International Companies Act 1981–82.
• “Trust” includes all trusts, settlements, dispositions of or in relation to property, powers in the nature of trusts or coupled with a trust, and powers of appointment (including a general power), whether testamentary or created inter vivos. The expressions “trust” and “trustee” extend to resulting, implied, or constructive trusts, and to cases where the trustee has a beneficial interest in the trust property, as well as the duties of a personal representative. “Trustee” includes a personal representative and a donor or holder of a power (including a general power of appointment).
• “Trustee Company” means a company registered as a trustee company under the Trustee Companies Act 1981–82.

3. Saving of existing laws
The laws applicable to trusts in force in the Cook Islands immediately before the commencement of this Act shall continue in force and shall apply to international trusts, except insofar as they are inconsistent with or modified by this Act.

4. Registrar and Deputy Registrar
(1) The Registrar of International and Foreign Companies appointed pursuant to section 8 of the International Companies Act 1981–82 shall be the Registrar of International Trusts.
(2) Any Deputy Registrar of International and Foreign Companies or officer appointed pursuant to section 8 of the International Companies Act 1981–82 shall also be a Deputy Registrar for the purposes of this Act.
(3) Anything authorized or required to be done by the Registrar under this Act may be done by a Deputy Registrar.
(4) All courts, judges, and judicial officers shall take judicial notice of the seal and the signature of the Registrar and any Deputy Registrar.

5. Application of this Act
(1) Unless the context otherwise requires, the provisions of this Act apply to:
    (a) International trusts; and
    (b) All registered instruments, whether taking effect before or after the commencement of this Act.

(2) A trust registered under this Act shall be a valid trust notwithstanding that it may be invalid according to the law of the settlor’s domicile, residence, or place of current incorporation.
(3) In determining any question concerning the existence or validity of a trust registered under this Act, the Court shall apply:
    (a) The provisions of this Act;
    (b) The laws of the Cook Islands; and
    (c) Any other law which would validate the trust, if to do so would validate the trust.

PART II – MODIFICATION OF THE LAWS APPLICABLE TO INTERNATIONAL TRUSTS

6. Power to specify perpetuity period
(1) For the purposes of this Act, and notwithstanding any rule of law or statutory provision to the contrary, where an instrument creating any disposition or trust expressly provides, the perpetuity period applicable to that disposition or trust under the rule against perpetuities may be any period not exceeding 100 years, as specified in the instrument.
(2) Where a period is specified under subsection (1) in an instrument creating a general or special power of appointment, that period shall apply to any disposition made or trust created in exercise of that power.

7. Necessity to wait and see
(1) Where, apart from this section, a disposition or trust would be invalid as infringing the rule against perpetuities, it shall be treated until such time (if any) as it becomes certain that the vesting must occur, if at all, after the end of the perpetuity period—and for a further period of 21 years—as if it were not invalid. Its becoming so certain does not affect the validity of anything previously done in relation to the interest disposed of, such as advancement or application of income.
(2) Where, apart from this section, a disposition conferring a general power of appointment would be invalid as infringing the rule against perpetuities, it shall be treated (until it becomes certain that the power cannot be exercised within the perpetuity period, and for a further period of 21 years) as if it were not invalid.
(3) Where, apart from this section, a disposition conferring any power, option, or other right would be invalid as infringing the rule against perpetuities, that disposition shall be treated as valid for a period of 100 years from the date the instrument creating it takes effect, and shall be invalid only if and to the extent that the right is not fully exercised within that period.

8. Abolition of the rule against double possibilities
The rule of law prohibiting the limitation, after a life interest, of an interest in land to an unborn person of an unborn person is abolished, without prejudice to any other rule relating to perpetuities.

9. Abolition of the rule against accumulations
(1) Where property is settled or disposed of so that the income thereof may or must be accumulated, the power or direction to accumulate is valid if the disposition of the accumulated income is or may be valid, but not otherwise.
(2) Nothing in this section affects any power of a person to terminate an accumulation for that person’s benefit, or any jurisdiction or power of the Court or of a trustee under any Act or law or any instrument creating a trust.
(3) For the purposes of this Act, the following are repealed:
    (a) Sections 44 and 45 of the Property Law Act 1952;
    (b) Section 7 of the Property Law Amendment Act 1963.
These repeals are deemed never to have applied to any power to accumulate in connection with the law applicable to international trusts.

10. Application of the rule in Saunders v Vautier
(1) Where an instrument contains an express provision to accumulate income for a period not exceeding the maximum perpetuity period under this Act, the trustee may, in absolute discretion and subject to the express terms of the instrument, give effect to that direction. This applies even if a beneficiary requests immediate distribution and can give a valid discharge to the trustee.
(2) Notwithstanding any rule of law or equity, no power to vary the terms of a trust or disposition so as to remove or vary a direction to accumulate shall apply where subsection (1) applies.

11. Presumption against avoidance of trusts
Notwithstanding any law of the settlor’s domicile, residence, or place of incorporation—and regardless of whether the trust is voluntary or without valuable consideration, or made for the benefit of the settlor’s spouse or children—an international trust shall not be void or voidable in bankruptcy or liquidation proceedings or at the suit of creditors unless it is proven to the satisfaction of the Court that it was made with the intent to defraud the creditors of the settlor. The onus of proof lies on those creditors.

12. Charitable and Purpose Trusts
(1) Notwithstanding any rule of law to the contrary, an international trust shall be deemed charitable or for a purpose (whether charitable or not) if it substantially relates to one or more of the following objects:
    (a) The relief of poverty;
    (b) The advancement of education;
    (c) The advancement of religion;
    (d) Other purposes beneficial to the community;
provided that the purpose need not be of a public nature; it may benefit a private individual or class of persons, with or without a power of appointment, and the trustee may have discretion to defer enjoyment of any benefit for any period not exceeding the perpetuity period applicable to the trust.
(2) A trust established by a non-resident of the Cook Islands shall not be void or voidable merely because its funds are held for a purpose, charitable or otherwise, provided the trust must vest in natural persons within the perpetuity period. Such a trust is enforceable by the settlor or the settlor’s personal representatives or by any person named in the instrument as the person appointed to enforce it, even if that person is not a beneficiary.

13. Investments
(1) A trustee must not invest any of the trust funds in his or its hands except in securities, assets, or property expressly or implicitly authorized by the trust instrument.
(2) Where the instrument authorizes investment in “trustee investments” as permitted under Cook Islands law, it shall be deemed to authorize any investments declared by regulations under this Act to be trustee investments.

PART III – REGISTRATION

14. Application for registration
Application for registration of a trust as an international trust must be made to the Registrar in the prescribed form and be accompanied by the prescribed fee.

15. Registration
(1) No trust shall be registered as an international trust until the following are filed with the Registrar:
    (a) A certificate from a trustee company certifying that the trust, upon registration, will be an international trust; and
    (b) Notice of the name and registered office of the trust.
(2) Upon receipt of these documents, the Registrar shall register the trust in the Register of International Trusts and issue a certificate of registration in the prescribed form.
(3) A certificate of registration under the hand and seal of the Registrar is conclusive evidence that all requirements under this Act have been met and that the international trust named therein was duly registered under this Act.

16. Annual certificate of registration
(1) A certificate of registration issued under section 15(2) is valid for one year from the date of registration stated in the certificate.
(2) Renewal of registration requires:
    (a) An application for renewal in the prescribed form; and
    (b) Payment of the prescribed fee.
(3) Subject to section 26, no application for renewal shall be granted if filed or paid after the date of expiry of the last certificate.
(4) Each renewal of registration is valid for one year from the date of expiry of the last certificate.

17. Registration of trust instrument
Any trustee may provide the Registrar with a copy of the trust instrument (or any amendment) certified in the prescribed manner. The Registrar shall register it as a true copy and file it.

18. Registered office
(1) The registered office of an international trust shall be the registered office of the registered foreign company, international company, or trustee company which is a trustee.
(2) The address for service of documents on an international trust is its registered office.
(3) Every international trust shall display its name conspicuously at its registered office in easily legible letters.

19. Proceedings by or against
Where proceedings are instituted by or against an international trust, it is sufficient to name the international company, registered foreign company, or trustee company that is a trustee. It is not necessary to join any other trustee.

PART IV – APPLICATION OF OTHER ACTS

20. Interpretation
In this Part of the Act, unless the context otherwise requires:

• “Enactment” means any Act of the Parliament of the Cook Islands or ordinance, Act of the Parliament of New Zealand in force in the Cook Islands, or any Proclamation, Order, Regulation, or Rule made thereunder. It also includes any Act of the Parliament of England, Great Britain, or the United Kingdom in force in the Cook Islands, and any Regulations or other instruments made under such Acts.
• “Foreign currency” includes notes, coins, money orders, bills of exchange, promissory notes, drafts, travelers’ checks, or negotiable instruments payable or expressed otherwise than in New Zealand currency. It also includes rights and instruments of title to such currency.
• “Securities” includes shares, stocks, bonds, debentures, debenture stock, treasury bills, notes, and units of a unit trust. It includes deposit receipts for any such securities, but does not include bills of exchange or promissory notes.

21. Application of other Acts to international trusts
(1) Subject to subsections (2) and (3), no enactment (other than this Act, the Cook Islands Monetary Board Act 1981, the Offshore Banking Act 1981, the International Companies Act 1981–82, the Offshore Insurance Act 1981–82, and the Trustee Companies Act 1981–82) shall:
    (a) Impose any liability, duty, obligation, restriction, fee, levy, tax, duty, or penalty on an international trust; or
    (b) Require the deposit of any money in a public account, or the filing of any accounts, returns, reports, or records; or
    (c) Require licensing or registration of an international trust.
(2) Regulations made under the Cook Islands Exchange Control Regulations 1984 shall not apply to certain transactions by an international trust unless:
    (a) The security or foreign currency is owned or controlled by a natural person ordinarily resident in the Cook Islands or by a domestic company (other than a trustee company); or
    (b) The transaction involves acquiring property or rights in the Cook Islands or New Zealand currency, or discharging a debt payable in the Cook Islands or New Zealand.
(3) An international trust that wishes to invest in a domestic company, acquire assets from a Cook Islands resident or domestic company, or carry on business within the meaning of the Development Investment Act 1977 shall be subject to that Act (except where the only domestic company involved is a trustee company).
(4) It is an offence for an international trust or its officers or employees to send or cause to be sent any money or securities out of the Cook Islands which are owned or controlled by a natural person ordinarily resident in the Cook Islands or by a domestic company (other than a trustee company).

PART V – MISCELLANEOUS

22. Resident beneficiaries
Nothing in this Act prevents any application under it by a beneficiary who is ordinarily resident in the Cook Islands.

23. Secrecy
(1) Except where this Act so requires, and subject to subsection (2), it is an offence for any person to divulge or communicate to another person any information relating to the establishment, constitution, business, undertaking, or affairs of an international trust.
(2) All judicial proceedings (other than criminal) relating to international trusts shall, unless the Court orders otherwise, be heard in camera. No person shall publish details of the proceedings without leave of the Court or the presiding officer.

24. Translations
(1) Any document filed with the Registrar that is not in English shall be accompanied by a certified translation.
(2) A document not in English and not accompanied by a certified translation shall not be accepted for registration.
(3) A certified translation is one that is certified as correct by a translator to the satisfaction of the Registrar.

25. No action to lie against certain persons
No action shall lie against the Government of the Cook Islands, any statutory body or authority, or any public or judicial officer in respect of any act done or performed in the exercise of functions or duties under this Act.

26. Power of Exemption
(1) The Minister may, on his own motion or upon written application by an international trust (or a trust that would qualify as an international trust if registered), exempt that trust from any or all provisions of this Act or any regulations, subject to such terms and conditions as he sees fit. Such exemption may be revoked or varied by the Minister at any time.
(2) In dealing with an application under this section, the Minister is not required to act judicially, and his decision shall be final.
(3) Any exemption or condition imposed under subsection (1) shall take effect from a date decided by the Minister in his discretion.

27. Prohibitions by Minister
(1) The Minister has an absolute right, on his own motion or otherwise and without assigning reasons, to make an order:
    (a) Prohibiting the registration of any trust; or
    (b) Directing any international trust to cease carrying on its business or part thereof immediately or within a specified time.
(2) An order made under this section may be revoked or varied by the Minister.
(3) In making an order under this section, the Minister is not required to act judicially, and the order is final.

28. Penalties
(1) A person commits an offence against this Act who:
    (a) Does anything forbidden by or under this Act; or
    (b) Omits to do anything required by this Act or fails to comply with any provision of this Act.
(2) Offenders shall be liable on conviction to a fine not exceeding US$10,000 or to imprisonment for a term not exceeding one year, or both.

29. Regulations
The Queen’s Representative may, by Order in Executive Council, make regulations prescribing all matters necessary or convenient for carrying out or giving effect to this Act, including prescribing penalties for regulations not exceeding the penalty prescribed in section 28(2).