Cook Islands Trust Risk Review & Advisory Services

Cook Islands Trust Risk Review & Advisory Services

At Dilendorf Law Firm, we provide independent legal risk assessments and structural reviews for clients who are considering, currently managing, or questioning the viability of offshore asset protection trusts—particularly Cook Islands Trusts.

Over the past three decades, U.S. courts have consistently scrutinized and litigated offshore trust structures. A single misstep—such as retaining control over trust assets, improperly structuring beneficiary rights, or failing to comply with U.S. disclosure requirements—can render the trust ineffective or expose the settlor to civil contempt, denial of discharge in bankruptcy, or significant tax penalties.

Our firm provides an unbiased evaluation grounded in real legal precedent. We’ve helped clients stress-test their offshore structures, avoid unintended liabilities, and design more secure, court-tested alternatives.

Whether you’re considering a new trust or already have one in place, our services help you understand what’s truly at stake.

Key Considerations When Evaluating a Cook Islands Trust:

• For clients considering offshore trusts, Dilendorf Law Firm offers independent risk assessments and structural reviews.
• The U.S. body of law targeting and dismantling offshore trusts—particularly Cook Islands-style asset protection trusts (APTs)—began forming in the early to mid-1990s and has developed over 30+ years of federal and state precedent.
• Offshore structures don’t work in every situation. These structures require absolute and irrevocable surrender of control—legal title passes to a foreign trustee, and any retained power undermines the plan.
• U.S. creditors’ attorneys will challenge every aspect of an offshore trust. There is a robust body of law in which courts have collapsed trusts, found debtors in contempt, and imprisoned them for refusing to repatriate assets.
• Cook Islands trusts are self-settled, and many U.S. jurisdictions do not recognize asset protection in self-settled trusts. U.S. courts routinely apply state law instead of Cook Islands law. See Rush Univ. Med. Ctr. v. Sessions, 2012 IL 112906.
• In Sattin v. Brooks (In re Brooks), 217 B.R. 98 (Bankr. D. Conn. 1998), the court invalidated offshore spendthrift trusts as unenforceable under Connecticut law, declaring the debtor’s interest reachable by creditors.
• Courts don’t need to control the offshore trustee—they only need to control you, the settlor. Any retained ability to replace trustees, request distributions, or influence decisions may lead to civil contempt and incarceration. See FTC v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999).
• Transfers to offshore trusts are subject to a 10-year clawback under Bankruptcy Code § 548(e) if made with intent to hinder, delay, or defraud creditors. See In re Mortensen, 2011 WL 5025288 (Bankr. D. Alaska).
• In U.S. v. Grant, 2013 WL 1729380 (S.D. Fla.), a federal judge issued a permanent injunction prohibiting the settlors and their family from ever receiving trust benefits after finding evidence of improper asset protection planning.
• Offshore trusts require strict IRS compliance, including Forms 3520, 3520-A, and FBAR filings. Failure to comply can result in penalties often exceeding the value of the assets being protected.
• Alternative domestic strategies—such as Family Limited Partnerships (FLPs) and Domestic Asset Protection Trusts (DAPTs)—can often provide more effective, cost-efficient, and court-accepted protection with full U.S. legal compliance.

Contact Us

If you are considering establishing an offshore asset protection trust or currently maintain one, contact Max Dilendorf for a consultation.  Contact us at (212) 457-9797 or email us at info@dilendorf.com.

Our firm offers legal clarity in a complex area—helping clients understand both the strengths and vulnerabilities of offshore structures before irreversible decisions are made.