Protect Your Assets With ACook Islands Trust

We established an offshore asset protection trust in the Cook Islands, transferring ownership of the land to the trust, thus minimizing exposure to US taxes. Cook Islands' legislation offers strong asset protection and exempts several types of taxes, effectively shielding the assets. The proceeds are further managed through a Private Placement Life Insurance (PPLI) in Bermuda, which the client loaned against to facilitate tax-free access to funds.

The approach began with establishing an offshore asset protection trust in the Cook Islands, paired with a PPLI policy. Thus far, you'll recognize this setup from the one used in Case Study #1, but with one significant difference. By highlighting potential liabilities and operational risks, adopting conservative financial projections, and emphasizing unfavorable industry trends and economic conditions, the formal estate valuation we secured was worth only $20 million, significantly below the internally estimated value.

After several years of continued operations and courting potential buyers, the company eventually sold for $96 million, resulting in a $76 million tax-free capital gain on the value of the PPLI.

We established an offshore asset protection trust in the Cook Islands, transferring the client's $200 million in assets and incurring a one-time capital gains tax of $55 million. The remaining $145 million was invested in Dubai corporate entities, avoiding South Korea's 24.2% corporate income tax. A private bank was set up in Hong Kong to leverage its favorable tax treaty with South Korea, reducing withholding tax on interest income to 10%. Finally, a private placement life insurance (PPLI) policy was established, allowing tax-free loans and ensuring business distributions remain tax-free, providing secure, flexible, and tax-efficient cash flow.