Legal entity with its own tax domicile.
Common Law: Cook Island Foundation Act
Suitable for the protection and segregation of all tangible and intangible assets such as patents, copyrights, money, real estate
It also acts as a will
It can be a shareholder of other profit-making companies but cannot manage profit-making activities on its own

Cook Islands Private Foundation

Quick menu

Cook Islands Private Foundation
- Registration and Bylaws of the Cook Islands Foundation
  - Cook Islands Multipurpose Foundation
  - The most common uses of Cook Islands offshore foundations are:

In June 2012, the Cook Islands Foundation Act became law, making it the gold standard in asset protection.

Drawing on foundation law experience elsewhere, particularly Guernsey and the Isle of Man, this legislation contains special provisions that provide superior client planning options and simpler credit action requirements, as well as stringent privacy regulations. As noted in Trusts & Trustees, published by Oxford University Press in July 2014, "Strong legislation combined with highly respected courts and exemplary service... has created the ideal environment in the Cook Islands in which to establish a foundation."

Registration and Bylaws of the Cook Islands Foundation

The law provides for a registration regime for foundations in the Cook Islands. Each foundation will have a foundation instrument containing its basic details, including its name, objects, and registered agent in the Cook Islands. The foundation instrument is filed with the Registrar.

A foundation must also have bylaws that comply with the law. Under Cook Islands law, while there are certain issues that must be addressed in the bylaws, there is considerable flexibility in how the bylaws are generally drafted. This allows client founders and their advisors to clearly establish how they want the foundation to operate and how they want it to benefit its beneficiaries. Foundation bylaws do not need to be filed with the Registrar, but only held by the registered agent in the Cook Islands. The foundation bylaws provide the substantive details of how the foundation will operate. The bylaws will include procedures for establishing the board, appointing the registered agent, the functions of any executor, and rules for the endowment of additional assets. The bylaws may also address how the board exercises its powers and the distribution of the foundation's assets in the event of dissolution.

The Foundation is a legal entity separate from its founder.

The foundation is valid even if the law in the founder's jurisdiction does not recognize or prohibits foundations.

Cook Islands Multipurpose Foundation

The foundation can be used for charitable or non-charitable purposes, estate and estate planning, and asset management.
Protection from creditors.
Two-year statute of limitations for requests to cancel the foundation or to attack the transfer of an asset to the foundation.
Courts cannot recognize or enforce a foreign judgment against the foundation.
Strict rules on fraudulent transfers make it difficult for creditors to file a claim for fraudulent transfers. The Foundation is independent of the founder's personal circumstances.
The foundation cannot be void or voidable in the event of bankruptcy, insolvency, or liquidation of the founder.

One of the most common uses is estate planning. The fact that the law does not recognize other countries' laws on forced inheritance, the high level of confidentiality, zero taxation, and the fact that foundations have no limited lifespan, make them ideal as an estate planning vehicle.

Foundations can also be used for general asset protection, tax minimization, international trade, and as a means of ensuring confidentiality.

Foundations can be used for charitable or non-charitable purposes, or both. They can be established for the benefit of one or more specific individuals or for another specific purpose.

The most common uses of Cook Islands offshore foundations are:

Wealth Protection
Estate/Succession Planning
Asset protection and management
Circumvention of the rules on forced inheritance
Charitable purposes
Pension funds
Keep art collections
Receive and manage capital and securities
Minimize international income, capital gains and inheritance taxes
Maintaining corporate control
Separation of voting and economic benefits
Employee stock option schemes
Used by companies for employee benefit plans, pension and stock option plans, insurance plans, and special financing arrangements
Recognized in both common law and civil law jurisdictions.

Complete foreign ownership is permitted. Founders can be foreigners of any nationality, with beneficiaries and assets located in any country.

There are no taxes applicable to Cook Islands Foundations.

Privacy and confidentiality are guaranteed by a Cook Islands Foundation.

Details of the founders, beneficiaries, board members, and executors do not appear in any public register, nor do details of the foundation's assets.

Confidentiality, disclosure and protection of assets through a Cook Island Foundation

Cook Islands Foundations guarantee maximum privacy. Although designated founders are not eligible, the names and information of founders, beneficiaries, and board members are not published in any public register. There are also provisions in the law that make it illegal to disclose unauthorized information about the foundation and the identities of its associated parties.

Furthermore, information relating to the foundation's assets is very well protected, as are the assets themselves. The following provisions make it extremely difficult to assert claims against the foundation's assets:

The only jurisdiction where creditors can bring legal action against foundations is the Cook Islands.
Foreign court orders, including those relating to divorce, will not be recognised in the Cook Islands.
Creditors may file claims against specific foundation assets only within two years of the asset's transfer to the foundation.
Creditors are required to prove “beyond a reasonable doubt” that the founder was insolvent or intentionally seeking to defraud the creditor at the time the asset(s) in question were transferred to the foundation.

Cook Islands foundations can hold different types of assets:

Stocks, bonds and other securities of public or private companies
Intellectual property
Real estate/immovable property
Banking activities
Investment portfolios
Life insurance policies
Most other types of resources

Tax Benefits

As long as the founder, beneficiaries, property or assets, contributions to the foundation originate outside the Cook Islands, the Cook Islands Private Interest Foundation is exempt from:

Any income tax
Professional tax
Withholding tax
Property tax
Gift Tax
Profit tax
Capital gains tax
Distribution Tax
Inheritance tax
Property tax
Stamp duties

In addition to opening your Offshore Foundation, you will probably be interested in creating a life insurance policy on your tax situation by taking a second tax residence in a country with territorial taxation, such as a Residence in Panama or a Residence in Paraguay.

Studio Panama Italia

Verified Author Expert Reviewed