Relationship Property Trust

Cook Islands passes new legislation creating a trust to keep the assets of high net-worth families intact in the event of a separation

On the 1st December 2021 the Cook Islands became the first country to enact a set of laws that addresses a serious weakness in estate planning for high-net-worth families.

Most jurisdictions have developed law, allowing parties to agree on how their assets are to be treated in the event of separation or divorce.

However, all proceed on the basis that the assets will be divided and distributed, and all are subject to review by the courts. Trusts are one of very few structures which enable assets to be retained intact and managed for the benefit of the family if the settlors separate or divorce.

The problem is that over the last decade matrimonial courts have continued to extend their jurisdiction to bring assets held by family trusts into matrimonial property disputes. 

Even where a trust has been meticulously managed during the duration of the trust, courts prefer to divide the trust assets up and distribute them in lump sums to the settlors. It is as if the trust had never existed! All the careful planning and foresight of the settlors, and decades of careful management by trustees, go out the window. 

Trustees & Fiduciaries developed the Relationship Property Act (RPA) in direct response to this problem.

The RPA creates a statutory foundation whereby couples can choose to keep designated trust assets intact, in defined shares and under common management, in the event of their separation or divorce. The RPA also restricts the recognition of judgments of foreign courts from interfering with this principle.  Family businesses are also particularly susceptible to the separation or divorce of the shareholders.

For more information on the Relationship Property Act book a FREE 30 MINUTE SEMINAR with our team using the link below.


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