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Posted on May 10, 2018 by James Billings

Recently I've had inquiries from people using Cook Islands Trusts for asset protection. In one case they own a Fidelity brokerage account in the United States. They believe its protected. It's not and here's why…

Assets themselves are subject to the situs or legal jurisdiction where they're located. This means that despite the account owner being Cook Islands Trust, a local court order in New York can levy that account forcing Fidelity to send funds to satisfy the creditor's claim.

The moral of this story is to site account outside United States. Bahamas or Cayman Islands are safer because they operate British common law. They can still invest in the American stock market but ownership situs is foreign.

One alternative is anonymous business trust to own Fidelity account with Cook Islands Trust as beneficiary. It's less hassle than going offshore. The business trust is a ‘privacy curtain' in front of their holdings.

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