Protection Of Family Assets In The Event Of Divorce
Reuben Tyler & John Evans
The principal features of the Act are;
- Recognition of foreign judgements inconsistent with the principles of the Act are restricted.
The Act recognises a special category of property being a family-owned business. The forced sale of ownership interests in a family business can be catastrophic to both its value, and the interests of the beneficiaries, often resulting in the collapse of the business. Financial institutions lending to a family business must take this risk into consideration. In response to this problem the Act makes special provision for the retention of a family business. It is also recognised that it may be in the best interests of the beneficiaries if management of a family business by a spouse, who is a key person, continues after divorce or separation.
The Act is designed primarily to appeal to married couples in jurisdictions where the norm is to dismember a trust upon divorce. It is not an alternative to a prenup which is designed to divide and distribute assets. An RPT might be used where a recently married couple is just starting out and believe their joint efforts should be held for them and their issue without exception. Or where there is a 2nd marriage with different families. An RPT might also be used where matrimonial property is subject to the laws of more than one jurisdiction. Where parties are not married, (or are not able to be married) an RPT can fill a useful purpose. An RPT can ensure succession of ownership of a family business as well as provide a higher level of security for lenders.
The Act gives planners a new tool with which to protect the assets of high-net-worth families. It creates a legislative regime which reinforces traditional concepts of trust law while complying with principles of matrimonial property law which allow parties to enter into agreements addressing property rights in the event of their divorce. The regime is responsible, balanced and protective of a subordinate party. The requirements for disclosure and independent representation prior to entering into a RPT follow those set out in the Uniform Premarital and Marital Agreement Act, (US Federal) as well as principles of English common law. Specific provisions address areas of possible abuse. Finally, the Act is constructive socially, with an emphasis on retaining social cohesion and traditional family values. It is anticipated foreign courts will recognise the merits of this return to traditional trust principles.
Banking in the Cook Islands
There are four banks currently licensed to provide banking in the Cook Islands, and there are two types of banking licenses. ‘Domestic’ is for residents and ‘International’ is for people or entities not resident in the Cook Islands. Banks are required to meet the requirements of the Banking Act 2011, together with the obligations under the FSC’s Prudential Standards. Capital Security Bank (CSB), meanwhile, is the only bank that utilizes its International License to provide investment banking services to non-resident clients. Banking in the Cook Islands with CSB provides its clients with several safeguards to protect their assets, since it has vigorous internal policies and procedures, which are aligned to the Cook Islands legislative and regulatory frameworks. CSB clients can be comfortable in the knowledge that their assets are being managed and protected in line with internationally recognized banking standards.
Banking with Capital Security Bank
With over 20 years in business, CSB is a full-service investment bank and provides banking services to individuals and entities from around the world, with the ability to open accounts remotely, such that there is no need to travel to the Cook Islands in person. Offering self-directed Online Securities Trading and custody services, CSB gives its clients access to a broad range of global exchanges and investment opportunities, such as stocks, bonds, mutual funds, exchange traded funds and options. CSB also provides Managed Investment Accounts, Term Deposits, Foreign Exchange, and Bullion Storage. Establishing an investment account with CSB is a simple process and this is what our clients tell us too.
The three-step process is as follows: