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“It depends” is the stereotypical answer to receive from a lawyer. I’d give that answer when asked about the cost of a Cook Island trust. What if you called a car dealership and asked “how much is a car?” That would depend on what type of car you’re looking for. You could spend $100k+ on a sports car. Or you could spend less than $10k on a tiny little subcompact car. 

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Most people that call our office are interested in asset protection. They are worried. Stressed. Waiting for the day that they will be sued and have their assets taken away from them. 

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An asset protection trust works by separating legal ownership from beneficial enjoyment of the assets in the trust. 

The person who sets up the trust (the Grantor) transfers assets into the trust. The Grantor then no longer legally owns those assets. He or she has given up both legal ownership and beneficial enjoyment (also called beneficial ownership) of the assets. 

Those trust assets are now legally owned and managed by the Trustee of the trust. The beneficial enjoyment (i.e. who gets to use or benefit) of those assets lies with the Beneficiaries of the trust.  The rules for asset protection trusts allow for the Grantor to also be a Beneficiary. 

An example of separating ownership

Take for example a $250,000 investment account. The account is in Mike’s personal name. He owns it outright. He’s the legal owner who calls the shots on what happens with the $250,000 and he also has beneficial enjoyment of the money. I.e. he gets to use it if he wants to. Mike sets up a trust and retitles the account into the trust. Legal ownership of that $250k now lies with the Trustee of Mike’s trust. Beneficial enjoyment of those bucks now goes to the Beneficiaries of the trust. 

Great asset protection trust laws, like in Nevis or the Cook Islands, allow Mike to be a Trustee and a Beneficiary if he wants. 

Flexibility for changes

The laws also allow for flexibility. The people or companies in these different roles of Trustee or Beneficiary can change. Mike can start as a Beneficiary of the trust, but later not be a Beneficiary if there were a legal threat against him. Who sits in the roles of Trustee and Beneficiary can be modified as needed.

To recap:

An asset protection trust works by dividing legal ownership and beneficial enjoyment between two different parties. Legal ownership of the trust assets goes to the Trustee of the trust. Beneficial enjoyment of the assets belongs to the Beneficiaries. 

Colin Ley is an asset protection attorney and the creator of the PREP Trust® and Better LLC™. He is also the co-founder of LayRoots (along with with partner in life & business – Shreya Ley)

Being successful in America makes you a target for bogus lawsuits from shameless lawyers. We created an effective, asset protection solution, so you don’t have to worry anymore, happily knowing your family’s future is protected. Get started now by scheduling a free, 30-minute call at livemorecarefree.com.

Our power went out recently after a bad wind storm which kept Shreya up at night. I slept somewhat soundly except for when she woke me up by asking, “what was that boom?” (To which I mumbled something and pulled my covers tighter).

When we woke in the morning to a bad power outage and a large tree blocking our driveway – well, that answered that question. We weren’t alone. Around 500,000 homes had no power. And since we live in a rural area, we know we are lower on the list to get things restored after the cities.

It wasn’t too bad though at first. We have a back up power source to run the essentials (meat freezer/refrigerator/coffee maker) and some battery-powered lights and candles. On day two, though, the novelty wore off and things got worse. Our water supply ran out since the well pump was out of action.

Facing the annoyances of no running water, two days in, the power company said we’d have to wait three more days to get service back. We gave up and booked a hotel.

I was hesitant to book, hollering out to Shreya that “As soon as I pay for the hotel, you know that the power will come back on.” And “I just don’t want to waste money!” I clicked confirm anyway.
Sure enough, less than five minutes after I booked the room, the power came back on.

A couple hundred bucks was gone, but I sure was happy to be able to stay home. I was happy I wouldn’t have to live in a hotel down the road for a few days. I was happy our quarter cow wouldn’t spoil as the backup power ran out and the freezer shut off.

Yes, the money was “wasted” but for those 5 minutes, I was grateful to have a back up plan.

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