For 25 years, our law firm has been ahead of the curve bringing our clients innovations for effective asset protection techniques.
Below, I am pleased to introduce a new and innovative service available to those who have established or are considering establishing a foreign asset protection trust.
David McNair’s company, the provider of this new service, is one of the early pioneers of offshore asset protection trusts, as a founder of one of the most successful offshore trust companies of the Cook Islands.
This service will be another means to gain ongoing peace of mind assuring that appropriate checks and balances are in place without compromising the “firewalls” afforded by the APT.
SAFER TRUST GOVERNANCE – ASSET PROTECTION TRUST AUDIT
A Legal Service for Cook Islands International Trust Clients
“Trust but Verify.” – President Ronald Reagan
While by law Cook Islands trust company general finances are audited annually (clients may receive confirmation requests from auditors) there has until now, been no independent legal service aimed at verifying the establishment and ongoing integrity of your client’s trust structure.
Now, the reassurance of a legal auditing service is available to individual clients, conducted by a Cook Islands attorney and a former principal shareholder of a major Cook Islands trust company.
For new or prospective clients, our legal audit can provide the extra reassurance required as they make the significant decision to proceed.
Existing clients have much invested in the soundness of their asset protection structure. They have undergone the perhaps personally disruptive process of separating themselves from direct ownership and control of assets. They rely on foreign trustees to conduct affairs to preserve the legal integrity of the trust structure designed by their legal advisers. It could be catastrophic for them to learn that their trust is vulnerable for ‘control’ or other reasons only when a claimant later challenges it.
For attorneys who plan trust structures and recommend trustees, and for other advisors, our legal audit service provides an additional means of limiting personal or firm exposure in the event a client’s trust is challenged.
We are independent of the trustee and advisors. We review documentation to verify that the trust structure has been properly established and is operating effectively under Cook Islands law in accordance with its terms. APT legal audit is precautionary and intends to provide an enhanced sense of security for clients by regular diligent audits of the trust company’s management and administration of your client’s asset protection trust.
When the trust was established, the trustee probably provided Cook Islands legal input and now administers the trust structure. The trustee though, is not a law firm and has separate legal duties, responsibilities and therefore potential conflicts of interest with the settlor.
Typically, when a trust is established, communication and administrative protocols are established, but functional or procedural weaknesses can, over time, undermine the legal integrity of the trust. This may be particularly relevant where there has been a change of trustee or other parties.
Records were created in the process of establishing the trust. Trust activity is evidenced by hard copy and electronic records maintained by the trustee. Invariably, requests, recommendations, and client intentions are subsequently conveyed to a trustee directly or through advisers.
Settlors are frequently also beneficiaries of the trust and communications with the trustee over a period of years can reveal a trend to informality in maintaining the separation of functions inherent in the trust concept and hence the legal integrity of the whole.
Now the process can be independently checked and verified.
A client may seldom review the complete discoverable documentary file held by the trustee year by year. An assessment as to whether ongoing procedures are being conducted in a disciplined manner complying with the terms of the trust agreement is a matter of Cook Islands law. We can provide such an assessment.
We offer the independent APT Audit, a legal service, to review trust documentation held by a trustee to examine assess and verify:
- proper establishment and operation of the trust, underlying entities and related structures.
- trust party communications records and, if necessary, recommend corrective action.
- transactional records such as contracts for share purchases, mortgages and insurance contracts and, if necessary, recommend remedial action.
- trustee and/or protector resolutions for risk and if necessary recommend remedial action.
- technical requirements; e.g. continuous and current trust registration, proper appointment of parties, proper authority to execute documentation and to authorize and make distributions.
- completeness and proper security of documents, and communication protocols.
As regards the trustee we will assess and verify that:
- trustee licensing and regulatory compliance is current and complete, liability insurance is current, and establish whether there is potential overflow risk from any unrelated litigation.
- we can review work processing procedures if required. The trustee should agree willingly to the procedure. A suggested consent and agreement form will be provided amenable to suit particular trust documentation.
- a detailed advisory report is provided on completion. The advisory report is of course, private, confidential and legally privileged.
- we charge a fee of $900 for initial audit verification of a trust structure (including related entities) and $800 for each year of audit thereafter. Reduced fees apply for multiple year retainers.
- we recommend clients consider an annual legal audit for active trusts.
More complex issues may require a separate opinion. We will advise if this need arises.
A corollary independent private mediation service is available where any matter interpretation or recommendation arising from the legal audit arises.
We offer independent trust protector services at $500 annually plus hourly rate charges for work performed.
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PO Box 167
For US callers: 1 (949) 734-5216
Office: + (682) 21514
Cell: + (682) 79623
Fax: + (682) 21517
For more information about any of the information discussed in this Client Alert, or any other income or estate tax planning or asset protection planning assistance, please contact Jeffrey M. Verdon Law Group, LLP at firstname.lastname@example.org or (800) 521-0464.