0:02 Today on Trusts and Estates Weekly, my guests are Jen Ruffley and Matthew Smith of Southpac Group, who which specializes in Cook Island and Nevis trusts. Stay tuned for Trusts and Estates Weekly.
0:19 >> Who are you? And where [music] are you going? What do you want?
0:34 >> So, thank you for joining us. This is the show where we talk about estate planning and probate and trust administration, as well as aspects of multi-family office practice, both from the standpoint of professionals like myself and my guests, whom I'll introduce in just a moment, but also for those of you who don't do these these kind of things for a living, but I don't know, maybe you got appointed as the executor of your parents, you know, will, and now you're trying to figure this out or or, you know, you're a business owner and
1:09 like, what do I do? I've got this great business, but I'm I I'm afraid I'm going to get sued, all those kind of things. So, this is the show where we talk about those issues and and more importantly, how to deal with them, how to solve them. So, today, I'm I'm really happy to bring to you all the way from the Cook Islands, Jeff Jen Ruffley and New Zealand, Matthew Smith, uh two people from Southpac Group. Now, if you've seen my shows with Craig Redler, who special
1:44 who's a an a US-based attorney who specializes in Cook Island trusts, you probably have heard him mention Southpac Group. He He actually worked for this organization in the early days of his career. So, I was at the uh STEP LA conference uh a while back and I met uh one of uh Jen and Matthew's colleagues and he was kind enough to put me in touch with them so I could get them here on the show. So, uh Jen, Matthew, welcome to Trusts and Estates Weekly. Thank you so much for being my guest today.
2:17 >> Thanks, Kevin. Kevin, great to be here.
2:19 >> So, I I I I I explained to Matthew, much to the chagrin of Jen, that in in in in you know the Wait to Wow Show's world, ladies go first. So, so Jen, start off if you would. Tell us a little bit about yourself so people can get to know you.
2:35 >> Thanks, Kevin. Well, first of all, just thank you so much for having me. It's a it's a pleasure to be here. I was explaining to you just before we started, this is the first podcast I've ever done. So, um keeping uh nerves in control but feeling good. So, um yeah, thanks again. Um a little bit about me, well, I the most interesting thing I suppose is that I was born on a tiny island just off the coast of France called Jersey in the Channel Islands. Um so, not the New Jersey, the original Jersey. Um and uh yeah, it's it's a very small place, population of 100,000, but it's actually
3:10 a very similar offshore um finance center and uh it's very similar legislation to um New Zealand and the Cook Islands. Um so, it kind of set me up well even from birth. I was introduced to the offshore finance centers. Um and sort of fast forwarding a little bit um after my university degree, my my first job was in Jersey. I returned from the UK where I went to university. There's no universities in Jersey, unfortunately, so everybody has to be shipped to the mainland. Um I entered into an office, entered into an
3:45 interview room and they said, "You know, we can't tell you anything about the job. It's in trust. There's a non-disclosure agreement." And I thought there's no way I'm not taking this job.
3:55 >> [laughter]
3:56 >> This is way too interesting to pass up.
3:59 >> Was that to be MI5 or
4:02 >> [laughter]
4:03 >> I can't say anything. Um and it was it was trust. Um it was a high net worth individual um and I stayed there for 10 years in a family office and that was my first exposure to to trusts. Um and I was really lucky because being in a family office is like gold dust. Um you get introduced to a huge wide range of professionals, um you know, third parties who you would never really get a chance to get involved with unless you're in that kind of high net worth bracket. Um So 10 years went by um and had an incredible time at at at that in that role. Um sort of worked up the ranks
4:39 through up through to to trust manager. Um it was very much a concierge kind of role as well. So with the trust work alongside that we were doing a lot of travel. Um even arrange for a two-hour to be transported to a university in the UK once. That was probably one of my uh strangest [snorts] moments. Um but
4:59 >> [laughter]
5:02 >> Um So uh my husband and I got married and and that was it. It was time for a change. So um it was it was off to New Zealand uh with our little dog and five suitcases and some golf clubs. And um yeah, arrived in New Zealand. Now um been in the Cook Islands for a couple of weeks, but we were in New Zealand for uh around 9 years and have just continued that um career in in trust and offshore um structures. Uh in the meantime I I good 10 plus years ago got my uh STEP diploma in international trust management.
5:38 And yes, I'm still here working in trusts right from that 21-year-old fresh off the boat from university.
5:45 >> Wow, fantastic. It seems to me Jersey was at least the nominal setting of some kind of World War II historic show that I was watching, but I
5:57 >> Yes, I mean there's there's quite a few famous shows that have come out of Jersey, Bergerac being the main one.
6:03 >> Okay.
6:03 >> Um that had yeah, uh it's actually just been remade, um which is pretty cool. Um but yeah, there's been a couple of things that have come out. Obviously Jersey was occupied during the Second World War.
6:15 >> Right.
6:15 >> Um we it was a fairly peaceful occupation. I think the Germans were pretty happy to be stationed there. The locals kind of, you know, integrated and looked after them and and they did vice versa. It was, you know, a fairly okay place to be posted. Um my granddad actually got pushed off a sea wall by a German soldier and and blew his eardrum and was sort of deaf from his early 20s.
6:39 >> Wow.
6:39 >> Um but as a result, we've got a huge amount of history that's been left behind from that German occupation, which has really just become part of everyday life in Jersey. But it's a fascinating place. We're famous for potatoes and for our milk. So, yeah.
6:53 >> Okay.
6:54 >> Yeah.
6:54 >> Is that where Jersey cows come from?
6:56 >> That's right. Correct. Our beautiful Jersey cows are from Jersey in the Channel Islands. There we go.
7:02 >> You know, here in here in, you know, America or I guess what you would call the colonies, you know, we think we think of anything with Jersey coming from New Jersey, but it it, you know, listening to you talk it it strikes me that Oh, of course. It's got to come from, you know,
7:18 >> That's right. Yeah, no, from a tiny little little rock um in the English Channel and that's that's me.
7:24 >> Well, that that's that's that this is great stuff for me.
7:28 >> [laughter]
7:28 >> We have to talk about all that, but not on not on this show.
7:32 >> I could go on and on.
7:33 >> So,
7:33 >> [laughter]
7:33 >> let me have you do the same for us if you would. Give us give us your background so people know about you a little bit.
7:39 >> Yeah, absolutely. And as Jen said, Kevin, you're great to be on the show. Thank you very much for having us. We really appreciate it. You know, I've been looking forward to to coming on here for a while. There's a few parallels between myself and Jen. I'm I'm also from the UK, but from a much less interesting part of it than Jersey. I just grew up in a in a town to the south of south of London. Went to went to uni in the UK and worked there for around 10 years as a lawyer. And you know, I was was sort of set off down down that path of just staying happily in the UK. And then I married a New Zealander.
8:15 And New Zealanders tend to have you have famously strong homing beacons. And so it was that around 10 years ago now, we we decided to make the move back back here for her and over to New Zealand for for me. Came over with the three kids, now four. And in 2017, I started working for Southpac as an attorney specializing on the on the international trust side. So doing the international trust and company formations for clients. And doing a little bit of work in New Zealand, but without primary focus being
8:50 in in Cook Islands and Nevis. So Southpac we have our main office in New Zealand, but this is our sort of professional hub. So we manage the relationships with attorneys and clients from here, but also kind of a go-between between those people and the trustee offices in the Cook Islands where Jen is now. And in Nevis where where we have that office as well. So yeah, nine years with Southpac, coming up to 10 now. I've been in a variety of roles sort of on on the legal side with general counsel for a few years. Group general manager for a couple of
9:26 years. And and then moved last year into this director business development role. Just really to focus on the growth of of Southpac. It's an exciting time in our industry. There's been an awful lot of growth over the last few years. A lot of interest, a lot more exposure, a lot more understanding. And so I moved into this role to be at the you know really at the forefront of that and helping sort of South Pack you just just grow our business and and work with increasing numbers of referrals in the states and elsewhere. So I
10:01 moved away from the personal sort of background here fairly quickly there. Sorry. I thought there was a lot more interesting.
10:09 >> Yeah, [laughter] yeah. So I wanted but he didn't want to you know one of the differences I think between the US and the UK is you know in the US if if someone is you know admitted to the bar, they're a lawyer, they deal with both or they can at least deal with both you know documents and that whole side of of legal work but also they make court appearances, they can you know they're an advocate in court whereas as I understand in the UK those roles are split between solicitors and barristers, right? So
10:43 >> Yes, absolutely. So you have to pick them up.
10:47 >> Talk about that so people can understand the difference.
10:50 >> Yeah, so in the UK you're if you're a lawyer you're a solicitor or a barrister and and you have to choose a path early in your your legal career and the barristers are the ones that you know they get to do the more sexy work. They're in they're in the court, they're they're the advocates presenting in in those higher courts and and wearing the wigs and and the gowns and what have you. The the the role of the solicitor tends to be more in the background dealing with the clients and then briefing the barristers so that they can present the cases. There's a bit of blurring. You get some solicitor advocates who have those those rights to appear in the
11:26 higher courts and solicitors can appear in the lower courts. It was a a bit different when I came to New Zealand is that I came here and and re-qualified as a New Zealand lawyer um and here you get a two-for-one deal when you qualify as a lawyer, you're a solicitor and a barrister. Um so um while I haven't set foot in a court since I um since my admission ceremony, um I could do. I have that option as a as a New Zealand barrister. Um but but tend to you know keep that keep the legal advice in the office and sort of in in-house so so we're advising the trust asset protection trustee companies from here.
12:02 >> Got you. So good news that you haven't had to appear in court then. That [laughter] sounds like
12:06 >> No, I'll take that as a positive.
12:08 >> So tell us talk if you would give us some of the background the history of um asset protection in the Cook Islands in Nevis because I I I think for and I was having this conversation with um it was um a San Francisco-based attorney earlier um this week and she was saying, you know, we don't even deal with this and she said, you know, I know so little about it and I was telling her um I was going to be doing this show in a couple of days. She's like, oh, I've got to watch that show. And this
12:43 [laughter] is this is someone who's practicing at a very very high level, right? And and yet for whatever reason um doesn't really know very much about it other than, you know, they exist and and she gets, you know, asked about it from time to time by clients.
13:01 >> Um if she knows that the Cook Islands exist, that's quite a head start compared to a lot of practitioners. Um I yeah, I I find still when I'm over in the States and doing conferences and and meetings that there there's just not that much awareness of the jurisdictions we work in uh or what they can offer and it's something we're working very hard to change cuz there are some, you know, awesome protective laws available, uh some fantastic estate and succession planning options. Um if we wind the clock back um you you know, 45 years to the early '80s, this Southpac was established in 1982 uh in the Cook Islands. We were the
13:36 first uh Cook Islands trustee company to be set up there. Um and Southpac's founders and other kind of early adopters within the industry uh really wanted to build this bespoke industry uh that would provide protective services to you the initial original target was US persons, particularly physicians. So, that was the the original kind of target client base, you know, physicians who were getting hit with malpractice lawsuits, who were were struggling to um you know, cover the malpractice insurance given the increasing rise in what was often frivolous litigation, but
14:13 litigation that could take away, you know, the entire earnings for your career. Um and and so, you know, as as as is still sadly often often the case uh for for a lot of people in the US. So, uh Southpac worked with asset protection attorneys in the US to help craft and develop Cook Islands international trust laws. Uh there was an initial act uh that that was uh and you that was uh put into law in 1984, and and then more importantly, there were a suite of amendments that were made in 1989, and they introduced uh a
14:48 lot of the key protections that you see today. Um protections such as if you place assets into a Cook Islands trust before anyone has a cause of action, before there's a reason to sue for anything, those assets will be protected as from day one uh under Cook Islands law. Um Cook Islands does not recognize international uh you know, does not recognize foreign judgments, for example, so a US court judgment um cannot just be enforced in a Cook Islands court. The creditor has to re-litigate, clear some very high hurdles um to uh show the court that there has been a fraudulent transfer um
15:24 and the the levels of protection are very very high indeed. Um so to bring Nevis into the equation, you know, Nevis uh is was seen first and foremost as a specialist company jurisdiction, brought in international companies law in 1984. Um and then in 1994, I think I'm getting the dates here, enacted trust legislation that was very similar to what what was in the Cook Islands at the time. Um and then the following year, one of one of the key sort of products from Nevis that we work with is limited
16:00 liability companies which have their own set of protective features. A very common structure that our clients use is a Cook Islands Trust owning a Nevis LLC. Um so so that legislation came into place around the same time. And in in what I think was an unofficial trade off, the Cook Islands kind of adapted LLC legislation in the 2000s that is closely modeled on Nevis's. So there's there's a lot of crossover between the jurisdictions. South in Nevis since 2000 and a presence there. So we're we're very well established in both of those
16:35 jurisdictions.
16:36 >> And I mean and correct me if I'm wrong, but it it sounds like somebody or or a group of people in the Cook Islands and and Nevis basically saw a need for asset protection and created the legal structure to do that as almost I don't know, an economic development aspect of these you know, locations or or I mean or was it somebody coming from America saying, you know,
17:12 I'm going to set up an office here to help out you know what I'm saying? I mean
17:16 >> Mhm. [clears throat] I I There was There was an element of quid pro quo there. I mean, yeah yes, it was driven by the American market and American practitioners were, you know, were involved, but the the people who set up the Cook Islands Trust companies were were Cook Islanders, uh New Zealanders, and you know, they got the support of the government to create an additional industry and revenue stream for the Cook Islands. I mean, Jen, maybe you're in a sort of better position to go into a bit more detail on on that and the the local benefits.
17:45 >> Yeah.
17:45 >> Yeah, absolutely. I mean, we we currently have um five members of staff employed in the Cook Islands office. Um so, with with six being a a sort of visitor from me. Um And and listen, you know, we've got strong support from the, you know, the Financial Services Commission in the Cook Islands. Um you know, they often will travel to, uh you know, the conferences abroad um as a support for their their own um finance industry as a huge part of that is, you know, the trust companies. Um the several uh trust companies operating out of the Cook Islands. Um you know, obviously Southpac
18:22 being the original, um being the first. I say the original, uh the best, of course. Um and
18:30 >> [laughter]
18:31 >> And and yeah, listen, um both of the places, Cook Islands and Niue, are small places, right? So, you know, it does contribute hugely um economically to the people. Um offers employment and, you know, it is a major industry. Tourism, obviously, is also a huge industry there. Um but the financial services is is also major. So, yeah, it's it's it's great to provide that for the families there as well.
18:55 >> When we were talking before we started the show, I think you mentioned there's what, 100,000 people in the Cook Islands?
19:02 >> No, that was Jersey. There's actually only 15 15,000 in the Cook Islands.
19:06 >> Oh Oh, 15,000. Wow.
19:08 >> Yes. Yeah.
19:08 >> That's real That's That's like a little you know, that's a really small town here in in
19:13 >> It is. And And the Cook Islands are made up of many many islands. Um Rarotonga, where I'm staying and where our office is present, is the main sort of most populated island. Um like the largest, I believe, but this is, you know, the where our office is is present and where most people in the Cook Islands are from. Um some of the outer islands, absolutely beautiful beautiful clear water. Um only have populations of sort of 15 20, you know, maybe maybe yeah, sort of just even just one small family living in it in each atoll, so very interesting.
19:47 >> Wow, fascinating.
19:49 >> Mhm.
19:50 >> So then, um I guess talk next, if you would, so what are really what is the conversation I was having earlier with this lawyer I mentioned is kind of like you know, why would I have my clients essentially put their money, or at least some of their money, in a foreign jurisdiction that is by design outside the control of, you know, in her case, it would be the US government, but
20:25 I I presumably someone from from Canada, from Mexico, from, you know, the UK. Presumably someone from anywhere in the world could do the same thing. Um you know, I I obviously I'm US-based, but I don't know that there's any, you know, magic to you know, the US vis-à-vis the Cook Islands and Nevis. What What is I mean, what would be the the impetus for doing that? And And um I guess what are the the sort of the benefits for someone of doing that?
21:04 >> Well, um I mean, offshore structuring is is nothing new. It's It's been around for a very long time. Uh the the use of different jurisdictions as part of managing uh your your assets, your risks, your succession, your tax. Um so, what what the Cook Islands and Nevis offer is is far from far from unique um in a kind of general sense. Where they differentiate from these other jurisdictions is those asset protection features that um you know, that that I touched on uh briefly earlier. So, you know, day one protection for assets settled into a
21:40 trust where there's no uh you know, cause of action against the settler, for example. Um there there are some benefits for other jurisdictions as well for people from other jurisdictions, too. Um for example, people in some countries they're subject to forced heirship laws, which you know, determine which which of their successors their assets pass down to when they die. Um using a Cook Islands trust can um you know, Cook Islands does not and Nevis don't recognize those forced heirship laws. So, that's one way of managing the probate managing and avoiding the probate and uh forced succession uh
22:15 processes is to use one of these trusts. Um but but really fundamentally, you know, given the the asset protection dimensions of the industry and and that's been, you know, the primary objective, what these jurisdictions offer is peace of mind. Um that uh and that's what sets them apart from from from others. Um having that peace of mind that assets placed into a trust uh are going to be safe, are going to be protected uh by a tried and tested legal regime. Um now, in terms of why would a client place their assets offshore? Um yeah, there's a leap of faith involved, absolutely. It's a We We get that it's
22:51 it's a scary part of the process for clients. Um I mean, we'd just say, you know, look at look at the the history and the background of your of your trustee that you're using. How long have they been in business for? Do they have a strong track record? Because you want things for certain. If a if a professional trustee mismanages client assets, they're not going to be a professional trustee for very much longer. Um and so yeah, you you look at the background, the credentials, the people involved. Um and the the ease of contact and staying in touch as well. Yeah, it's it's no good to have a trustee who's distant and uncontactable. And uh you know, the work that Jen's team does
23:27 really acting as point of contact people helps to bring down those barriers and and create personal points of contact. And maybe Jen, if if if you want to go into a little more detail on it's work.
23:40 >> Absolutely, yeah. I mean, I I guess just sort of just rewinding a bit though, I mean, it's it's the physical presence that we have in in all of those jurisdictions, right? You know, we have offices. There are people that work there. There are people that will pick up the phone if you call the office. Um and and these the people that work in those offices have done these roles for many years. You know, there's a strong sense of um commitment to a role in these industries. Um you know, there's a a huge amount of loyalty to the offices in in those jurisdictions. So I guess that's you know, one thing to mention, it's worth
24:16 mentioning. The The other thing is that we we are Those people are are professionals, right? So we are reviewing, um we are constantly speaking to clients. We're in touch with their professional advisers, their attorneys in the US, their CPAs, you know, a wide range of people. Um it's not just a you know, client sort of emails us and might get a reply a week later. It's it's a really sort of constant um interaction with all sorts of areas of you know, setting up a
24:51 trust, but then that continuation of of the administration of that trust. I mean, we've even had clients turn up in New Zealand. Um, you know, we've had attorneys come and visit us regularly. Uh, banking relationships, for example, in Switzerland, you know, come out um, once a year or once every couple of years. You know, we go and see them in in the US and and in Europe and, you know, we hold conferences, we attend conferences. So, you know, we we are actively out there in the market. Um, we have our door open. We anybody can come visit us and maybe you will um, one day, Kevin. It would be great to have you in New Zealand.
25:24 >> I I'd I'd love to visit.
25:26 >> [laughter]
25:27 >> We're even the Cook Islands.
25:27 >> place to stay now.
25:29 >> Yeah, you'll have to Yeah, jump to jump to the Cook Islands by Hawaii and then back through New Zealand. Um, so in terms of my team, well, Ma- Matt and I work really well together. Um, and and the reason why that happens is because we we've actually got two separate teams. Matt's on the business development side. He and his amazing team are in charge of getting those clients in, um, dealing with referrers, um, building those relationships up. Um, but once that trust uh, or LLC or other structure is established, it comes across to the trust services team. We're a team of nine. Um, we're made up of legal
26:06 executives, trust practitioners, and attorneys. Um, and we have been in the industry for a long time. Like myself, we've got some senior members of staff who have been in the offshore world for, you know, 10 plus years. And it it just provides that sort of middle ground in terms of that middle office that we can communicate with those clients and be professionals, but then also provide that information to the trustee for them to make those important decisions. Um, it it's it's really, you know, the Cook the New Zealand office is is assisting the
26:41 trustee and and, you know, helping them reach that decision for on behalf of the trust that they administer. So, it's a really well set out and well thought out plan. Um, we've got real clear segregation in terms of who does what at the firm. The client moves through this journey from start to finish. Um, and you know, even as far as we've got our Matt will talk about this a little bit more, but you know, we have our own um, banking investment relationships. You know, we've got many third parties that we work with that we can recommend on to clients and and we work closely with a lot of these people and we're happy to recommend these people to our clients.
27:17 So, yeah, it's it's there's a lot of care in the trust services team. Um, a client will be assigned a client manager. That person will get to know that person, know the names of that person's kids. You know, um, it's a really personal uh, relationship and um, you know, we we love looking after clients. That's what we do. We like picking up the phone um, and yeah, we we look after our clients and that's one thing we really pride ourselves on at Southpac.
27:44 >> We let's take a quick break for a sponsor and and I I lots of questions to come back to.
27:50 >> Okay, thanks.
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28:36 >> So, so Jen, you you brought up something interesting about how um, you have I guess uh, relationships with companies or organizations anyway in Switzerland. And you know, I I think for people like me who are perhaps less experienced in you know, this world than the two of you are when I think of you know, sending money, you know, out of the US like yeah, you you put it in a Swiss bank, right? Because they're known to be safe and all that kind of stuff. And I I'm I'm I'm curious what is kind of that that nexus between
29:11 um you know, Swiss banking and and what you folks do at Southpac because again, I think most Americans, they think, oh, I put my money in a Swiss bank account, no one can ever find it. Now I'm safe or or you know, whatever, but I I think but it maybe that's not the case.
29:32 >> I mean, listen, we're we're part of a modern uh society and world, right? That there's no hiding funds anymore. You know, we're we're we're all um subject to um you know, CRS and um FATCA reporting. Um but it's important to mention that regarding the bank account, um you know, you have to make sure that those funds have been uh you know, entered into the trust. So, the trust holds a bank account, whether that be in Switzerland or we have a a very close relationship with a bank in the Cook Islands. So, many of our clients will set up a bank
30:07 account in the Cook Islands under their trust, directly held under their trust. And we'll move funds um into that bank account. Um we you know, obviously not providing that having that bank account outside of the US is is hugely beneficial. Um Switzerland is is just a popular choice. There's a lot of reputable banks there, um a lot of reputable custodians that we work with. We've been building those relationships for many years. We have a uh head of banking and finance team at Southpac headed up by Guy Carson. And as
30:43 part of the intro calls that Matt actually has, Guy will often sort of just hop in and discuss those best banking relationship bank relationships with that client and sort of find out what they need. What kind of asset are they holding? Is it Bitcoin? Is it just cash? Is it investments? And and sort of lead them down the path of the right choice for that client through our relationships that we have. So, there's nothing sort of, you know, it's it's a popular choice, Switzerland, just by default, but you know, there's other options as well and and our clients do have bank accounts, you know, we we have a close relationship with a provider in Panama, in the Cook Islands,
31:20 many Swiss relationships, so it's not just there.
31:23 >> Got you. So, this is maybe a question for both of you. Typically, you know, what is if there is such a thing and maybe it's too varied to answer, but what is kind of the profile of the client who comes to you saying, "Hey, you know, I've heard about, you know, the asset protection of a Cook Islands trust" or maybe it's, you know, their advisor, their lawyer saying, "I've heard about this." But, you know, who is that client? And and what what do they do? That kind of
31:59 thing.
32:00 >> I mean, I'll I'll I'll let Matt sort of join in as well cuz he's he's sort of the client-facing side, but just from my point of view, there isn't any typical, you know, you have to be of you have to have this certain amount of wealth or you have to be high net worth, you have to be a billionaire to open one of these types of trusts. Actually quite the opposite, it's anybody who has any risk, okay? So, you know, we could be looking at doctors, like Matt said originally, the the trust was set up with physicians in mind, but you know, entrepreneurs, property developers, you know, crypto holders, family businesses, professional
32:36 investors, advisors. I mean, it's a huge wide range.
32:39 >> Mhm. Yeah, I mean, if you've if you've sadly, if you've got wealth, you're a target in in a lot of jurisdictions, including the US. Um probably our our largest uh sector of clients would be, you know, entrepreneurs and business owners. Uh and and then we have clients from within a a variety of industries. Um yes, medical is is still a big part of our client base. Um uh legal, um you quite a few lawyers are clients just because they're they're in a yeah, they're in a a higher risk profession. Um in terms of the the clients we're working with, so we are we are actually dealing directly with with
33:15 the attorneys generally, with the referring uh attorneys and other providers. So so they will they will kind of build the client relationships and they will bring the clients to us. Um so and and a large part of what we're trying to do at the moment uh is to kind of help um inform and empower and upskill those attorneys who, you know, maybe maybe know that there's such a thing as a Cook Islands Trust and that it's a good option for clients, but don't really know how to set one up or who to talk to. Uh so so we're trying to plug that gap. Um in terms of the the again, going back to those client profiles, I think there's a
33:51 bit of a misconception that if you're if you're doing anything around offshore trusts, you're you know, you've got 30, 50, 100 million um dollars kind of net worth. Um a lot of our clients, in terms of the assets they're protecting, that would sit within the two to five million dollar uh US kind of bracket. Um so, you know, we're we're we have plenty of clients who are who are protecting a million or under uh because it's important to them. It's you know, it represents um you know, decades worth of work and they want it protected. Um albeit that our standard client profile
34:26 would be kind of a a little bit above that, but yeah, it's it's more accessible than a lot of people realize.
34:32 >> Yeah, it's all relative. It's all if it's worth, you know, it's your nest egg, it's worth protecting from your point of view, it's it's worth getting one of these trusts because it is relative.
34:42 >> I mean, that is fascinating because in the back of my mind, I was thinking, okay, you know, you probably would need to have at least eight figure net worth in order for it to be practical or or whatever to to start looking at moving wealth offshore or maybe very high, you know, seven figures, but but evidently not. So, it's it's a much from from what you're saying, a much broader tool than perhaps
35:17 you know, people really think.
35:19 >> It's a very accessible structure for a lot of people. You know, it's It's It's It's reasonable to run. You know, and like I said, if if you think that that portion of your wealth is worth protecting, then you know, it's like an insurance policy. It's just the same. You pay your insurance premiums to protect yourself for any sort of future occurrences, and it's the same with trusts.
35:44 >> It's It's just important to have have the right people on board. So, so not just the trustee company you're working with, but but to have the right banking and investment advisor combination. And as Jen was saying, you know, we we have our head of banking investment who can, you know, help set up those relationships and find the best fit. And then, you know, on the tax side, for example, you've got to as a US person, you've got to get your tax reporting right. You need to be working with a CPA who is comfortable around offshore trust tax reporting and you know, knows the knows the obligations. Yes, so clients need to go
36:20 into this with their eyes open knowing, yes, there's there's a slightly more new complex reporting regime um that cost a little bit more money to administer, but so long as you're working with a CPA who who knows how to manage that, there there's nothing to nothing to fear from you doing one of these structures.
36:39 >> So So, having brought that up, talk if you would um at least in in, you know, general terms, what what is the structure? How does it work? How does it fit into, you know, the the, you know, the filing of of of US tax returns? How does it work with respect to, you know, maybe I, you know, I've got a, you know, a wealth advisor here in the US, but now part of my wealth is is based in the Cook Islands, so do I have a separate wealth advisor? Talk to us about, you know, kind of that structure, so people get a feel for
37:14 you know, how this works and and with whom they would, you know, be involved.
37:19 >> [gasps]
37:20 >> What we often find is that is that our clients are using using us and using the structures they set up with us to protect a portion of their their net worth. It's not all in, everything's being administered from here. So, we are just one of a number of providers that that they'll work with. But but looking at, you know, let's say you you've got a trust that's got, you know, a Swiss bank account being managed by a Swiss investment advisor, and and has been set up by US persons, there are, you know, there are a set of your filing and
37:56 reporting obligations in relation to the trust. I need to preface this with this is not tax advice, I'm not a US tax attorney. Just had to get that out there. Yes, so for example,
38:07 >> on the bottom of the screen, by the way.
38:10 >> Just an extra one. Yes, so that there's for example, if you've got an offshore bank account, whether you own that or it's trust level, there's an annual reporting requirement, there's a form called an FBAR that needs to be be filed uh disclosing value in that account. Uh there's a a form 3520-A that has to be filed with the IRS every year, uh which which covers any any sort of distributions and and contributions to the trust and outlines the value of a trust fund. So, there there's a set of obligations uh that that you know, not all CPAs are aware of. It is it is a niche part um of of that CPA
38:48 area. Um and it's something that puts clients off because sometimes they're told by their accountant, "Bit big, bit scary, don't do this." Um but, you know, for for clients whose CPAs aren't familiar with with offshore, um we have ones that we can connect them with who who are who can happily handle that offshore component of the reporting. They don't need to take over the entire, you know, family CPA business.
39:13 >> Right.
39:13 >> Yeah, and I think that's the key, right? We've got 40 years of professional advisers under our wing. So, you know, if if the client doesn't know somebody or needs a recommendation, we have one.
39:24 >> And and now, just so and so I can understand, someone basically they set up a trust that's cited in the Cook Islands.
39:34 >> [clears throat]
39:34 >> And it'll You sure as heck don't want a California trustee cuz now you've just pulled it back into California from, you know, from a California standpoint. But, so you have a trustee presumably who's also based in the Cook Islands, right? And and and it's presumably also an irrevocable trust, right? So, anything that happens in it is, you know, the trust is its own entity. Uh and and, you know, assets are essentially managed or admin- I should say administered by the trustee. So, you know, let's say at the, you know, the end of the calendar year, you know, the trust has uh you know, an income of, you
40:10 know, $100,000 um and it's only distributed, you know, $50,000. So, presumably, you know, you've got a you know, a taxable the trust has a a tax liability. You know, is is the trust a separate entity from an American tax standpoint or is it like a grantor trust in the sense that it it kind of just passes what what happens to the trust just sort of is automatically included in the the taxpayer's tax return or am I getting into too much of the weeds?
40:44 >> No, that while it does vary how these are set up, the majority of trusts we set up for US persons are foreign grantor trusts. So so the set law is reporting trust income on their tax return with liability flowing through to them. What we will often see as well is not so much that assets are directly held by the trustee, but but the the trust is used as an umbrella so then hold holding companies underneath. And and this this can sort of tap into the piece of the piece of
41:19 mind and the control equation for clients because having assets at an underlying company level it allows the client to have the power to to still manage those assets. Now we we need to make sure it's done properly in a in a way that still respects the trust structure and this is you know, part of the the work that Jen's team does making sure the clients understand that you know, they can't just help themselves to a distribution. You you've got to you know, involve the trustee appropriately. Otherwise, you know, the the the trust may not be really worth the paper it's written on if it's not treated like a trust. So so there's a lot of work that goes
41:55 into that. But yeah, there there's there's a lot of options in terms of how those assets can be held and managed within the structure. It's not necessarily always just with with the trustee doing everything at trustee level.
42:07 >> But you're absolutely right, Kevin. Irrevocable trust structure with the trustee physically present in the Cook Islands or Nevis. Um it is the team in Southpac that sits in that office that are the trustee authorized signatories. So uh the the New Zealand office, what our role is is is to really have that client interaction. Client calls up looking for a distribution or, you know, I've got a hundred thousand dollars worth of cash I want to move into my trust. We'll really take care of that that paperwork side of things, you know, guiding the client through how to make that payment into the structure or who's
42:42 the distribution for, have we got the right due diligence, etc. We will then present those those papers, that work, to the trustee who will um be a second pair of eyes on on that and make a decision under their, you know, under their legislation and under the terms of the trust deed. They have fiduciary obligations, right, to act in the best interests of the beneficiaries.
43:04 >> Mhm.
43:04 >> So um that's that's really how, you know, the the two or three offices really sort of work and interact well together. Um but the, like Matt said, the common structure, trust underlying LLC, and then the LLC will then continue to hold various assets through there. With the man- with the manager of the LLC often being the client.
43:27 >> Ok ok, so that was what I was just going to ask you. So somebody has somebody has a I don't know a restaurant or maybe a chain of restaurants that's owned by an LLC and then the the trust becomes the sole member of the LLC. And so from a an ownership standpoint um the the client doesn't own the LLC anymore. Um that's now owned by the trust, but may- is the client still the managing member of the LLC? And so they're still kind of running the business. Um they they're just not the owner any longer. Is that
44:02 how I mean I I mean the only way, but is that kind of one of the ways it works?
44:07 >> It's more than likely that the trust would hold a a Nevis or a Cook Islands LLC, which in turn would then hold the US LLC or series of LLCs, whatever it may be. Um wouldn't particularly recommend a structure where the trust owns directly a US LLC. Um but yes, you're absolutely right. The the Nevis or the Cook Islands LLC, you know, there there's no requirement to have a um a manager from that jurisdiction. So you can have a a US manager, for example, or you could have a corporate manager um that we can provide um or, you know, uh an entity being that manager. It's It's
44:42 It's various options. But yeah, like Matt said, the the control is sort of retained through that operating agreement. The manager has day-to-day running of that company. So um that's that's the way it would work.
44:54 >> W- What can What can maintain some protection though um is that with with the trustee being the owner of that company, being the member of the company, um if if there were to be a lawsuit filed against the manager or some other kind of event of duress, um you know, that might put the manager in a position where they're they're being forced to divert assets of the company to a to a creditor or or some other purpose, you know, if if that was a risk to the trust fund, the trustee could remove the manager. Um you know, take away that that power um and and could, you know, install a temporary corporate manager uh that that that Southpac would
45:29 provide, for example, or appoint, you know, a third party in another jurisdiction uh to temporarily manage manage those assets um to so so that the so that the client can't be forced to dissipate them. Um and and so you you've you've got a a protective kind of regime uh overlaying that.
45:48 >> So it it it it strikes me that uh you know, lawyers who are involved in um estate planning and such, they're uh what I should say, it's not only lawyers who are involved in estate planning and such that that need to understand how these structures work but the you know someone's you know corporate lawyer would would would need to know because if if the if a business being held you know is sort of through a couple of layers by the Cook Islands Trust but that business is sued or or let's say
46:24 the the manager who's the client of that business is sued they would need to know what kind of protective measures are afforded to the client by the fact that the business is owned by the Cook Islands Trust so again I'm not trying to throw you any curveballs but it it strikes me as how does how do the the advisors outside the you know the the estate planning team how do they know about these things or or how do they learn them I guess so I could
47:00 imagine you know like we were saying in the beginning a lot of lawyers in the United States just have no idea about any of these aspects
47:10 >> Yes so if if you've got some yes Cook Islands or Nevis Trust can be used not not just from that estate planning perspective but but you can be using in connection with you know protecting a revenue stream for example protecting business assets I I think it's important that that you know that that the clients who are setting these up bring in their you know their attorneys or their advisors who who are maybe involved in that side of the business and we we would encourage you know an open dialogue between those people and and the you know
47:45 the trust services team member that the Southpac point of contact so so that you know these other advisors are aware of Southpac and and what we and what the trustee can offer and what protections are available. Um so that it it doesn't come as a a sort of bolt from the blue if something does need to happen and the you know the trustee needed to remove the client as manager. Um you know we we we like to be a part of that overall um you know planning solution for the for the client. Um and and we'll often you know interface with a range of other professionals in the
48:20 course of doing that.
48:21 >> Yeah we we we have interaction with client you know third-party providers, attorneys, you know we're we're here to to provide support to the client and the wider circle in which they operate. Um so yeah quite often you will get what the heck's the structure, you know?
48:38 >> [laughter]
48:39 >> Your assets are where?
48:41 >> Yeah. I mean if I if I had a dollar since I I sort of started in the industry for how many people sort of look at you blankly going you know what is this? Um I'd be fairly rich. But yeah it's it's it's a hand-holding exercise sometimes. Um and of course more than willing to simplify that, you know, put it out there to to providers. But I guess that's really something that we pride ourselves on in in the team is actually just making it easy for clients. Um we don't want to make anything hard. We want to make their life easy. So yeah. That's what we here to do.
49:12 >> Let's take another quick break for a sponsor and again more questions probably than we'd than you have
49:17 >> [clears throat]
49:17 >> the answer. Probate and Trust TV, your curated source for the most useful and insightful content on estate planning and trust and probate administration featuring standout professionals like Bill Gross, Paul Rabalais, James Cunningham, and yours truly. Whether you're a lawyer, accountant, real estate professional, or working on your own succession plan, this channel helps you quickly find the clearest, most practical content YouTube has to offer. Subscribe now to Probate and Trust TV.
49:54 Spend more time learning, less time searching.
49:59 >> So, as as we're talking about this, one of the things that struck me is um because you deal with clients who I'm not saying that, you know, two to five million dollars is a lot of money. It is, but but you know, we think I mean, I guess I tend to think of this level of sophistication of planning really, you know, for the sort of, you know, eight figure net worth and above crowd who probably in general are more familiar with things like, you know, fraudulent
50:34 transfers to avoid creditors, you know, those those kinds of issues. And and I'm I'm I'm curious to know um how I guess you know, how are those I well, I guess let me ask the first question. Typically, what is the level of sophistication of your clients? How much education do you need to do with them so that they can understand, you know, this
51:10 this structure and and how it it can really help them? And um I I I hesitate to ask this, but I know I see this in my practice all the time, um which is how much of it do you think clients really understand versus their lawyers and advisors understand it and and are saying to them, "Yeah, yeah, this is a good idea, you know, now that I now that I understand it myself, you this you know, you want to do this."
51:39 >> I think Do you want to take this one, Matt, or should I stop?
51:43 >> Uh you go for it, Jen.
51:44 >> Yeah, I I think our clients are definitely sophisticated, right? We can't say they're not in the context of this conversation.
51:49 >> [laughter]
51:50 >> Well, just just among us three maybe.
51:54 >> Um I guess the beauty of the model that we're operating under, and Matt will talk more to this, but we we aren't dealing with individual clients right at the start. We're dealing with our our referring attorneys. Um so they actually do a lot of the groundwork for us. Um many of them have been operating in in that field for many years, or whether it be a new one that we've sort of, you know, brought on board and educated through through Safewill. We we do So by the time the client gets to us, you would hope they know what they're getting themselves into. Um but on top of that, they will also have some close contact with with Matthew and and the business development team. Um By the time they get to the trust
52:30 services team, they have a an introduction call. So this could be anywhere from 45 minutes to an hour and a half. And and my team will take them through what happens next. So Matt's, you know, setting up the structure, getting the bank account, um then they come over to us. Now the level of understanding, it it really depends. You know, some of these clients really understand well at what they've got themselves into. Um they know how, you know, gifting works. And when I mean gifting, I mean that's how you get funds into the structure. You can't just transfer funds into a bank account and go, "There you
53:06 go, protected." Um the trustees have to actually accept that asset into the trust. So they have to sign a deed of gift. They have to demonstrate that on that day, they recognize that that asset now forms part of the trust structure. Those are the little bits and bobs that kind of sometimes can get a little bit lost in the mix. So we just really carefully take the client by the hand and say, "If you're bringing assets in, this is what you need to do. If you want a distribution, this is what you need to do. Any amendments to the trust, you you how a power works,
53:42 Um And we try and keep that as simple as possible. But, it's it you know, it it's sometimes a challenge in itself, but we understand that clients are not in that industry. You know, you're talking about a medical doctor, for example. They probably have no interest in learning about it anyway. So, um we just try and be there to assist where we can.
54:02 >> Yeah. Um So, unfortunately, we are coming up on on on our time. We I warned you that we may end up We're getting close to an hour.
54:14 >> [laughter]
54:14 >> Um so, I I guess, you know, kind of final question. Um and and I I think we'll have to save the whole section of um you know, it in a in an actual situation where someone someone's assets are are under siege, shall we say, you know, how does that all work? I'm going to have to have you back, I think, to talk about you know, to talk about that whole side of it, right? Cuz in in the end, presumably, that's why your you know, your clients are are doing these things, right? It's It
54:49 Jen, your your um comparison to insurance makes makes a lot of sense. This is another type of insurance. It's just not It's not a policy. It's It's insurance in terms of a you know, a structure, right? So, um from a from a day-to-day standpoint, um how much time or maybe day-to-day is the wrong comparison, week to week, month to month, um how much time does it take for a client to um
55:25 operate their financial affairs or handle their financial affairs within the structure, um you know, that that that is set up with with a you know, you know, a maybe a Nevis LLC and a Cook Island Trust, right? It sounds very complicated. I'm just wondering, you know, what what kind of time commitment are people making once once they embark on this journey?
55:49 >> I I think it depends, you know, what what sort of structure they want to set up and and why they're why they're setting it up. So, we we have a lot of clients who, you know, the the the work is front-loaded. You're you're spending a few weeks setting up the trust and LLC and bank account combination. Um and and then yeah, they'll work with Jen's team to do the gifting exercise to get those funds into that bank account. Now, for many clients, at that point, they they their kind of work is done. They've done they've set up their their protective structure. They put funds in as a precaution because asset protection
56:24 works best when it's precautionary, uh rather than because you've got a creditor you're about to go into battle with. Um uh and so, you know, and and and those structures take very little maintenance. There might be a professionally managed investment account uh that will grow over the years that will fund the annual trustee fees and then some and provide decent growth. Um and um yeah, provide that that sort of retirement fund for the for the client further down the line. Uh for the more complex structures where you've got a few more moving parts, uh it just really depends how they look, where do the operating businesses sit, uh how much involvement
57:00 do you need of the of the trustee um to, you know, to to be involved in in consenting to uh transactions, for example. Um so, it it really does vary, but a lot of a lot of our structures are fundamentally quite simple uh at their at their core uh and will involve the protection of a financial account. Uh and and those ones don't don't involve a a massive amount of time commitment.
57:24 >> Mhm.
57:26 >> So, okay. Haha. Too too many questions. So, I unfortunately, I think we're we're we're going to have to to leave it at here for now. Um But but you know, I I need to elicit promises from both of you that you will come back and talk some more about this because I I think in many ways we've just scratched the surface.
57:44 >> I think so.
57:45 >> I think there's a whole there's a whole set of questions about succession and and like I said and like I said a moment ago, what happens when there is an event that could create, you know, the need for this kind of protection. So those those are two large subjects that that I'd love to delve into with with you you know on on a future show. So
58:07 >> Absolutely.
58:08 >> Yeah, we'd be very happy to come back for part two, Kevin.
58:12 >> We've also got some some other incredible people at Southpac as well that, you know, would would I'm sure love to join. So we'll we'll sort of see who's there.
58:19 >> We can I can fit more people on the screen.
58:22 >> [laughter]
58:23 >> But I I do want to give each of you kind of a, you know, last opportunity to, you know, you know, convey any other information you think will be useful for the viewers. Just you know, just an opportunity to kind of wrap things up if you will in case there was something maybe I I overlooked or something you think may not have been clear.
58:44 >> Yeah, I'll stop. Um I mean I I just like to finish um well quick thank you, Kevin, to you but it's been fantastic. But really just to say um you know, Southpac's history speaks for itself. You know, we were the first trustee company. We were the, you know, the lawmakers. Um Not only that, you know, we have real people in offices. We have no US nexus. Um we have no business ownership in the US. We are owned by um you know, through our through our Nevis, Cook Islands, and New Zealand offices. Um so yeah, it's it's really just a a sort of plug for Southpac and and really just how much we
59:19 care about the clients and and what we can offer our clients going forward. Yeah.
59:24 >> And I think for me to build on that, you know, this is a great opportunity and a great plug for our industry in the Cook Islands and Nevis as well. Yeah, as I said, they are they are lesser known jurisdictions and we are working really hard to try and build their profile and showcase the benefits that these jurisdictions can offer. Yeah, really kind of demystify them for a lot of practitioners who who may have vaguely heard about them and know a little bit about what they do. Any any practitioner who's interested, I would love them to get in touch and I'd love to have a conversation with them and and you know, show them how we can
60:00 work with them to help them set up these kind of structures for their clients so that their clients can be you know, getting the sort of benefit that that you know, hundreds of thousands of other clients of ours have had over the last 40 years.
60:13 >> Yeah. So if you if you need someone to help you advocate for maybe having a session on this at STEP LA next year, let me know. I'd be happy to do that cuz I I I was surprised I'm very surprised honestly when I spoke to this lawyer earlier who told me that she didn't really know anything about them. I I but like literally, you know, one of the top top attorneys in in our field and nothing against her. It it it just I guess because I've known Craig for a number of years now, so on my radar about even
60:51 though I don't I don't consider myself anything like you know, truly knowledgeable about them, but at least you know, I know about them and it it it it really strikes me as as an incredible tool that should be in most estate planning attorneys kit even if they don't use it all the time.
61:10 >> Yeah. 100% It's it's not it's not for it's not for everyone. Not everyone needs an offshore trust, but it it's it's great for attorneys to know that this is the option for those clients who have those those greater protective needs. Um yeah, it's it's a great tool in the armory.
61:28 >> Great great platform to get the word out and you know, hopefully more more people will will have them in their toolkit.
61:34 >> Absolutely. Absolutely. Well, Jen, Matthew, thank you so much for spending this time with me today. I'll have you hang tight for just a minute to go and do a quick wrap up. So So folks, uh you know, sometimes my guests are willing to talk about
61:50 >> [laughter]
61:51 >> how good they are. Most Most are shy. I I got to love, you know, love these guys, but you know, you can see these are true professionals. So if you look right down below you in the show notes, you will see their contact information. If you have any questions, reach out to Matthew. Um Jen, I you know, reach out to Jen. And and if they can't answer your questions, I'm sure they can contact you with the people who can, but the the the worst question is the one that's not asked, right? And it may You
62:29 can see Matthew just said, "This isn't for everybody." So you don't have to worry, they're not going to try and sell you on something that's not right for you. They're going to do the opposite. They're going to help you come to understand if this is the right situation for you. And if not, I'm I'm willing to bet they're going to point you to someone else who will, you know, help you get this figured out. So So, you know, don't hesitate to look for more information. I think, you know, that's that's one of the things I try and inspire with this show is for all of us to to learn more. Especially
63:06 Especially for all the attorneys out there, you know, get in touch with with with Matthew on the business development side and and find out what Southpac and Matthew and Jen and their group can do uh maybe able to do to help your clients out. Put that tool in your toolkit. Uh so, real quickly, uh Mondays, like today, at 10:00 a.m. Pacific time, Trusts and Estates weekly. Tuesdays, at 10:00 a.m. Pacific time, Business Lessons from the Military. Wednesdays, at 10:00 a.m. Pacific, uh People Making Money. And then, every other Thursday at
63:42 5:00 p.m. Pacific time, join me at Jigger's this place. We'll have a cocktail and a schmooze and talk about all kinds of things completely unrelated to finances. It's a chance just to relax. So, lots of opportunities for us to be together during the week. And I hope you will join me. If you know someone who you think might be interested in this topic, please share this episode with them, and they can see the kind of uh expertise that that Jen and Matthew have brought to the show today uh for themselves firsthand. So,
64:17 you know, do a favor for a friend. Uh again, Jen, Matthew, thank you so much for joining me today. Really appreciate it. And that just leaves me to sign off as I always do, and remind you, Marie darling, you are my bell. Courage at all times, my friend.
64:36 >> Thank you very much.
64:37 >> Thank you, Jen.