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Skeptical coverage of offshore trusts tends to cite the same handful of cases: Bilzerian, the Andersons in FTC v. Affordable Media, In re Lawrence, In re Huber, and a Bermuda structure called the Prince Trust. Cited without context, these cases read like a pattern of failure. Read closely, they show something narrower and more useful: offshore trusts lose in a small number of identifiable circumstances, and those circumstances have almost nothing to do with the jurisdiction and almost everything to do with what the settlor did after the trust was funded.
Offshore Broker builds every Cook Islands Trust around the specific structural requirements the losing cases below failed to meet. Our team includes Connor Steens and John Evans, both with direct trustee and private banking experience in the Cook Islands.
The Cases Everyone Cites
Paul Bilzerian, subject to an SEC disgorgement order and a court-ordered asset freeze, moved funds offshore while that freeze order was actively in effect and was held in civil contempt. In FTC v. Affordable Media, the Andersons were jailed for contempt after a federal court ordered them to repatriate Cook Islands trust assets and they did not comply to the court’s satisfaction. In re Lawrence involved a Chapter 7 bankruptcy where the debtor invoked his trust’s duress clause and argued compliance with a turnover order was impossible. In re Huber saw a bankruptcy court reach assets inside a Cook Islands trust. Charles Colburn moved assets into a Bermuda trust called the Prince Trust, was later found to have retained a right to benefit from it, and had his bankruptcy discharge denied on that basis.
Contempt for the Settlor Is Not the Trustee Losing
None of these outcomes involved a Cook Islands or Bermuda court ordering a trustee to release assets to a creditor. Every one involved a US court exercising jurisdiction over the settlor personally, and finding either that the settlor still controlled the assets or that the settlor’s own conduct undermined the impossibility defense. In re Lawrence makes this explicit: the court could not compel the offshore trustee to act, and said so directly. It sanctioned Lawrence for his own conduct while the trustee held the assets throughout. The distinction matters because it identifies where the actual risk sits, not in the trust’s jurisdiction, but in what the settlor does before and after a court order arrives. See our overview of Cook Islands Trust case law for the fuller record this handful of cases sits inside.
Huber and the Bankruptcy Exception
Huber is the one case in this group that reflects a genuine structural limitation rather than a settlor’s mistake. Bankruptcy Code § 548(e)(1) gives a bankruptcy trustee a ten-year lookback period to claw back transfers into a self-settled trust, far longer than any state fraudulent transfer statute, and federal bankruptcy courts assert worldwide jurisdiction that ordinary state-court litigation does not have. An offshore trust remains highly effective against a state-court judgment creditor. Bankruptcy is a different forum with different rules, and any honest accounting of an offshore trust’s limitations has to treat it separately. Our pros and cons overview covers this distinction directly rather than glossing over it.
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The Pattern Underneath the Cases
Every losing case in this group shares one of two features: the settlor retained genuine control or a hidden benefit that a court could point to, or the case landed in bankruptcy where the ten-year lookback applies regardless of jurisdiction. Colburn kept a leadership role on the trust’s protector committee and appeared in SEC filings tied to the trust, evidence a court read as retained control rather than a genuine transfer. Bilzerian moved funds while directly violating an active freeze order, conduct that would have drawn contempt sanctions whether the destination was the Cook Islands or a domestic account. Neither case turns on where the trust was formed. Both turn on what the settlor did.
What This Means for Reading the Skepticism
Commentary that cites this case list to argue offshore trusts “don’t work” is describing what happens when a structure is built or operated incorrectly, not what happens to a properly structured Cook Islands Trust facing an ordinary civil judgment. No reported case shows a creditor recovering assets from a properly administered Cook Islands Trust through actual Cook Islands court proceedings, which remains the relevant question for a settlor evaluating the structure’s core function. The honest reading of this case law argues for exactly what a careful trustee and drafting process are supposed to deliver: genuine relinquishment of control, no side arrangements, and a structure that does not depend on concealment. See our answer to whether reporting requirements defeat asset protection for the related question of what disclosure does and does not change, and our guide to is a Cook Islands Trust legal for the full compliance picture.
