Real Estate

The usual method adds an LLC in between. You place the property in a domestic LLC, then move the LLC's membership interest - rather than the property itself - into the Cook Islands Trust. That safeguards the ownership chain while keeping the property deed clear of offshore complications.

Below we walk through the LLC-layered method, the due-on-sale exposure that comes with mortgaged property, the cases where homestead property is best kept out of the structure completely, and the situations where equity stripping is the better fit.

Why Real Estate Can't Simply Be Moved Offshore

Of all the assets people fund a trust with, real estate creates the most friction, for a structural reason: land and buildings cannot be relocated abroad. A Texas building or a Florida rental portfolio physically stays put, governed by the courts of the place it sits, no matter whose name is on the title. Putting a Cook Islands Trust's name on the deed changes none of that - it remains US real estate, subject to US court orders aimed at the property itself. Deeding it over directly also brings two further problems. Recording a deed under a foreign trust's name places the ownership structure on the public record, stripping away the privacy the offshore arrangement was partly meant to supply. And most mortgage agreements carry a due-on-sale clause, letting the lender demand the entire loan balance the moment ownership transfers without their consent - so deeding mortgaged property to a foreign trust can inadvertently accelerate the loan in a way the settlor never intended.

The Usual Method: LLC Ownership Plus a Trust Interest

The fix is an LLC layer. Instead of the trust owning the property outright, the property is deeded into a domestic LLC, and it is the LLC's membership interest - not the property - that then passes to the Cook Islands Trust. The upshot is that the property stays titled in the LLC's name, the LLC's interest sits inside the trust, and the trustee owns the LLC, all without the property's title ever appearing under the trust's name or any deed being filed offshore. This accomplishes two things at once. First, it keeps the ownership chain private: search the public property records and you'll see the property owned by an LLC, not a foreign trust. Second, it brings the LLC interest under the protection of the Cook Islands Trust's legal framework: a creditor trying to reach the property now has to get past both the LLC and the trust, instead of running straight from the settlor's personal ownership to the property.

The Due-on-Sale Risk When a Property Is Mortgaged

Moving a mortgaged property into an LLC is usually the step where due-on-sale worries surface. The Garn-St. Germain Act carves out a federal exception for certain residential transfers - moving a primary residence into a revocable living trust generally won't set off due-on-sale - but that exception doesn't reach investment properties, and it says nothing about handing the LLC's interest to the Cook Islands Trust. As a practical matter, lenders seldom enforce due-on-sale clauses against LLC transfers of investment property, particularly where the borrower keeps control of the LLC and the loan continues to be serviced normally. But "seldom enforce" isn't the same as "doesn't apply," and the exposure is present at every transfer step: from your personal name into the LLC, and potentially again should the lender's attention land on the offshore trust holding the LLC interest. Each property and each loan should be reviewed against its specific loan documents before any transfer is made.

Homestead Property: Often Best Kept Out

Most states grant a homestead exemption that shields a primary residence - or a portion of its equity - from creditor claims. Florida's homestead exemption is unlimited in value, covering the full equity in a primary residence. Texas offers comparable unlimited protection. Nevada, South Dakota, and several other states provide substantial but capped homestead exemptions. As a rule these exemptions apply to property titled in the owner's individual name, or, in some states, in the name of a living trust structured a particular way. Put a homestead into a domestic LLC and then let a foreign trust own that LLC, and you can risk losing the homestead exemption altogether - the property would no longer be titled in the individual owner's name the way the state's exemption statute requires. For most settlors in strong homestead states, the exemption already supplies the protection their primary residence needs, so keeping that home outside the trust structure preserves the exemption rather than potentially forfeiting it.

When Equity Stripping Is the Smarter Move

Some investors have built up substantial equity inside their properties - equity that stays genuinely exposed to creditors even within a properly maintained LLC. For them, the LLC-and-trust approach settles who owns the LLC, but it does nothing directly to protect the equity sitting inside the property from a creditor who goes after the LLC head-on. Equity stripping tackles this from a different direction: rather than moving the property into an offshore ownership structure, it positions the equity inside the property through a secured loan arrangement, shifting that equity into a protected offshore structure without the property itself ever changing title or going offshore. See our full guide to real estate equity stripping (REEIS) to see exactly how this works in tandem with a Cook Islands Trust.

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