US tech founders shift wealth to Cook Islands trusts - Southpac Group

Southpac Group says more US technology founders are placing wealth into Cook Islands and Nevis asset protection structures, linking the increase to rising legal exposure tied to artificial intelligence, cybersecurity and data privacy disputes.

The offshore trustee and asset protection services provider said new client numbers rose more than 290 per cent between 2022 and 2025, with US clients now accounting for about 85 per cent of its client base. It manages around USD $4 billion in assets.

The trend comes as litigation risk remains a growing concern across several sectors. Research cited by Southpac Group found that 56 per cent of senior in-house counsel surveyed across technology, healthcare, financial institutions and energy reported greater exposure to cybersecurity and data privacy disputes, while 46 per cent reported increased exposure to disputes related to artificial intelligence.

That research identified data breaches as the most likely trigger for future litigation. Among technology sector respondents, 75 per cent reported increased exposure to federal cybersecurity and data privacy litigation.

Matthew Smith, Director of Business Development at Southpac Group, said many technology entrepreneurs were building significant personal wealth through business growth, fundraising and exits, increasing the importance of wealth preservation planning.

"Most clients are professionals or company owners looking to protect assets they have spent decades building," Smith said.

"Technology entrepreneurs can create substantial personal wealth very quickly through rapid business growth, investment or a company sale. As that wealth grows, so does the importance of long-term asset protection, succession planning and managing legal risk."

Southpac Group said offshore asset protection structures are more common in the United States than in jurisdictions with less aggressive civil litigation systems. These arrangements are usually set up as part of a broader risk management and wealth preservation strategy.

A key issue for clients is timing.

"Asset protection planning needs to happen before there is a dispute," Smith said.

"Once litigation is underway, it is usually too late to establish these structures effectively or appropriately."

Cook Islands focus

Mike Arand, Chief Executive Officer at Southpac Group, said the firm was the first licensed trustee company in the Cook Islands and has established more than 4,000 trusts over the past 40 years. Clients typically hold between USD $2 million and USD $10 million in assets and come from 51 countries, although the United States remains its largest market by a wide margin.

The Cook Islands became known for asset protection trusts after introducing legislation in the late 1980s aimed at shielding assets from future creditor claims, provided the structures are established before legal proceedings begin. Southpac Group said Nevis is also used in some arrangements because of its company law framework.

Arand said the two jurisdictions can be used together.

"Many clients combine a Cook Islands trust with a Nevis company, creating two layers of protection across separate jurisdictions," Arand said.

"That combination is one of the reasons Cook Islands and Nevis structures are widely discussed in the US asset protection market."

Due diligence

Offshore trusts have long drawn scrutiny over transparency and oversight. Southpac Group said it applies due diligence checks before accepting clients, including identity verification, background checks, sanctions screening, politically exposed person checks and ongoing monitoring.

"Prospective clients can be declined outright where there are concerns around sanctions exposure, criminal activity, tax transparency or existing legal claims," Arand said.

Southpac Group pointed to the Cook Islands' most recent review by the Financial Action Task Force, which rated the jurisdiction compliant or largely compliant across 38 of 40 recommendations.

The firm now administers trusts for clients from 51 countries and employs teams in New Zealand, the Cook Islands, Nevis and the Philippines. It is also building relationships with attorneys, wealth advisers and other professional referrers across North America as it seeks more work from the US market.

Smith said understanding of offshore structures among US legal advisers remained uneven.

"There are thousands of lawyers across the US advising on domestic asset protection, but many still do not fully understand offshore structures," Smith said.

"That represents a significant growth opportunity for us."

Arand said many clients viewed these arrangements as a response to legal risk rather than a way to conceal assets.

"For many clients, this is not about secrecy or tax avoidance," Arand said.

"It is about preserving family wealth in a legal environment where one major dispute can put decades of work at risk."