Court Has Jurisdiction Over Cook Islands Trustee When Fraudulent Transfers in Divorce Proceedings

While Melvin and Sylvia Weitz were in the middle of a divorce, Melvin transferred $7 million into two Cook Islands trusts for his new wife Ellen. Southpac is a Cook Islands Trust company who was incidentally the trustee for these trusts at issue. When Sylvia discovered the transfers, she sued Melvin, Ellen, the two trusts, and Southpac for fraudulent transfer.

Southpac tried to claim it was not subject to jurisdiction in New York, but the court concluded that they did have jurisdiction because the fraudulent conveyance was an attempt to avoid satisfying a New York divorce action judgment. This case demonstrates that using offshore trusts to hide assets from soon to be ex-spouses is not a legitimate form of asset protection.

See Jay Adkisson, Weitz: New York Superior Court Holds That It Has Jurisdiction Over a Cook Islands Trustee For Fraudulent Transfers, Forbes, Apr. 2, 2012; see also Weitz v. Weitz, 2012 NY Slip Op 30767, N.Y.Sup.Ct.No. 016811-08 (Mar. 22, 2012).

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.