SBA vs. Cook Islands: Who Must Be the Trustee?

One important structural difference between the Sovereign Base Areas (SBA) and the Cook Islands concerns who can act as trustee.

The SBA framework does not appear to impose a general requirement that a trustee must be resident in, or licensed in, the Sovereign Base Areas.

That is a meaningful distinction from jurisdictions where local trustee licensing and regulatory infrastructure form part of the trust framework.

But there is an important qualification: the absence of a local trustee requirement does not mean the absence of trustee obligations.

1. Does the trustee have to be local?

Under the SBA trust-law framework, there is no general requirement for every trustee to be an SBA resident or locally licensed trustee.

This potentially gives the structure greater flexibility when selecting a trustee.

By comparison, the Cook Islands has an established regulatory framework for licensed trustee companies, which forms part of its international trust industry.

The distinction is therefore structural: the SBA framework does not build the same general local trustee infrastructure requirement into its trust law.

2. Flexibility does not eliminate responsibility

A trustee's obligations do not disappear simply because the trustee is located outside the SBA.

Trustees remain subject to the duties applicable under the governing law and any other relevant legal or regulatory requirements.

Depending on the circumstances, those duties can include:

• administering the trust in accordance with its terms;
• acting in accordance with applicable fiduciary duties;
• exercising trustee powers for proper purposes;
• managing trust assets appropriately;
• and complying with relevant accounting, record-keeping and reporting obligations.

The precise duties depend on the governing law, the trust instrument and the circumstances of the appointment.

3. Why the structural difference matters

The choice of trustee can affect the administration, cost and practical operation of an international trust.

A framework that does not generally require a locally resident or licensed trustee may offer greater flexibility in selecting an appropriate professional or corporate trustee.

However, that flexibility should not be confused with freedom from regulation.

A trustee established or operating in another jurisdiction may still be subject to that jurisdiction's licensing, regulatory, tax and reporting requirements.

The trust's governing law is only one part of the analysis.

Key Takeaway

The distinction is straightforward:

SBA: No general local-residency or local-licensing requirement for every trustee under the trust-law framework.

Cook Islands: An established local licensed-trustee framework forms part of its international trust infrastructure.

But neither proposition removes the trustee's underlying legal responsibilities.

In practice

When comparing the two jurisdictions, ask three questions:

1. Must the trustee be locally resident or licensed?
2. Which law governs the trustee's duties?
3. What regulatory obligations apply where the trustee actually operates?

The key distinction is flexibility in trustee appointment versus the continuing obligations of trusteeship.

A trust may offer flexibility in who can administer it, but the trustee's legal duties remain a separate and essential part of the structure.