What it does
Names a known creditor
Authorises payment under conditions
Effect
Weakens intent argument
Transfer not designed to defeat this creditor
Used when
Settling after a claim
Or one is foreseeable
Does not
Guarantee payment
Creditor still faces the statute
What it is
A Jones clause is a provision naming a specific creditor, or describing a specific claim, and authorising the trustee to pay that creditor under defined conditions. It is almost never described in general coverage of Cook Islands trusts and one of the most useful tools available when a dispute already exists or is foreseeable.
The logic
A fraudulent disposition challenge under section 13B requires proof, to a criminal standard, that the settlor acted with principal intent to defraud that specific creditor. A deed naming that creditor and explicitly authorising payment contradicts the intent argument on the face of the instrument. The clause does not make enforcement easier. It makes the intent limb harder to prove by removing the most obvious evidence for it.
What it achieves
Three things: it weakens the intent limb of a section 13B challenge; it gives the trustee a legitimate mechanism for addressing the known claim; and it improves the contempt position, since a settlor who instructed the deed to permit payment to this creditor is in a materially different position before a court assessing good faith.
What it costs
A genuine pathway by which the creditor can reach the assets under defined conditions. The trade is real: reduced risk of the whole settlement being unwound in exchange for giving up some blanket protection. Whether that trade is worth making depends on the size and strength of the claim.
Relation to the duress clause
They address different problems. The duress clause prevents general repatriation under compulsion. The Jones clause weakens the fraudulent disposition characterisation. A post-claim deed contains both, with careful drafting keeping the conditions distinct.
When to use it
When a specific claim already exists and the settlor intends to disclose it fully, which is the only approach a licensed trustee will accept; and when a claim is reasonably foreseeable. It is not a standard provision in a trust settled years before any dispute. See also settling a trust with existing litigation.
General information, not legal advice. Requires specific advice from litigation counsel before any settlement.
(Review & sourcing)
Written by
Connor Steens
BBus, business development
Reviewed by
John Evans
20+ years, offshore structuring
Last updated
General information
Sourced from
ITA 1984 and trustee practice
s.13B
01International Trusts Act 1984 — consolidated text.
02s.13B factsheet — limitation periods and burden of proof.
(COMMON QUESTIONS)
Frequently asked questions about the Jones clause
A provision naming a specific creditor and authorising the trustee to pay that creditor under defined conditions.
A fraudulent disposition challenge requires proof of principal intent to defraud that creditor. A deed naming them and preserving a payment route contradicts the intent argument.
Not automatically. It creates a pathway under defined conditions. The creditor still faces the limitation periods and burden of proof.
A genuine route by which the named creditor can reach the assets. You trade some blanket protection for a reduced risk of the settlement being unwound.
No. For a modest claim against a substantial portfolio it may give up more than it gains.
The duress clause prevents general repatriation under compulsion. The Jones clause weakens the fraudulent disposition characterisation of the original transfer.
No. It applies when a specific creditor exists to be named.
The claim must be disclosed fully to the trustee, who will not accept a settlement where a material dispute is concealed.
(MORE ON THE SETUP)
References and articles on the Setup
References
In-depth reference pages on the Setup.
1 min
Cook Islands Trust Beneficiary Class
Who can benefit, why their discretionary interest is not attachable property, and the drafting choices that preserve flexibility.
1 min
Cook Islands Trust Letter Of Wishes
Non-binding guidance to the trustee. Why it must not be binding, what it should say, and how often to update it.
1 min
Cook Islands Trust Registration
What gets filed, what remains private, and why registration triggers the protective provisions rather than deed execution.
1 min
Funding A Cook Islands Trust
Learn how to fund a Cook Islands trust, including asset transfers, timing, and key considerations for effective protection.
1 min
Reserved Powers In A Cook Islands Trust
What you can keep without undermining the structure, what you should not, and the audit question every power must pass.
1 min
The Cook Islands Trust Deed
What must be in the deed, the five provisions that matter under pressure, and what cannot be included.
1 min
The Cook Islands Trust Duress Clause
Authorises the trustee to refuse a repatriation order. What it protects and what it cannot, explained through Anderson.
1 min
The Cook Islands Trust Jones Clause
Names a known creditor and authorises payment. The counterintuitive tool that weakens the fraudulent intent argument.
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