The Jones clause

What it is

The Jones clause is a term that either identifies a particular creditor or characterises a particular claim, then permits the trustee to settle with that creditor once stated conditions are satisfied. General write-ups on Cook Islands trusts almost never mention it, yet it ranks among the most valuable tools once a dispute is already underway or on the horizon.

The logic

A fraudulent disposition challenge under section 13B demands that, to a criminal standard, it be shown the settlor's chief purpose was to defraud that specific creditor. Where the deed itself names that creditor and openly permits payment to them, the instrument on its face runs counter to any intent argument. Enforcement is not made simpler by the clause; rather, it makes the intent element harder to establish by stripping away the clearest evidence for it.

What it achieves

Three effects: the intent element of a section 13B challenge is undercut; the trustee gains a legitimate route for dealing with the known claim; and the contempt posture improves, because a settlor who directed that the deed allow payment to this creditor stands in a materially different place when a court weighs good faith.

What it costs

A real route through which, on defined conditions, the creditor can get to the assets. The exchange is genuine: you surrender some blanket cover in return for a lower chance of the entire settlement being set aside. Whether that exchange makes sense turns on how large and how strong the claim is.

Relation to the duress clause

Each tackles a separate problem. Repatriation under compulsion, in general terms, is what the duress clause blocks. The characterisation of the transfer as a fraudulent disposition is what the Jones clause undermines. A deed drawn up after a claim carries both, and careful drafting keeps their conditions apart.

When to use it

Where a particular claim is already on foot and the settlor means to disclose it in full, which is the only stance a licensed trustee will take on; and where a claim can reasonably be anticipated. It has no place as a routine term in a trust set up years ahead of any dispute. See also creating a trust while litigation is already live.

General information, not legal advice. Specific advice from litigation counsel is required before any settlement is made.