A new opportunity for asset protection with a New Zealand trust

Every now and then a new jurisdiction surprises us with opportunities for nomad capitalists. In this case, we're discussing an estate planning tool par excellence: the trust. This time it's not in Nevis but much further south, not in the Caribbean, not in Panama, not in Europe. Let's explore New Zealand finances through an asset-protective trust.

New trust Opportunities: New Zealand is ideal for foreigners

Under certain circumstances, a living trust can be the answer to our prayers, and this is the case in New Zealand. It's well known that making a fortune is not enough, the next step is to protect it in an effective way. We've talked about this in several of our articles including our featured piece on the Forever Free package.

When it comes to trust opportunities, New Zealand has excellent alternatives and, in this article, we will explore which ones are available and who can benefit from them.

New Zealand trust: what is it

A New Zealand trust is an agreement established by a non-resident (settlor) who transfers his or her assets to a resident trustee in New Zealand. The trust will enjoy several benefits if certain conditions apply. Tax exemptions will be applied for foreign trusts administered by resident trustees. As long as the assets, the settlor, and the beneficiaries are not residents of New Zealand, the assets are free of tax. It's worth noting that this exemption does not reach annual reports, which are mandatory.

Living trusts are excellent options for wealth distribution during the settlor's lifetime but also after decease. This is why the trust is an excellent estate planning tool being able to even replace a will or to legally circumvent laws like mandatory inheritance. Clearly, this will entirely depend on the jurisdiction and its legislation, but this is pretty much the trust’s essence.

Unlike a foundation, the trust is an agreement between two parties, i.e., it’s not a legal entity. Nonetheless, the main principle consists in separating assets from the owner, and this is amply fulfilled in New Zealand.

New Zealand: finances and management through a trust

Usually, a foreign New Zealand trust is settled as a discretionary trust. It has the power to benefit the settlor and the family in any way possible or else they can establish what share each beneficiary gets. Furthermore, it provides the settlor with the capacity to maintain a certain degree of control. 

A new opportunity for asset protection with a New Zealand trust

New Zealand trust: how to register it

For every financial structure, one must prove to have a clean record and impeccable character which generates the need for due diligence. When it comes to the New Zealand trust, the application requires a registry form, a list of related persons, a list of assets, and a distribution schedule. Once established the trust will be given a unique number under which it will present the annual reports.

New Zealand trust: reporting

Under this heading, Mundo would like to clarify an important aspect: living trusts and any type of trusts must be established through a certified professional to avoid legal issues. Reporting has always been key especially when you're working with foreign structures. One needs to only take a look at regulations and standards created within the past decade to understand the big picture. Is the financial world a better place after FATCA, BEPS, or CRS? We can't say, but one thing is certain: we must be extra careful when it comes to international compliance.

As a modern estate planning tool, the New Zealand trust comes with benefits but also responsibilities. Reporting is mandatory and must be done yearly with the following:

• Annual financial report
• List of assets and distributions
• List of people that have connections with the foreign New Zealand trust
• Financial state
• Payment of reporting expenses

Alternative jurisdictions to establish an estate planning tool such as the trust

Not every country is ideal for establishing a trust, especially for foreigners. The structure comes from British law, and it works better under the common law framework. Moreover, certain jurisdictions have made of this estate planning tool an irreplaceable piece in the machinery of modern financial plans.

From Baron Rothschild's times to our days many things have changed but the principles of asset protection didn't. They can be narrowed down to the following two: legal separation from assets and diversification. With a New Zealand trust you have half of the deal closed.

Another advantageous jurisdiction is Nevis, which is characterized by its high level of protection as it doesn't recognize foreign court rulings. In New Zealand, this does not apply, however, opening a case against a New Zealand trust is quite expensive, so potential creditors will have to think twice before starting this tortuous journey. In essence, both the Nevis trust and the New Zealand trust are highly protective structures.

New Zealand trust as an estate planning tool: confidentiality

In line with the previous paragraph, we want to point out that achieving complete confidentiality is almost impossible in the modern world. One way or the other, authorities will know who is linked to the trust. Technically it's possible to maintain a certain level of confidentiality, but the trust’s clients must be prepared to be visible.

Disclaimer: this article presents a general overview of the New Zealand trust and trusts in general, however, this article does not contain accurate information about the requirements and legal implications of forming a trust. The reader must keep in mind that this article does not replace a legal consultation and that before establishing a trust one should always consult with a certified advisor.

Explore the New Zealand trust with Mundo

We are happy to unveil new possibilities beyond the popular jurisdictions. In terms of asset protection, Nevis, Liechtenstein, and Panama ring a few bells and among these opportunities, New Zealand steps hard.

Luckily, thanks to our years of experience in nomad capitalist services we’ve managed to create a solid network of experts and partners. Thanks to this we can connect our readers with the best trusts, corporate, bank accounts, and investment migration.

We are a consolidated team of writers, lawyers, realtors, and advisors who believe in the concept of freedom and libertarian ideals. Talk to us and find the most fitting solution to your case. We're one click away. 

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