Individuals who open a trust in New Zealand are interested in protecting their assets, as well as guaranteeing their control. A family trust in NZ allows the founder to transfer the family assets as he/she wants to, however, there are multiple uses to a correctly structured trust. Our team specializing in company registration in New Zealand can also assist those who are interested in knowing more about trusts. Once you decide that this manner of protecting your assets is suitable for you, we can help you with setting up a trust in NZ.
| Quick Facts | |
|---|---|
| Governing Law | The Trusts Act 2019 |
| Trust incorporation in New Zealand | Via a trust deed |
| Trust registration | In the case of charitable trusts. These are entered into the Charitable Trusts Register. |
| Types of trusts | family trusts; charitable trusts; business trusts; foreign trusts, etc. |
| Trustees | Natural and legal persons |
| Number of trustees | No legal minimum applies, however, it is common to set up a trust in New Zealand with at least two trustees. |
| Trustee residency requirements | There are no residency requirements for trustees. |
| The appointment of new trustees | Performed by the person nominated for this purpose or as otherwise provided for in Part 4 of the Trusts Act. |
| Trustee duties | The primary role of the trustee is to act in the best interest of the beneficiaries. |
| Trustee liability | Trustees are liable for failure to meet their fiduciary duties or to comply with the statutory requirements for the trust, liable for breach of trust, etc. |
| Trustee powers | Controlling the assets of the trust in the best interests of the beneficiaries. |
| Court appointed trustees | Under specific cases |
| Beneficiaries | One or more individuals or classes of individuals (for example, children) |
| Trust taxation | Tax is paid on any income that the trust does not distribute to beneficiaries. The rate is 33% or 39%, depending on how much the trust earns in a year. |
| The transmission of property | According to the type of property (for example, land) and the circumstances under which it takes place. |
Table of Contents
What are the parties to a trust in New Zealand?
A trust is set up by a party for the benefit of one or more parties. The following are involved:
- the settlor: the person who sets up the trust and places the initial assets; any person who transfers assets into the trust is the settlor;
- the trustee: one or more appointed persons who will manage the assets; the settlor entrusts them with this task; while the settlor can also act as a trustee, it may be advisable in some cases to appoint an unrelated party. The use of a public trustee in NZ is possible – our team can give you more details;
- the beneficiary: one or more individuals who will receive the assets of the trust; the settlor can add beneficiaries as he/she sees fit.
Our team can not only assist you if you want to open a company in New Zealand, but also if you want to set up a trust here. You can reach out to us for more information about the parties to a trust, their roles, and duties.
In the country, the NZ Public Trust is the crown entity that offers trustee services. Our team can give you more information about the use of a public trustee in NZ and how you can request assistance for matters concerning estate planning, wills, and others.
What is the exempt trust in New Zealand?
The New Zealand exempt trust is not subject to taxation in NZ on its gains, capital due or its worldwide income. For this type of trust in New Zealand, only locally sourced income (i.e., income derived from NZ) is subject to taxation.
When setting up this type of trust, the law allows the appointment of a private trust company as the trustee of the exempt trust. Additionally, the private trust company can perform the role of trustee for the same family that sets up more than one NZ public trust.
We present some of the advantages of setting up an exempt trust in New Zealand and of investing in NZ in general:
- Not blacklisted: investors who open a company in New Zealand enjoy an important advantage that the country is not included on any blacklist (a list of jurisdictions that are untrustworthy, such as some countries in Latin America);
- Flexible laws: NZ imposes a set of provisions that favour investments and encourage entrepreneurs who want to start a business in New Zealand. The trust law grants sufficient powers to the professional investment management business that oversees the fund and, at the same time, the trustee remains responsible for certain compliance matters;
- Tax benefits: New Zealand has signed forty double taxation agreements. These allow for the reduction of certain types of taxes and the avoidance of double taxation between NZ and the other signatory state. Examples of such countries include: Australia, Austria, Belgium, Canada, Denmark, France, Germany, Hong Kong, Italy, Japan, Korea, Russia, Singapore, South Africa, Thailand, the UAE and others;
- Estate planning: the flexible regime applicable to trusts makes easy to retain a corporate trustee and, at the same time, grant this trustee the power to change the proper law governing the trust to that of another country. This can be a key advantage for the transfer of wealth across generations.
An exempt trust in New Zealand can be set up by a non-resident who will transfer the desired assets into the trust in the form of a gift or donation for the beneficiaries.
How do you use a family trust in NZ?
A family trust can be a useful tool to protect the assets of the said family. Some reasons why you can consider opening a family trust in New Zealand include the following:
- protect certain assets for your family members;
- make sure that the family’s business is transferred to the next generation;
- control how some assets are transferred, and to whom;
- more straightforward estate administration;
- asset and creditor protection;
- retirement savings and planning;
- cross-border asset management;
- privacy;
- philanthropic purposes.
Some important issues to consider about the duration of a trust in New Zealand include:
- the new Trusts Act changed the maximum duration of a trust to 125 years;
- prior to the 2021 new Act, trusts had a maximum duration of 80 years;
- trusts that were formed before the new law came into force may or may not be extended from 80 to 125 years; our New Zealand company formation agents can give you more details.
In addition to setting up a trust, we can also help you with dissolving a family trust in NZ. Ending a trust may be required for several purposes, and the manner in which this is accomplished can be detailed by one of our team members. If you already have a trust, and you wish to know more about dissolving a family trust in NZ, our team will answer your questions.
Who can use a charitable trust in New Zealand?
The charitable trust is used to protect money or assets that will be used (as the name suggests) for charitable purposes. The settlor is the one to decide what these purposes will be, and to what charity the fund will be donating its assets.
Common reasons to set up a charitable trust in New Zealand include the following:
- education promotion;
- religion promotion;
- poverty relief;
- other purposes that benefit the community.
Unlike a family trust, or a trust opened to protect the assets of an individual (and to control how these are distributed), the charitable trust must exist solely for charitable purposes.
The law governing these types of trusts in New Zealand is the Charitable Trusts Act. According to the regulations, a charitable trust has a trust board that follows the trust deed. Both the trust deed and the trust board are included in the Registrar for these trusts. Our team, which can help you start a business in New Zealand, can also help you set up a charitable trust.
A trust in New Zealand offers a significant degree of flexibility and the exempt trust can be a convenient wealth planning tool usable for many different, novel purposes.
Contact us if you want to know more about how to set up, change, or dissolve a trust in New Zealand.