As a member of the OECD, the WTO and FATF (among others), New Zealand is in a unique position compared to many of its peers. This affords it a degree of protection from scrutiny which is perhaps not so often afforded to jurisdictions which might be termed 'offshore'. It has a favorable tax regime, a robust book of legislation and is generally considered a stable jurisdiction in both economic and political fields.
Costs are comparable to other similar jurisdictions. The availability of skilled managers and administrators would, if anything, justify any higher fee. In keeping with its reputation (and compared to some jurisdictions) the trustee has a slightly higher administrative burden. This, coupled with the burden of statutory filings, might increase the fee charged.
Foundations are not available in NZ, but Trusts are very popular: some commentators believe that New Zealand boasts more Trusts per capita than any other common law jurisdiction. Trusts in New Zealand (which meet certain criteria) are afforded special tax treatment; confidentiality is also maintained. Limited Liability Partnerships are rising in popularity in New Zealand, as again, only limited information appears on public registers. 'Look-through' Companies are also popular, due to the favorable tax treatment afforded to foreign shareholders (who meet certain criteria).
The biggest challenge remains language differences. Cultural differences are also a challenge, as is the education of clients who are not familiar with the common law system, or the concept of a trust: educating clients on the need to have the trust administered and operated by the trustee can be a long process.
One of the biggest planning issues is succession planning. Ensuring that, whilst clients achieve their goals of asset protection, they also plan for the future (in most cases by way of a will, or trust (or both)) and in particular ensure that their succession planning will work for future generation(s). Another issue is the clients desire to remain involved in the operation of the Trust, but with the correct planning and drafting a New Zealand trust can generally meet most, if not all, objectives and goals.
New Zealand currently has 19 TIEAs in place and has entered into an IGA with the United States. Unless affected by one of the agreements, clients' New Zealand structures and arrangements will remain largely unaffected.
Trusts will inherently contain a mix of asset protection and asset succession tools. Whilst some jurisdictions have focused on the former, New Zealand has relied on its robust legislation and trust regime to afford protection to those settling trusts in New Zealand. New Zealand’s Trust Laws have recently been reviewed and changes will ultimately be made to the terms of the Trust laws. There is, however, no apparent move to focus more specifically on issues of asset protection.
New Zealand has a long heritage of trust laws and a robust regime. Principles of equity and law are well established (and based on English laws) and tested in the courts and have endured for more than a century. The current law strikes a fair balance between asset protection and the protection of innocent creditors, without being biased or offensive.
New Zealand does not legislation which provides for the establishment of a Foundation in New Zealand.
New Zealand's trust law is closely based on English statutes and principles. The main statute is the Trustee Act, 1956 which re-enacted provisions of the 1908 Trustee Act. The 1956 Act is closely based on the English Trustee Act of 1925.
Source: David Finlayson/AMS Financial Group
