Although Trusts are a very common arrangement in different business and private life situations, however countless questions still arise everyday about what a trust actually is, how it can be used, and what benefits they can provide. Allow us to present this simple introduction to acquaint you with trusts and their benefits, and the unique attributes of a New Zealand Foreign Trust for asset planning, protection and inheritance for citizens of almost any country in the world.
A Trust is an arrangement whereby the ownership of some assets is passed from one party, the Settlor, to another party, the Trustee. The Trustee's role is the effective management and care of the assets, extremely for the final benefit of another party, the Beneficiary, who is appointed by the Settlor at the time that the Trust's formation.
Each role within the Trust is typically bound into certain actions or behaviors through pre-determined contracts, which ensure security for the future of the Trust, and mandate actions which are in the best interest of the Trust's beneficies.
Trusts are subject to their own set of taxation rules and legal requirements in each jurisprudence in which they are implemented. While the concept of a trust is simple and easy to understand, their effective creation and operation is best planned by an experienced professional who holds a thorough understanding of local legislations and legal implications. In New Zealand, Trust formation is best carried out by large scale accounting companies, or specialized boutique agencies.
WHAT IS A NEW ZEALAND FOREIGN TRUST?
A New Zealand Foreign Trust is a particular type of Trust that is unique to New Zealand, and posses several legal features which are not found in other jurisdictions.
The primary benefit of a New Zealand Foreign Trust is that it is not subject to tax assessments on any non-New Zealand sourced revenues.
For a New Zealand Trust to be considered a New Zealand Foreign Trust, the primary requirement is to have a non-resident Settlor.
Under current New Zealand legislations, the Trust Deed, a binding formal document which outlines the Trust agreement, is not required to be disclosed to any government taxation authorities. With limited disclosure, the names of the Settlor and Beneficiary may remain confidential. The New Zealand Inland Revenue Department only requires that the Trust's name, date of commemance and the name of the Trustee be shared.
From a legal perspective, forming a straightforward New Zealand Foreign Trust is a relatively simple procedure, but one that requires the advice of a seasoned and experienced adviser through its lifetime. Due to the specialized nature of a New Zealand Foreign Trust, it is better to turn to a strict New Zealand-based Foreign Trust expert who has seen and deal with any intricacies and situations arising around the Trust.