Foriegn Trust Registration

New Zealand Foreign Trusts are a unique and popular wealth management and business investment vehicle. Properly structured New Zealand Foreign Trusts can allow for overseas residents to use a New Zealand business entity on the international market and enjoy 0% tax in New Zealand.

What are the benefits of a New Zealand Foreign Trust?
If a New Zealand Foreign Trusts has a non-resident Settlor and a non-resident Beneficiary, the NZFT will not draw a New Zealand tax liability on the profits it derives from activities outside of New Zealand. New Zealand Foreign Trusts allow for Separation of Powers, whereby different roles are delegated to Trustees. This feature allows a greater chain of control over the trust’s assets.

NZFTs are eligible to make distributions of capital and assets as it sees fit, and is only bound by typical restrictions for maintain positive Financial Statements. New Zealand Foreign Trusts are perfectly suited for use as a business entity, and are routinely utilized for trading, asset and property holding, and as investment vehicles.

What is Power Separation in an New Zealand Foreign Trust?

Under New Zealand regulations, the Trustees in a NZFT may be designated certain roles within the Trust. It is intended that these rules will reflect the differing positions and obligations that a Trustee may hold in a Trust. There can be any number of different roles and Trustees, but under typical conditions, it is common to see:

Custodian Trustee: The Custodian Trustee is responsible for getting the assets of the Trust. They are also required to hold and dispose of the assets, as appropriate.

Managing Trustee: The Managing Trustee is responsible for the management of the Trust’s assets, and issuing binding instructions to the Custodian Trustee.

Advisory Trustee: The Advisory Trustee is responsible for overseeing the Trust’s affairs. The Advisory Trustee advices the Managing Trustee through non-binding instructions.

Under New Zealand regulations, while the Advisory Trustee’s instructions are non-binding, the Managing Trustee is indemnified from any losses occurring from following the instructions. Similarly, the Custodian Trustee is not liable for damages arising from completing the instructions of the Managing Trustee.