Wealth structuresTrusts Act 2019: New Zealand Foreign – or ‘Offshore’ – Trust changes



New Zealand Foreign Trusts have been extremely successful for a variety of factors which include flexibility, widespread uses of trusts in New Zealand, an excellent judiciary and a reputation as being a country which plays fairly and ‘safe’. I have been working successfully with private clients and advising them on NZ foreign trusts for over ten years and I happily recommend them to clients as suitable trust vehicles in an excellent jurisdiction. As always, the key is to use top notch professionals, and one should note that one can always use New Zealand trustees using laws of other jurisdictions, such as the BVI or Bahamas. Finally, New Zealand’s unique separation of trustee functionality allows one to have New Zealand trusts managed by custodian trustees in New Zealand but with administrative trustees in Switzerland or Barbados, for example.

The changes coming to all New Zealand trusts, including ‘foreign’ or ‘offshore’ trusts are welcome. They preserve New Zealand trusts’ flexibility. The law will be more accessible for those without legal understanding. Finally, New Zealand trusts will embody core principles for trusts and set out absolute requirements for trustees which is useful as many trustees within New Zealand are not professionals.

Why New Zealand? 

Below please see a list of basic reasons as to why international private clients choose New Zealand foreign trusts:

  • • Tax neutrality for “foreign” trusts i.e. where there is no NZ or Australian settlor, beneficiary or source income.
  • • High-quality judiciary and legal profession well-versed in trust law.
  • • Ability to use NZ entity as custodian trustee with a managing co-trustee or investment manager resident in a more convenient time zone (‘separation of trustee powers’) which is crucial in the gig economy, and post-COVID-19 travel restrictions.
  • • Via the common law system, access to a clear and extensive body of substantive law based on an English model.
  • • Minimal level of public reporting requirements.
  • • Requirement for trustee or director of a trustee to be a professional as a member of NZ Law Society, STEP or a Chartered Accountant.
  • • OECD and FATF member jurisdiction.
  • • Neutral, non-interventionist government foreign policy.

So, what is changing? 

The Act makes several key changes to existing trust law:

1. Disclosure Obligations. The Act includes a positive obligation on trustees in most cases to notify someone that they are a beneficiary of a trust and that they have a right to request further information about the trust.

2. Retaining Core Documents. Trustees must keep copies of the core documents of the trust, including the trust deed and variations, details of trust assets and liabilities (and financial statements), contracts entered into by the trust, records of trustee decisions and settlor letter or memorandum of wishes.

These core documents of a trust must be kept for the lifetime of the trust, which will require financial statements to be held for longer than the law otherwise requires them to be.

3. Trustee Duties. Whilst the law has always imposed duties on trustees, the new Act defines both mandatory and default duties of trustees. Mandatory duties include acting in good faith and honesty whereas default duties, such as trustees not being able to work for payment, can be waived!

4. Trust Duration. Now 125 years, increased from 80.

5. Trustee Liability. There are changes to the rules that apply to trustees’ ability to exclude or limit their liability and trustees’ rights to be indemnified from trust property. These changes are likely to change how professional trustees manage those trusteeships.

6. Delegation. There are changes to trustees’ ability to delegate their powers and functions, which increase the circumstances in which the powers can be delegated, but restrict the timeframe during which the delegation is effective.

7. Dispute Resolution. It provides that a trust deed may permit a trust dispute to be determined by alternative dispute resolution.

Broadly speaking, as well as modernising trust legislation from the last act in 1956, the Trusts Act increases rights and protections for beneficiaries. The Trusts Act also imposes more responsibility and prescriptive requirements on the trustees of trusts. The changes make trusts more transparent for beneficiaries but also more intensive to handle for trustees and could lead to changes both to trust documentation and administration – as well as an increase in costs!


In a post-COVID 19 world, there will be a flight to quality jurisdictions as smaller jurisdictions grapple with debt and in many cases, the likely introduction of higher taxes. New Zealand offers an ‘onshore/offshore’ haven for the long term: it is safe, has a clean judiciary and boasts a long history of using trust vehicles with around 300,000 existing in a population of around 5 million.

Be aware that if expedient to the trust’s core aims, New Zealand trustees may be empowered change the law of the trust to somewhere which better serves their aims, such as BVI, Cayman or even Cook Islands. The revamped law strengthens the case for New Zealand as a quality, flexible player in an incredibly uncertain time.

Stephen Abletshauser

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