Frequently Asked Questions
1. What is a trust?
2. How does a trust work?
3. Why should I invest in a New Zealand
trust?
4. How do I protect my assets?
5. What is the life of the trust?
6. How do I set up a New Zealand offshore
trust?
7. How do I name the trust?
8. Who is the settlor?
9. Who are the trustees?
10. Who are the beneficiaries?
11. Is a NZ trust required by law to be
registered?
12. How will a NZ offshore trust protect
my assets?
13. Where can a New Zealand trust invest?
14. How do I get assets in to the trust?
15. How do I access funds from the trust?
16. How safe is your money offshore?
17. What name goes on the trust bank account?
18. How much does a Designer New Zealand
offshore trust cost?
19. How do I get a Designer New Zealand
offshore trust?
1. What is a trust?
A trust is a contractual agreement of trust. The settlor
places something of value, into the care of the trustees,
for the benefit of the beneficiaries. This contractual
agreement must be witnessed. If you don't have trust,
then you don't have a trust. A trust is a lawful, ethical
and effective way to protect your assets.
Ownership of the property held in trust is divided into
legal and equitable. The trustee has legal title to property
held in trust that the trustee is under contract to safeguard
or exploit for the benefit of the beneficiaries. The beneficiaries
have the equitable or beneficial ownership of the property.
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2. How does a trust work?
A trust is very powerful and very flexible. It is much
like a living will but with the added confidence of knowing
that it cannot be taken from you during your lifetime
nor, if properly designed, be overturned or held up in
probate upon your death. A trust affords the greatest
protection when the Settlor, Trustee and Beneficiaries
are all separate parties and when the following circumstances
are maintained:
- No gifting of assets to the trust by the
trustees
- All transactions are at arms length reflecting commercial reality
- The trustees retain total control over the
trust assets
- The trust does not have a Tax File Number
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3. Why should I invest in a New Zealand trust?
- To keep your assets private and confidential
- To facilitate wealth accumulation
- To protect yourself against lawsuits
- To legally minimise taxation
- To place a barrier between you and government
- To protect assets in the event of a family
disruption
- To leave an inheritance to your children's
children
- To create financial freedom
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4. How do I protect my assets?
A well designed trust is an excellent vehicle for holding
assets. By holding assets in trust you can often still
enjoy the use of trust property but public record of personal
ownership is avoided. Assets not held in your name cannot
be taken from you. For strong asset protection never retain
your assets in your name.
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5) What is the life of the trust?
The life of the trust is normally 80 years, however the
trust can be resettled at any time earlier.
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6) How do I set up a New Zealand offshore trust?
Because every situation is unique and everyone has their
own particular goals and objectives our experienced advisors
look at each client individually. You tell us your circumstances
and we will tailor design a structure to best suit your
personal needs. We at Designer Asset Management can help
with the design and structure of all the necessary functions
of the trust.
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7) How do I name the trust?
There are very few restrictions on naming a trust. Many
folk like to name a trust after of a body of water, geographical
location, animal or plant. Others prefer names that conjure
up feelings of emotion, faith or philanthropy. If you
are interested in privacy, we suggest that you avoid naming
the trust after your family name.
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8) Who is the settlor?
The settlor is fundamentally the one who creates the trust.
The trust is created by a settlor that gives a settlement
(of inherent value) to trustees to hold in trust for beneficiaries.
Once the settlor has assigned the settlement over to the
trustees' control, the settlor releases control of those
trust assets. The settlor may issue a non-binding Letter
of Wishes to the trustees for guidance.
Under New Zealand tax law, the taxation status of a trust is wholly determined by the residence of the Settlor. If the Settlor is a non-resident of New Zealand, then the trust is defined as a foreign or offshore trust for tax purposes. However, any person who subsequently gifts property, or sells property
below current market value, or makes a no interest loan
to the trust even after the trust has been settled will also be deemed a Settlor under New Zealand tax law.
Designer Asset Management has a very good relationship
with a charitable foundation in Panama. The foundation
is pleased to provide a settlement for a charitable trust.
The Foundation then becomes the non-resident settlor.
Common synonyms for the term settlor are grantor, creator, and trustor.
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9) Who are the trustees?
The trustees control the assets held in trust. There is
a requirement to have at least one New Zealand resident
trustee to qualify as a New Zealand offshore trust.
The cleanest way to achieve this is to incorporate a special
purpose New Zealand company to appoint as trustee. You
can suggest name preferences for the New Zealand company
to us or we can select a name.
A non-resident of New Zealand can own the shares and be
the director of the New Zealand Company thus controlling
the company and ultimately the New Zealand Offshore Trust.
Where a New Zealand company has non-resident shareholders
or directors that company must, in addition to the stated
costs, pay for a statutory audited set of documents for
submission to the New Zealand Companies Office. If the
sole purpose of the company is to act as a trustee then
these documents will reflect a nil activity report.
Alternatively, 'effective' control of the company can
be secured by purchasing an 'option' to buy the shares
of the company where that option contractually limits
activities of the company. Together with a limited Power
of Attorney to manage certain financial affairs of the
trust, including the bank account, on behalf of the company
the client ultimately retains 'effective control' of the
trust without bringing unwanted attention to themselves.
Using these techniques, clients maintain 'effective control'
of assets while avoiding being deemed trustee or having
absolute control on paper.
The trustees can be replaced at anytime by resolution.
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10) Who are the beneficiaries?
The beneficiaries are the beneficial owners who do not
hold legal title but who will ultimately benefit from
the assets held in trust. The beneficiaries will commonly
be children, grandchildren or a charitable cause. A charitable
cause may include any combination of health, education,
advancement of religion or other purposes of benefit to
the community.
The main reason people establish trusts is to be in 'control'
of assets but not 'own' them. Assets are private and kept
safe from various predators. Ownership eventually passes
to the beneficiaries on vesting day unless distributed
earlier. This leaves beneficiaries with the issues of
ownership that those who established the trust were avoiding.
For this reason it is worth following the proven techniques
of the wealthy who use trusts to transfer the 'control'
of assets through generations not the ownership.
Charitable organisations number among the wealthiest
organisations on the planet providing strong asset protection
for multiple generations. By establishing a private
charitable trust your descendents retain the same benefits
you maintain by 'controlling' wealth and not 'owning'
it.
By avoiding to name specific beneficiaries, the potential
temptation of those beneficiaries to sue the trustees
for not acting in their best interest is removed. One
of the foremost reasons a trust could wind up in a legal
dispute is thus circumvented. In addition to strong
asset protection, a charitable trust provides an ideal
opportunity to be of wonderful benefit to your club,
church or community.
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11) Is there a trust register in New Zealand?
There is no registration process for a trust in New
Zealand. There is no law in New Zealand that compels
a trust to register with any government body of any
kind. A New Zealand trust is private.
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12) How will a NZ offshore trust protect my assets?
A trust is an asset protection vehicle of privacy and
upheld by the courts based on their strong foundation
in common law. Assets held by a trust become trust property;
they are no longer your assets. Therefore, although
you can still control those assets they cannot be taken
from you.
A trust bank account is also property of the Trust.
Strict banking privacy laws in some jurisdictions protect
banking records against disclosure to either the government
or anyone else. Unless there is evidence of criminal
activity, it is extremely difficult for any predator
to steal money held in a trust account in a foreign
country.
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13) Where can a New Zealand trust invest?
A New Zealand offshore trust is an excellent offshore
investment vehicle and can invest in the same way that
any other International Business Corporation (IBC) can.
A New Zealand trust can also purchase property in New
Zealand. The costs for a New Zealand offshore trust
are normally significantly lower than virtually any
other tax haven jurisdiction.
For additional privacy and security we recommend that
assets held in an offshore jurisdiction be owned by
a separate trust.
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14) How do I get assets in to the trust?
For maximum security the very best way to get assets
in to a trust is through an arms length transaction
that reflects commercial reality. These transactions
are prepared using a sale and purchase agreement and,
where necessary, a Deed of Debt. New Zealand residents
must sell assets to a New Zealand offshore trust at
an appraised fair market value or loan money to the
trust at market interest rates to avoid the possibility
of being 'deemed' a settlor. This is an excellent practise
for anyone wishing to get assets in to a New Zealand
trust from any jurisdiction. All transactions of this
nature must be recorded in the trust minutes and a caveat
placed over titles to property held in trust. Useful
contracts along with example minutes are included as
part of a trust package.
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15) How do I access funds from the Trust?
For maximum security the very best way to get assets
out of a trust is through an arms length transaction
that reflects commercial reality. These transactions
are prepared using loan or line of credit documentation.
If assets were sold into the trust and the trust has
not paid for those assets or if money was loaned to
the trust initially, then those funds can be returned
simply as a legitimate repayment of a loan.
Alternatively, if the trust is designed appropriately,
the trust can make an endowment to a second trust. A
second trust can then, if the trustees agree, purchase
any other wanted assets.
All transactions of this nature must be recorded in
the trust minutes. Useful contracts along with example
minutes are included as part of a trust package.
A private offshore account with debit card is a prudent
solution for international transactions. For ultimate
privacy and security a trust as well as trustees can
obtain a free online account at
www.pecunix.com.
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16) How safe is your money offshore?
Despite local media reports your money is generally
safer held in an offshore bank account. Most people
the world over keep money in a local bank because they
perceive it to be safer. Local banks are generally more
unsafe because they fall easy prey to cash strapped
local authorities and collection agencies. It makes
little sense to hold significant sums of money in local
bank accounts that get continually raided by local authorities.
The Internet has made international banking a viable
and convenient alternative. Our experience is that you
can achieve greater safety, stricter privacy, lower
fees and no tax reporting requirements when banking
offshore
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17) What name goes on the trust bank account?
Generally the bank account will be given either the
name of the trust e.g. "XYZ Trust" or include both the
name of trustee as well as the trust's name e.g. "ABC
Limited as trustee for XYZ Trust". The second option
provides greater flexibility allowing deposits to be
received in either the name of the trust or the trustee.
It is also possible to open an account for the trust
in the name of the trustee (or trustees) providing that this is properly
documented in the trust minutes.
If a company is the trustee, a representative having
the appropriate authority of the company can sign on
the trust's account. The representative can be either
a company director or one with Power of Attorney. One
signatory will suffice although two or three signatories
are recommended.
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18) How much does a Designer New Zealand offshore
trust cost?
Our prices are displayed on this
Price Guide.
Please send
Pecunix payments to: payments@designertrust.com
Otherwise
Contact the Payments team for alternative payment instructions.
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19) How do I get a Designer New Zealand offshore
trust?
Please
Contact Us with the details about your particular
situation and tell us where you live and what you are
hoping to achieve. We will facilitate the rest. Our
policy is to respond the same day during week days.
To communicate with us securely please use
this PGP key. To send mail privately using PGP you
will need to download a free version of PGP at the
PGP website. Learn how to use PGP by viewing a
free PGP tutorial on the Pecunix website.
Alternatively you can send us a secure message by opening
a
free ziplip e-mail address and sending us an e-mail
to
DesignerTrust@ziplip.com.
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