NEW ZEALAND Law and Practice Contributed by: Brent Wicks, Violet Yu, Jonathon Russell and Sandy Chen, Cone Marshall Limited
2.7 Transfer of Assets: Digital Assets Digital assets are personal property and are treated as such under general property law. There is currently no specific legislation that addresses digital asset administration. To ensure smooth man - agement and transfer of assets after death, individuals should take care to: • include reference to their digital assets in their will; • provide account details, passwords or access instructions to their executor; and • consider appointing an executor who is comfort - able with technology. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities In New Zealand, trusts and similar entities are widely used for tax and estate planning to protect assets, manage succession and optimise tax outcomes. The primary types include the following. • “Discretionary” trusts – These are used to ring- fence personal assets from business risk and/or to facilitate succession and tax planning. • Funeral trusts – Prepaid trusts (up to NZD10,000) to meet funeral expenses. Due to ownership of the funds being transferred during the lifetime of the settlor, this removes the funds from the settlor’s estate at time of death. Probate of those funds is therefore not necessary, and they can be immedi - ately available for payment upon the death of the settlor. • New Zealand foreign trusts – Established by non- residents with New Zealand trustees, these are tax-exempt on foreign-sourced income, ideal for international wealth planning. • Limited partnerships – Tax-transparent entities often paired with trusts, these are used for offshore planning and recognised as separate legal entities abroad. • Charitable trusts – Established for charitable pur - poses, these are popular due to their relative ease of establishment and the benefits of charitable reg -
• Section 182 (FPA) – Courts may vary nuptial trusts upon marriage/civil union dissolution to address benefit disparities. • Constructive trust – Arises if a partner contributes to trust property with a reasonable expectation of benefit, requiring compensation. Prenuptial/Postnuptial Agreements Section 21 of the PRA allows for couples to “contract out” of the default equal sharing provisions. There are some formal requirements, including: • agreement must be in writing, signed and wit - nessed by lawyers; • both parties must receive independent legal advice; and • terms of the agreement must be fair and reason - able. Courts may set aside agreements where the circum - stances could amount to causing “serious injustice” (Section 21J, PRA) considering the overall fairness of the agreement, the amount of time that has elapsed, and any other circumstances that may apply. Formal relationship property agreements that comply with the technical provisions of the PRA are essen - tial for clarifying and confirming how assets should be owned, in the event of a marriage or relationship breakdown. 2.5 Transfer of Property Transfers of property during life or after death (via a will) generally set the cost basis at market value for recipients, with no immediate tax being payable on receipt. However, a potential future liability could arise on sale (eg, bright-line test). Specialist tax advice should be sought prior to trans - ferring assets to trusts, especially depreciable assets. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms There are no death taxes/estate duties or gift taxes, so this is not applicable in New Zealand. Assets can pass tax free to the younger generation via wills, and no tax is payable on distributions of capital from trusts.
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