NEW ZEALAND Law and Practice Contributed by: Brent Wicks, Violet Yu, Jonathon Russell and Sandy Chen, Cone Marshall Limited
6.4 Fiduciary Investment New Zealand’s prudent person regime requires trus - tees to invest with the care and skill of a prudent busi - ness person managing others’ affairs, factoring in their expertise or professional standards. The prudent person regime integrates Modern Port - folio Theory (MPT)’s focus on diversified portfolios to balance risk and return. However, unlike MPT, which optimises returns for a given risk, the regime prohib - its speculative investments and focuses on prudent processes. Diversification is expected unless exempted by the trust deed, with failure to do so risking personal liabil - ity (Section 128 of the Trusts Act 2019). Trusts can hold active businesses (eg, controlling shares) if permitted by the trust deed. However, the following apply. • Trustees must actively oversee businesses, seek - ing information (eg, board reports) and intervening if needed. • Inclusion of anti-Bartlett clauses in the trust deed may limit monitoring duties. • Trustees must consider and balance the interests of any income beneficiaries against beneficiaries entitled to receive capital – catering to one class may be detrimental to the other. • Failure to properly monitor or fulfil obligations risks incurring personal liability of the trustees. • Responsibility for management can be delegated (Section 67), but oversight from the trustee is still required (Section 68). 7. Citizenship and Residency 7.1 Requirements for Domicile, Residency and Citizenship In New Zealand, domicile refers to a person’s perma - nent home where they intend to reside indefinitely. Tax residency in New Zealand is established if an indi - vidual spends more than 183 days in New Zealand within a 12-month period or has a permanent place of abode in the country.
New Zealand residency is granted through a residence visa: various visa categories lead to the grant of a residence visa. Once an individual holds a residence visa for 24 months and meets other requirements, that individual will be able to apply for a permanent resi - dence visa, which allows indefinite stay and does not require the individual to establish or maintain fiscal residency in order to retain it. New Zealand citizenship can be acquired by birth (subject to parental status) or by grant after meeting residency, character and language requirements. New New Zealand does not have a formally recognised expeditious or fast-track pathway to citizenship for most individuals. Citizenship is generally obtained through grant, with the requirement of a standard five-year residence period and compliance with all statutory criteria. However, there are limited excep - tions where citizenship may be granted more quickly at the discretion of the Minister of Internal Affairs, but these are rare and exceptional. 8. Planning for Minors, Adults with Disabilities and Elders 8.1 Special Planning Mechanisms New Zealand provides flexible trust law and statu - tory mechanisms to support minors and adults with disabilities. Discretionary trusts, with clear guidance expressed to the trustee, can be applied towards looking after a minor or for adults with disabilities. One may also use wills to set up testamentary trusts to appoint a trustee to manage the inheritance of a minor until they reach the age of majority or a disabled adult. Where an adult becomes incapacitated, an applicant may apply under the Protection of Personal and Prop - erty Rights Act 1988 for the court to appoint a prop - erty manager and welfare guardians. Enduring power of attorney for property or personal care and welfare can ensure long-term care and financial protection for individuals who become incapacitated. Zealand allows dual citizenship. 7.2 Expeditious Citizenship
426 CHAMBERS.COM
Powered by FlippingBook