NEW ZEALAND Law and Practice Contributed by: Violet Yu, Jonathon Russell and Sandy Chen, Cone Marshall Limited
While New Zealand does not currently have a public beneficial ownership register, there have been propos - als to introduce one in response to Financial Action Task force (FATF) recommendations. These measures do leave clients feeling more exposed to increasing disclosure requirements, which may deter some indi - viduals from setting up effective structures. There is also currently no system that publicly reveals the beneficial owners of companies and limited partnerships, but this is under discussion under the Corporate Governance (Transparency and Integrity) Reform Bill. New Zealand remains an environment where careful use of trusts and limited partnerships may still offer a degree of privacy, provided that full compliance with tax and anti-money laundering laws is maintained. 2. Succession 2.1 Cultural Considerations in Succession Planning It is common for the younger generation to need assistance from the older generation when entering the housing market. Most banks require parental funding for home pur - chases to be classified as a “gift” for mortgage approval, although families often prefer to treat that support as a loan so they can retain control, ensure repayment in the future, or equalise benefits among children. Documenting financial assistance from parents as a loan, with a formal agreement, allows parents to recover funds if needed and reduces the risk of family disputes later on. This is particularly relevant where assistance is provided to a child and their spouse or partner, because a relationship breakdown may other - wise result in a 50:50 split of assets under the Property Relationships Act 1976. Structuring assistance as a loan can safeguard wealth for the family and child, preventing unintended loss to an ex-spouse or part - ner. Over time, parents can still choose to forgive the debt (in whole or in part) or to account for it when distribut -
ing their estate, for example by offsetting the amount advanced against that child’s eventual inheritance if equalisation among siblings is desired. 2.2 International Planning When putting in place a succession plan, it is essential to understand who the beneficiaries are and how any cross-border legal, tax or compliance issues in their jurisdictions may affect what is intended. For example, a distribution from a New Zealand trust to a UK resident beneficiary may trigger UK capital gains tax on unrealised gains in the trust, even if the UK link is recent. Likewise, a distribution from a New Zealand estate may face inheritance tax in the beneficiary’s jurisdic - tion, depending on the beneficiary’s domicile and location of assets. Specialist advice in the beneficiary’s jurisdiction is key to avoid unexpected tax or legal issues. 2.3 Forced Heirship Laws New Zealand does not have any forced heirship laws and generally honours testamentary intentions. How - ever, functional limits contained in legislation such as the Family Protection Act 1955, Property (Relation - ships) Act 1976 and Testamentary Promises Act 1949 impose restrictions that, in certain circumstances, can modify or override a will’s terms to ensure fairness or fulfil obligations. The Family Protection Act 1955 imposes a moral duty on parents to provide adequate support and mainte - nance for their children. If a parent excludes a child from their will, that child can claim against the estate, arguing that the parent failed to meet this moral duty. If successful, the court may adjust the will to the extent necessary to remedy the breach and provide adequate provision for the child’s support and maintenance. The Testamentary Promises Act 1949 allows a per - son who was promised provision in a will for services provided (eg, caregiving) to claim against the estate if excluded. If the claim is upheld, the court may award provision from the estate, potentially reducing the share intended for children.
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