NEW ZEALAND Law and Practice Contributed by: Greg Ambler and Elizabeth Heaney, Tompkins Wake
1. Contemporary Cultural Considerations in Succession Planning 1.1 Social and Cultural Attitudes New Zealand has a large proportion of economically prosperous citizens, many of whom have benefited from salary, business and investment income, inherit- ed wealth and a relatively favourable taxation environ- ment over a number of decades (for example, citizens have made considerable profits in the last 50 years from private property ownership, which has resulted in significant and largely untaxed capital gains). There is no forced succession in New Zealand, aside from certain limits on testamentary freedom, which are covered further in this chapter. This means that suc- cession planning can be extremely variable between families, and different motivations and principles are reflected in this planning. A peculiarity in New Zealand is the prevalence of dis- cretionary trusts. These trusts are used regularly, for reasons of creditor protection, succession planning, ringfencing separate property from the relationship property pool, historically favourable tax settings, and sometimes to facilitate eligibility for certain gov- ernment support. A modest estimate of the number of such trusts in New Zealand is 300,000 to 500,000 although there are likely more, and there is no official register. For succession purposes, these trusts are used to provide flexibility in distributions to a deceased’s family members (typical trusts allow trustees to treat the beneficiaries equally) or to hold family assets long term and across multiple generations (trusts can pres- ently hold assets for a maximum of 125 years). They can also facilitate the succession of business inter- ests, providing for a common owner of a long-term company-owned business, that can accommodate a number of generations taking an interest in the busi- ness, rather than being disrupted or forestalled on the death of a founder or long-term owner. Charitable giving in New Zealand varies from person to person. There is evidence of significant lifetime dis- tributions for charitable purposes being made, and individuals also choose to make charitable gifts in
wills, or establish charitable entities during their life- time (or by means of a testamentary direction). This activity could not be described as commonplace, as there are others who prefer to retain wealth in their family line and let the individuals receiving that wealth choose how they wish to use it. Reduction in certain government intervention or services has resulted in an increased reliance on charitable entities contributing towards unmet needs in social welfare, cultural life, research and recreation. Certain charities rely on a hybrid of government support and philanthropic con- tribution, but more and more are charitable entities relying on the resources they can raise privately to make their own way. New Zealand is culturally diverse. There are certain cultural practices that infuse into its succession prac- tice, including filial piety, marriage contracts and dow- ries, and cultural charitable practices. Along with a migrant population, whose cultural prac- tices are reflected in succession practices, New Zea- land has an indigenous population, and the distinction between Māori (indigenous New Zealand) and Pākehā (non-Māori) land ownership and inheritance is signifi- cant. Under the general New Zealand land law system, land is typically individualised and governed by statutory and common law principles. The land is owned out- right by individuals or entities and generally passes in accordance with conventional succession law. There are set legal rules and guidelines to follow. By contrast, Māori land is governed by Te Ture Whenua Māori Act 1993, which is informed by tikanga Māori. Ownership reflects a more collective framework, with land often held by whānau, hapū or iwi members as undivided shares. Māori land is commonly regarded as taonga, reflecting deep ancestral and spiritual con- nections, and carries obligations of stewardship. As a result, Māori land is subject to restrictions on alienation and succession. It is generally not freely divisible or transferable in the same way as general land, and succession is typically limited to preferred classes of beneficiaries (such as descendants), with the aim of retaining land within the whānau. This dif- fers from the broader testamentary freedom available
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