New Zealand foreign trust: how it works

What a New Zealand foreign trust is

Inland Revenue calls a trust a foreign exemption trust when no settlor has been resident in New Zealand since the first settlement (source: Inland Revenue, Foreign exemption trusts).

It also does so when the trustee uses the foreign-sourced income exemption, which sits in section HC 26 of the Income Tax Act 2007.

To keep the exemption, the contact trustee must register the trust and meet the ongoing disclosure and annual return duties (same source).

Registration needs one or more resident trustees. The contact trustee gives the trust deed, the settlements made onto the trust and details of the connected persons (source: Inland Revenue, Register a New Zealand foreign trust).

Each feature and its source is set out on the law and features page.

A foreign exemption trust is therefore visible to a tax authority. It is built for families who accept that, not for those who want no record of the trust to exist.

We say so early, because the choice of place should fit the family’s aims.

Who uses New Zealand trusts

This structure suits families and business owners who live outside New Zealand and want a common law trust with a trustee on the ground.

Typical aims are to hold family investments, to pass on a company, or to keep a clear, explainable structure for banks and tax authorities.

A useful test before you go further: would you be comfortable explaining this structure, and why it exists, to any tax authority that asks?

If so, disclosure is a feature of the structure rather than an obstacle.

The options build on one core: a discretionary family trust with a named class of beneficiaries and trustees who answer to the deed.

• Discretionary family trust. The trustees decide distributions within the class, guided by your letter of wishes.
• Reserved powers trust. The settlor keeps certain powers, such as directing investments. How far that works depends on the deed’s wording.
• Holding company trust. The trust holds a company that owns the family business or the family’s investments.
• Trust with a private company. A family company can sit under the trust, with its own filings.

If a company is involved, tell us early. Shares in an operating company raise different questions from a portfolio of listed securities.

Some families add a private company on top, or move an existing trust to a New Zealand-resident trustee. Both routes need advice from your lawyer on the steps.

If a trust already exists, our trust administration service shows what administration covers once we are appointed.

How we work with the resident trustee

The foreign exemption trust rules need a trustee resident in New Zealand, so that seat sits with a partner firm there (source: Inland Revenue, Register a New Zealand foreign trust).

We are your single point of contact, and the partner takes the defined role that your deed and service agreement give it.

Our side covers the first conversation, identity and source-of-wealth checks, the document list, and coordination with the law firm, accountant and bank.

The partner’s side is named in your documents before you sign. You deal with one checklist and one contact, not with two firms separately.

Legal and tax questions go to your own advisers. We coordinate the papers and reporting, and the trustee decides under the deed. We do not give advice on either.

How the trustees run a New Zealand trust

A trust is a legal relationship set out in a deed, not a company. You, the settlor, transfer assets to trustees, who hold and manage them under the deed, for the beneficiaries.

Most families choose a discretionary trust. The trustees decide who receives what and when, guided by a letter of wishes that you write and can update.

The Trusts Act 2019 and the common law set the trustees’ powers and duties. This is a point your lawyer confirms for your case.

The trustees must follow the deed, act in the interests of the beneficiaries and keep proper records.

In practice their work looks like this:

• holding title to the assets and keeping them separate from their own;
• trustee meetings with minutes for each distribution or major decision;
• accounts and an asset report that we send you;
• a periodic refresh of identity checks on the people connected to the trust;
• the annual return and the updates that Inland Revenue asks for.

What stays with you is the choice of beneficiaries, the letter of wishes, and either the decision on how assets are invested or the appointment of a professional manager.

Our side stays with the checklist, and the partner trustee stays with the trust.

Documents and timeline

Registration asks for tax numbers, so gather these early: yours as settlor, and those of beneficiaries and other connected persons where they have them.

Basis: our onboarding checklist and Inland Revenue, Register a New Zealand foreign trust, accessed 2026-11-05.

A law firm drafts the deed, an accountant handles the filing, and the bank runs its own checks. Each sets its own pace.

We give you a checklist and show where each step stands. The step-by-step set-up guide walks through every stage.

New Zealand compared with the Cook Islands

Both are Pacific places on our list, but they are built for different families.

New Zealand centres on a registered, disclosed trust with a resident trustee. The Cook Islands rest on a different statute and a different service model, explained in the Cook Islands structure explainer.

Weigh three things:

1. How much disclosure you accept. This kind of trust gives its details to Inland Revenue.
2. Where your advisers are. A place they know shortens drafting and review.
3. Who acts as trustee. Here a resident partner firm takes a seat; the other place differs.

Tax and legal comparisons belong with your advisers, because the outcome turns on your residence and your assets, not on the place alone.

Use the side-by-side comparison tool to put New Zealand beside another place.

What affects the cost

Costs have three parts: our work, the resident trustee’s fee, and third parties such as the law firm and the accountant.

We publish the set-up fee for a standard trust; the rest is quoted after we review your case. Five things move the total more than anything else:

1. Type of structure. A discretionary trust, a reserved powers trust or a trust with a company each need different drafting and different ongoing work.
2. Value band of the assets. Our yearly fee is quoted by bands of asset value, because more value usually means more reporting and review.
3. Kinds of assets. Cash and listed securities are simpler to hold than private company shares or property.
4. Number of beneficiaries and places involved. More people and more countries mean more checks and more local advice.
5. Filings. The annual return and updates add accountant time every year.

The quote states its assumptions, shows the trustee’s part separately and is confirmed once we have seen the documents.

The cost guide sets out each cost line and who charges it.

For more before you decide, browse every place we cover or read the answers to common questions.

When you are ready, request a quote for New Zealand. It is an estimate based on what you tell us, not a binding offer.