Family Trusts and Estates – Things to think about for your family trust and your estate when beneficiaries live overseas
It is common for adult children and grandchildren to live overseas. The length of time away from New Zealand and the degree of connection to where they are now living will determine where they are seen as tax residents or “domiciled” for tax purposes. People do not need to be a citizen or permanent resident of another country in order to fall under that country’s tax regime.
This is important as the method in which distributions or assistance from a family trust or from your estate to offshore beneficiaries can have adverse tax implications for them depending on what country they live in. The common theme creating adverse tax consequences in overseas jurisdictions is that New Zealand is one of the few western economies that does not have a comprehensive form of capital gains tax.
If you have children or grandchildren living overseas and you wish them to benefit from a family trust or you have made provision for them in your will, then it would be a good idea to discuss your intentions with them. You and any beneficiary are likely to need tax advice here and from the country they are living in.
It is also important to consider whether any trustees of a family trust or executors named in your will have moved from New Zealand as the tax regime of the country they now live in can have implications for a New Zealand trust or estate.
If you have questions regarding your trust or will, please contact Andrew Logan, Principal (03 377 2900 / andrew@mmlaw.co.nz).