by Evgeny Orlov, Barrister, Equity Trust International

Many people pick an asset protection jurisdiction or “offshore” asset protection vehicle in the same manner as they would buy a burger. They look at the menu, see the fastest and cheapest solution and don’t worry about the result as long as it meets their needs.

We all know what happens to people who don’t think about what they eat and survive on a diet of junk food. Well, it is the same in the asset protection industry. Simply buying an offshore company with a do-it-yourself bank account online may be okay for a while and indeed it may be okay even in the long run but when establishing an offshore company the first thing you need to ask yourself is why.

If the answer is you need something cheap and nasty which will be opened for a single transaction and then will no longer be needed then the best place to do so is the Internet. Choose the cahepest possible jurisdiction because in essence you don’t care about the product or its quality. However this is not asset protection but simply opening up an account.

If on the other hand, you want to protect your assets not only in the short term but in the long term you should look very closely at the following:

1. A jurisdiction where the laws are clear and predictable and where the agents/lawyers are accountable and professional.
2. Laws which allow you to legally avoid claims by creditors, disgruntled spouses, official assignees and others after your hard earned money.
3. A jurisdiction which is respected and not blacklisted and which has well established asset protection laws.

There are several such jurisdictions in the world but New Zealand is one of the best in terms of value for money and stability of its legal and political system.

The multitude of reasons for choosing New Zealand as jurisdiction can be summarized as follows:

• Firstly, New Zealand is a highly politically stable country with a small population. Its legal and trust profession is highly regulated and controlled; this means that generally if you choose a New Zealand trustee company or incorporator that is actually in New Zealand it is likely to be reputable and more importantly accountable. In some jurisdictions {I will not name them} this is not always the case where your incorporator may even be located there and finding the nominee director or shareholder or even contacting the office may become a problem.
• Further New Zealand is very particular about privacy having well established privacy laws which protect information. Your agent for a trust has to keep your financial information but there are no trust registration requirements. This makes your New Zealand Non-resident Trust more confidential than many other similar products.
• New Zealand Trust laws mean that a “properly” established trust structure cannot be set aside by anyone. That means if a professional has drafted your trust and has been appointed as a trustee it is almost impossible for anyone void it. Thus, for example if your assets are in trust and you personally go bankrupt the official assignee or any of your creditors have absolutely no chance to attack the trust assets (even if they find out that you are the beneficiary).
• The advantages of New Zealand as an offshore jurisdiction include the fact that it is highly regarded by the OECD, is not blacklisted and consequently not considered as tax haven. New Zealand has been voted as having the world’s lowest corruption index and one of the easiest countries to do business in. It is politically neutral and therefore its structures are not eyed with suspicion by any country as well asset held in a New Zealand Offshore trust with properly prepared accounts will satisfy most of the foreign banks as to the source of funds requirements.
• The further advantage of a New Zealand non-resident trust is that it can hold the shareholding in other structures such as Hong Kong, Panama etc which can then remit profits back to the trust. Extensive network of 37 Double Taxation Treaties means that withholding tax can be minimized.
• Further as New Zealand trust do not tax wordwide income if the trust has a non-New Zealand resident settlors. This means your assets and income are tax free and held for generations.

For the above reasons holding property, shares, commodities (silver and gold) or funds should always involve establishing trust as part of the asset protection plan. Without a trust your assets are simply not protected because they are still considered by your creditors as yours. And they are actually yours. Whereas a New Zealand Offshore Trust is recognized as a structure which removes the “legal” ownership of the asset from the settlor and beneficiaries. This means that if anyone sues you, and you have gifted the assets to a trust, they cannot attack the assets because simply speaking they are owned by another owner (your trust).

New Zealand is one of the few countries in the world to legally recognise this; and as long as your trust is established long before you have any problems with creditors your assets are safe forever. A conventional offshore company does not give that protection.

Conclusion:

In todays complex world anyone who has money or assets is a target. In litigious societies such as United States even the most honest businessmen can be sued and made bankrupt. With the ever increasing liability of company directors even being a director of a business exposes you to limitless risks if your company fails. Instances of multimillionaires being stripped of a lifetime of hard earned assest because their company failed due to no fault of their won abound in a world where receivers, creditors and even spouses hunt their rich like prey. The New Zealand Offshore Trust has withstood the test of time as being one of the most reliable tools in one of the most reliable jurisdictions.

To learn more about setting up a New Zealand Offshore Trust and how Equity Law can help protect your assets, contact us using the form below.

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