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  • Lucas & Lucas

Kiwis living overseas & estates

We all know Kiwis love to fly. Most likely your family will have members living overseas, in Australia or other countries.

Often people appoint family members as the executors and trustees in their wills. If one of the named executors is a New Zealand Citizen and living outside New Zealand this may affect the estate administration in two important ways:

  1. Time Although communication is very fast by email, when we courier documents by international courier, there can be delays, especially during Covid-19 restrictions in each country. There are significant witnessing and certification requirements for the High Court of New Zealand and various banks and financial institutions which require witnessing of affidavits and statutory declarations and also identification and residence as part of the AML/CFT requirements. This can be more time consuming when you are not in New Zealand.

  2. Tax implications If you are a New Zealand citizen and have been outside New Zealand continuously for three (3) years or more then you will be classified as an “offshore person” and this may tax implications for the estate. You could inadvertently turn the estate into a foreign trust. This is because of recent changes to how New Zealand treats trusts. If more than 25% of the controlling persons being the executors are an “offshore person” then the estate would become a foreign trust. This is best to be avoided if possible. It is therefore most important to work out when each overseas person last entered New Zealand. The Inland Revenue in New Zealand will also confirm these details with the Department of Internal Affairs. Prior to the Covid-19 restrictions on entering New Zealand this had little practical effect as most overseas Kiwis returned fairly regularly to see family and returned home for the funeral of a loved one. However now with the Covid-19 restrictions we often have family members that have been outside New Zealand for three years continuously and this has been especially hard when returning for funeral has been impossible because of the strict boarder restrictions. If there is a foreign trust/estate the executors have 30 days from the date of their appointment (grant of Probate) to register with estate with Inland Revenue. Specialist tax advice is strongly recommended in these circumstances. We also strongly recommend that the beneficiaries of the estate also take independent accounting advice in respect of their individual circumstances.

The decision therefore to join the application for the grant of Probate should be carefully considered. If you chose not join, by signing a Renunciation of Probate document, this will not affect your entitlement to inherit under the will, just whether you are active in the day-to-day administration of the estate.

For further information contact us or call (03) 477 8080

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