NEW ZEALAND LEGAL. Israel Vaealiki Jackson Russell Lawyers

Transcription

1 NEW ZEALAND LEGAL Israel Vaealiki Jackson Russell Lawyers

2 Introduction - The New Zealand Legal System The New Zealand legal system is based on English law. New Zealand was a British colony before becoming an independent country. It recognises the Queen as its head of state represented by the Governor-General. The New Zealand s Parliament has 120 members (MPs) who are elected under a democratic mixed-member proportional system every three years. The party (or coalition) with the largest majority forms the government. The New Zealand Parliament has authority to pass statutory laws by majority vote subject to certain procedural requirements. New Zealand s highest court is the Supreme Court. Underneath the Supreme Court is the Court of Appeal, High Court and the District Court. New Zealand has a common law legal system where decisions of the higher courts constitute binding precedent on courts of equal or lower status. New Zealand does not have a founding constitutional document but to some extent its law recognises the principles in the Treaty of Waitangi - a treaty entered into with the indigenous Maori people of New Zealand and the British Empire.

3 Purchasing property in New Zealand New Zealand operates the Torrens System for land ownership. Ownership of land is recorded in a central register operated by Land Information New Zealand (LINZ). The government guarantees the accuracy of its register and titles are searchable online. The most common form of title is freehold land although there is also leasehold land. Transfers of land are generally undertaken by lawyers who update titles electronically through LINZ. The terms of a purchase of property are primarily governed by the contract of sale and purchase entered into by the parties. Real estate can only be transferred by a contract in writing. Typically a standard form of agreement is used and then modified by the parties lawyers. In the Auckland region a sale by auction is often the preferred method of sale. It is necessary for vendor and purchaser to have a New Zealand Inland Revenue number and to sign an authority form after their identity has been verified by a trusted referee typically a lawyer. There are restrictions on the purchase of land by non-residents under the Overseas Investment Act The purchase of sensitive land (which is likely to include residential property shortly) requires approval of the Overseas Investment Office. Wills To make a New Zealand will requires the will-maker sign the will in front of two witnesses in the presence of each other. The transfer of New Zealand situated land under a will is governed by New Zealand law but the transfer of moveable property under a will is governed by the law of the will-maker s domicile. It is important that inbound expats are aware of this issue and obtain advice on their domicile before making a New Zealand will.

4 If an expat couple move to New Zealand with minor children, they should consider appointing guardians under their respective wills to cover the situation where they have both died leaving minor children surviving them. A foreign will can be proved in New Zealand to allow assets situated in New Zealand to be dealt with by the executors or administrators named in the foreign will although it is a more involved process and can take significant time. Similarly, an overseas grant of probate or letters of administration in a Commonwealth country can be resealed in New Zealand to allow the executors or administrators to deal with New Zealand situated assets. Where the expat has significant assets in New Zealand, it may be advisable to have a separate New Zealand will. In some cases an Expat may need separate wills in a number of countries that are compatible with each other. If a person dies without making a will, the Administration Act 1969 specifies which family members take the deceased s assets under New Zealand law depending on who survives the deceased. Spouses, partners, children and grandchildren may also make claims against a deceased person s estate. In the case of a spouse or partner, they may make claims in relation to matrimonial property in the estate or on the basis that the deceased has not provided for them adequately under his or her will. In the case of children and grandchildren, they may bring a claim on the basis that the deceased has not provided for them adequately under his or her will. It is also possibly to make claims based on a testamentary promise. Enduring powers of attorney Under New Zealand law, a person can sign an enduring power of attorney to permit someone else to act for them in the event he or she loses mental capacity. There are two types of enduring powers of attorney an enduring power of attorney for property and an enduring power of attorney for personal care and welfare.

5 An enduring power of attorney needs to be certified by a lawyer or other qualified person. An enduring power of attorney signed in another jurisdiction is not valid in New Zealand. Family Trusts Family trusts are often used for New Zealand succession planning as New Zealand does not have any gift tax, inheritance tax or death tax making it relatively straight forward to establish a family trust. New Zealand s trust law is based on English law and New Zealand s courts have well-developed case law precedents relating to trusts. Family trusts are used in New Zealand for creditor protection, asset protection, tax mitigation, matrimonial and testamentary claims protection and the transfer of wealth in an efficient and robust manner on death. New Zealand trusts are also a useful estate planning tool for nonresidents as the New Zealand tax rules for trusts are based on the tax residency of the settlor. This regime may assist an expat who is only going to be tax resident in New Zealand for a limited number of years or who does not intend on becoming tax resident in New Zealand but wishes to have their trust administered from New Zealand. New Zealand s trust regime is sometimes used by expats moving to a country other than New Zealand to take advantage of a favourable tax regime for that expat in that other country. Matrimonial Law The Property (Relationships) Act 1976 is the main statute governing New Zealand s matrimonial law. Under New Zealand law, a couple s matrimonial assets are subject to an equal division rule on separation or death where that couple has been living together for three years (and sometimes less than three years where the couple have children).

6 There is no requirement that the couple are married. The couple can also be in a same sex-relationship and a person may be in more than one relationship at the same time. For a New Zealand court to exercise jurisdiction over the couple s assets, those assets must be New Zealand immovable property (such as real estate) or at least one of the parties to the relationship must be domiciled in New Zealand. The equal division rule only applies to relationship property and there are special rules that define relationship property. Pre-relationship property and inheritances are generally not subject to the equal sharing rules but there are exceptions. Most notably a family home owned by the couple in automatically relationship property. A couple can contract out of the Property (Relationships) Act 1976 by entering into an agreement that is certified by independent New Zealand lawyers separately acting for each party. A foreign pre-nuptial agreement can be enforced in New Zealand where a couple agrees that the laws of another jurisdiction apply to their relationship property. The agreement must be valid under the law of that other country. A New Zealand court can still overturn that agreement if it decides that it is against public policy or contrary to justice to enforce it. A foreign post-nuptial agreement is not enforceable in New Zealand. Due to the complexities surrounding foreign agreements and the potential uncertainties around the enforcement of these agreements, expat couples may want to consider obtaining New Zealand legal advice on the effect of any agreement they have entered into before moving to New Zealand. In addition to having jurisdiction over the division of a couple s assets on separation or death, a New Zealand court can order a person to pay spousal maintenance and child maintenance until a child is over the age of 18 years.

7 Establishing a business in New Zealand New Zealand is a business friendly environment to operate in. New Zealand consistently ranks in the top countries for ease of doing business. Companies are the most common vehicle for operating a business and are governed by the Companies Act The Companies Office operates an online system for registering, maintaining and searching New Zealand companies. All New Zealand companies must have at least one director who is a New Zealand (or Australia) resident. There is no prohibition under New Zealand law on a person acting as a director of a foreign company. Limited partnerships are another incorporated limited liability structure that is available. For expats with an existing business overseas it is possible to establish a subsidiary or branch in New Zealand. Generally, directors are not liable for the debts of a company but they do owe duties to the company that are codified in the Companies Act 1993 and can be held liable for a breach of those duties. For example, directors owe a duty not to trade recklessly and to act in good faith and in the best interests of the company.

8 AT A GLANCE The New Zealand legal system is based on English law. To some extent, the laws of New Zealand recognise the Treaty of Waitangi - the treaty entered into with the indigenous Maori people of New Zealand. The Torrens system of land ownership applies in New Zealand. This means that land ownership is recorded in a central register the accuracy of which is guaranteed by the government. One requirement of a will in New Zealand is that it be signed before two witnesses. The transfer of New Zealand land under a will is governed by New Zealand law but the transfer of moveable property is governed by the maker s domicile. Should a person pass away without a will in New Zealand then the Administration Act 1969 determines who inherits the deceased s property. Spouses, partners, children and grandchildren can a make claims against a deceased person s estate on legal grounds such as not being adequately provided for under the will.

9 An enduring power of attorney allows a person to act on anothers behalf should they lose mental capacity. This can either be in relation to the property of the person or the person s personal care and welfare New Zealand allows for family trusts. Some reasons for their use are succession planning, asset protection, tax mitigation, matrimonial and testamentary claim protection. Generally under New Zealand law, a couple s matrimonial assets are subject to equal division on separation provided they have been living together for at least three years. For property to the split between a couple, there is no legal requirement that they be married. The couple can be in a same sex relationship and a person can be in more than one relationship at a time. The most common vehicle through which to operate a business in New Zealand is via a company. New Zealand companies must have at least one director who is a New Zealand or Australian resident.