Imagine that you are an American for a second. America’s ruthless capital landscape has been good to you. You’ve made millions upon billions of dollars and you don’t want Uncle Sam to get his hands on it. You want to leave as much of your wealthy empire to your children as you can. You do not want to pay an estate tax and a variety of other taxes that America enforces if you leave your vast amount of money in a will.
In this case, you’d be smart to set up a trust. A trust is where you take a chunk of your wealth and give it to a third-party called a trustee. The trustee then passes on that money to your family when the time is right. This kind of financial arrangement is a good set up for avoiding estate taxes and other taxes levied on wills.
This is right about the time where many wealthy Americans would look for a tax haven. Tax havens exist in countries with relaxed laws concerning trusts and banking in general. In fact, the Organization for Economic Cooperation and Development has set up guidelines to help you identify tax havens.
The hallmarks of a tax haven include little to no tax enforced on a trust set up in that country, very little banking regulation if at all, and laws prohibiting intergovernmental communications. These three key metrics would allow you to hide money in a foreign country from your own US government. And when the time is right, the foreign trustee would give money to your beneficiaries without much tax at all, if any.
But Geoff Cone, a New Zealand tax lawyer, would advise you again setting up that trust in New Zealand if you’re looking to hide money in a tax haven. New Zealand has been in the news recently for allegedly tax haven status for foreign trusts. But Geoff Cone wrote a powerful newspaper article shooting down the notion.
He says that New Zealand enforces strict banking laws with plenty of transparency. For instance, Cone states that New Zealand has not made OECD’s list of tax haven countries. And he points to plenty of reasons why New Zealand will never make that list in the future.
Cone reiterates that New Zealand enforces transparent banking laws and forces anybody setting up a foreign trust in the country to keep easy-to-read records. The Kiwi government is also ready, willing, and able to communicate with foreign governments during investigations.
Cone has intimate knowledge of these laws because he runs the only New Zealand tax and trust law firm. He is Kiwi born and raised, graduating from the University of Otago. He’s been practicing trust and tax law since 1990 in the cities of Auckland and Christchurch. He now runs Cone Marshall in Auckland.
Check out Cone on LinkedIn