For many Kiwi small business owners, putting your property and assets into a family trust has been a key way to protect their personal wealth and the future prosperity of their family.
But the current anti-money laundering (AML) rules in New Zealand have added a high level of extra bureaucracy to the process of selling a house that’s held in a trust.
In a move to simplify the process, the Associate Justice Minister, Nicole McKee, recently announced plans to make the level of AML complexity far more simple.
The minister was quoted as saying:
“For thousands of New Zealanders, setting up a family trust is part of securing their financial future, especially when it comes to their home. But under the current AML regime, selling a house held in a trust triggers a burdensome level of document verification and compliance checks that has little to do with actual risk,”
The main changes to the AML processes for family trusts
What’s the current due diligence process?
Placing your family home in a trust helps you manage and protect your most valuable asset. But under the currently used regulations, when you sell that property your real estate agent is required to collect a significant amount of personal and legal information.
This information included
- The names and addresses of all beneficiaries, even your children, trustees and lawyers
- A detailed explanation and documents to prove how the home was paid for.
How will the due diligence process be simplified?
New reforms to the AML and trust rules will mean that a real estate agent use simplified due diligence if the sale of the house in question is ‘clearly low risk’.
Under the new legislation, real estate agents will only need to:
- Confirm the property’s ownership and trustee details match what’s on the certificate of title
- Verify the couple’s identity documents and their role as trustees
- Retain a copy of the trust deed.
New guidance for real estate agents, lawyers, and accountants will be issued shortly.
Helping you with the sale of a trust-held property
If you currently have plans to sell a property held in a family trust, or just want advice on setting up your own family trust, please do come and speak to the team.
We can explain the legal and tax-planning benefits of a trust and can advice on the updated due diligence and AML processes when selling a trust-held property.