Declaration Of Bare Trust Template for New Zealand

A Declaration of Bare Trust is a fundamental legal document in New Zealand that creates the simplest form of trust relationship. Under this arrangement, you appoint a trustee to hold legal title to property purely as your nominee, while you retain all beneficial ownership and control. This document provides legal certainty and protection when you need to separate legal ownership from beneficial ownership for legitimate business, regulatory, or personal reasons.

When do you need this document?

You'll need a Declaration of Bare Trust when purchasing property through a nominee to maintain privacy, when setting up investment structures that require a corporate trustee for regulatory purposes, or when transferring assets to family members while retaining beneficial control. Property developers commonly use bare trusts when acquiring land through special purpose vehicles, and investors use them when regulatory requirements prevent direct ownership. The document is also essential when you want to protect your identity in property transactions or when banking regulations require a local trustee for overseas investors.

Key legal considerations

The trustee in a bare trust has extremely limited powers and must follow your instructions regarding the trust property at all times. You need to clearly define the trust property and ensure the trustee understands they cannot make independent decisions about the assets. The document must specify that you retain all beneficial rights, including the right to income, capital gains, and the power to direct disposals. Consider the implications for tax purposes, as you'll be liable for all income tax and capital gains tax on trust assets. You should also address what happens if the trustee becomes incapacitated or dies, and whether corporate trustees require board resolutions for certain actions.

Legal requirements in New Zealand

Under the Trusts Act 2019, your Declaration of Bare Trust must clearly identify all parties with their full legal names and addresses, and provide precise descriptions of all trust property. The document must be executed with proper witnessing requirements, typically requiring an independent witness who is not a beneficiary. You must ensure compliance with the Income Tax Act 2007 for tax transparency, as the IRD treats bare trust income as belonging directly to you as beneficiary. If the trust involves property transactions, you'll need to comply with the Property Law Act 2007 requirements. Anti-money laundering obligations under the AML/CFT Act 2009 may apply if you're using financial services, requiring additional identity verification and source of funds documentation.