Complete Estate Planning Guide for New Zealand (2025)
Everything you need to know about protecting your family, managing your assets, and planning for the future in New Zealand.
What is Estate Planning?
Estate planning is the process of arranging how your assets will be managed during your lifetime and distributed after your death. It's about making sure your family is protected, your wishes are carried out, and potential disputes or complications are avoided.
Estate planning in New Zealand involves:
- Creating a legally valid will
- Establishing family trusts for asset protection
- Setting up enduring powers of attorney
- Planning for business succession
- Managing relationship property issues
- Minimizing tax and legal complications
- Protecting assets from creditors and aged care costs
💡 Key Fact
Estate planning isn't just for wealthy people. If you own a home, have children, or run a business, you need an estate plan.
Who Needs Estate Planning?
You Need Estate Planning If You:
🏠 Own Property
If you own your home (even with a mortgage) or investment properties, proper estate planning protects these assets and ensures smooth transfer to your family.
👨👩👧👦 Have Children
Parents need to appoint guardians, create trusts for minors, and ensure children are financially provided for if something happens to you.
💼 Run a Business
Business owners need succession planning, asset protection from liability, and strategies to ensure business continuity or orderly wind-down.
💍 Are in a Relationship
Married, de facto, or separated - relationship status significantly affects estate planning. You need to understand relationship property rules.
👨⚕️ Have Professional Liability
Doctors, lawyers, accountants, and other professionals need asset protection from potential malpractice claims.
🏦 Have Significant Assets
Assets over $500,000 (including property, KiwiSaver, investments) benefit from structured estate planning to minimize complications.
👵 Planning for Retirement
Protecting assets from aged care costs (residential care subsidies) requires planning at least 5 years in advance.
🤝 Have a Blended Family
Second marriages, step-children, and ex-spouses create complex situations requiring careful estate planning.
Essential Estate Planning Documents
A comprehensive estate plan in New Zealand typically includes these core documents:
1. Will
Purpose: Directs asset distribution after death, appoints executors and guardians
Cost: $450-$850 for individuals/couples
When needed: Everyone over 18
2. Enduring Power of Attorney (EPA) - Property
Purpose: Appoints someone to manage finances if you lose mental capacity
Cost: $350-$500 (often bundled with will)
When needed: Everyone over 18
3. Enduring Power of Attorney (EPA) - Personal Care
Purpose: Appoints someone to make health and welfare decisions
Cost: Usually included with Property EPA
When needed: Everyone over 18
4. Family Trust Deed
Purpose: Protects assets from creditors, relationship property, aged care
Cost: $2,500-$5,000 setup + $800-$1,500/year admin
When needed: Property owners, business owners, professionals
5. Trust Minutes & Resolutions
Purpose: Annual documentation of trust decisions (required by Trusts Act 2019)
Cost: Included in annual administration
When needed: All trust holders
Wills in New Zealand
What is a Will?
A will is a legal document that sets out your instructions for what happens to your assets after you die. It appoints an executor to carry out your wishes and can name guardians for minor children.
What Happens Without a Will?
If you die without a valid will (called "dying intestate"), the Administration Act 1969 determines how your estate is distributed:
- If you have a partner and children: Partner gets personal chattels + $155,000, remaining estate divided 1/3 partner, 2/3 children
- If you have a partner, no children: Partner inherits everything
- If you have children, no partner: Children inherit everything equally
- If you have no partner or children: Estate goes to parents, then siblings, then more distant relatives
⚠️ Problems With Dying Intestate
- Assets may not go where you want them to
- Court appoints administrators (expensive and slow)
- No guardians appointed for your children
- Family disputes are more likely
- Children under 20 inherit at age 20 (often too young)
- De facto partners may miss out entirely
What Should Be in Your Will?
- Executors: People who'll manage your estate and carry out your wishes
- Beneficiaries: Who gets what (specific gifts and residuary estate)
- Guardians: Who'll care for children under 18
- Specific bequests: Particular items for particular people
- Residuary clause: What happens to everything else
- Funeral wishes: Burial or cremation preferences (not legally binding but helpful)
When to Update Your Will
Review and potentially update your will when:
- You get married (marriage revokes existing wills in NZ)
- You divorce or separate
- You have children or grandchildren
- Beneficiaries die
- You acquire significant assets
- You move overseas
- Executors can no longer serve
- Tax or estate law changes
- Every 3-5 years as general practice
Family Trusts in New Zealand
What is a Family Trust?
A family trust is a legal structure where trustees hold and manage assets for the benefit of beneficiaries (usually family members). The trust owns the assets - not you personally - which provides significant protection.
Key Benefits of Family Trusts
🛡️ Asset Protection
Protects assets from business creditors, professional liability claims, and relationship property division.
⚖️ Relationship Property Protection
Assets in trust (gifted more than 2 years ago) aren't relationship property in separations.
🏥 Aged Care Protection
Assets gifted to trust 5+ years before residential care aren't counted for subsidy assessment.
💸 Probate Avoidance
Trust assets don't go through probate - faster and cheaper transfer to next generation.
🎯 Control Distribution Timing
Control when children receive inheritances (e.g., age 25 not 18, or staged distributions).
📊 Succession Planning
Smooth business succession and multi-generational wealth transfer.
Disadvantages of Family Trusts
Family trusts aren't right for everyone. Consider these drawbacks:
- Costs: $2,500-$5,000 setup + $800-$1,500/year ongoing administration
- Complexity: Requires annual minutes, trustee meetings, record-keeping (Trusts Act 2019)
- Loss of first home grants: KiwiSaver HomeStart and First Home Grants unavailable
- Mortgage complications: Some banks charge higher rates for trust-owned properties
- 5-year aged care rule: Asset protection only after 5 years
- Can't avoid existing creditors: Only protects from future liabilities
- No capital gains tax benefit: NZ has no CGT, so no tax advantage from trusts
The Trusts Act 2019
New Zealand's Trusts Act 2019 (effective January 2021) modernized trust law with new requirements:
Mandatory Trustee Duties
- Know the terms of the trust
- Act in accordance with the trust deed
- Act honestly and in good faith
- Act for the benefit of beneficiaries
Enhanced Beneficiary Rights
- Right to trust information (with some exceptions)
- Right to reasons for trustee decisions
- Ability to challenge trustee decisions
Record-Keeping Requirements
- Core trust documents must be kept
- Annual trustee meetings and minutes required
- Decisions must be documented
- Financial records maintained
Enduring Powers of Attorney (EPA)
Why EPAs Are Critical
If you lose mental capacity due to accident, illness, or dementia, someone needs legal authority to manage your affairs. Without an EPA, your family must apply to the court for legal guardianship - an expensive, stressful, and time-consuming process.
Two Types of EPA
EPA for Property (Financial Decisions)
Covers:
- Banking and bill payments
- Selling or buying property
- Managing investments
- Operating businesses
- Accessing digital accounts
- Filing tax returns
EPA for Personal Care & Welfare (Health Decisions)
Covers:
- Medical treatment decisions
- Where you live (residential care decisions)
- Social activities and contacts
- Personal care preferences
- End-of-life care wishes
✅ Best Practice
Set up BOTH types of EPA. They serve different purposes and both are essential for complete protection. Many people appoint the same person for both, but you can choose different attorneys if preferred.
Choosing Your Attorney
Your attorney should be:
- Trustworthy and financially responsible
- Capable of making difficult decisions under stress
- Willing to accept the role
- Likely to outlive you (typically younger than you)
- Understanding of your values and wishes
Common choices: Spouse/partner, adult children, trusted family members, professional trustees (lawyers/accountants).
Multiple attorneys: You can appoint attorneys to act jointly (must agree), separately (any can act), or jointly and separately (flexible). Always appoint alternates in case your first choice can't serve.
Asset Protection Strategies
What Can You Protect Assets From?
- Business creditors: If your business fails, personal assets in trust are protected
- Professional liability: Malpractice claims can't reach trust assets
- Relationship property claims: Assets gifted 2+ years ago aren't relationship property
- Aged care costs: After 5 years, assets in trust aren't counted for residential care subsidy assessment
- Beneficiary creditors: If beneficiaries face financial trouble, undistributed trust assets are protected
What You CAN'T Protect
⚠️ Important Limitations
- Existing creditors: Transferring assets to avoid current debts is illegal (voidable transactions)
- IRD: Tax debts can pierce trusts in some circumstances
- Recent transfers: 2-year rule for relationship property, 5-year rule for aged care
- Criminal proceeds: Assets from illegal activity can be seized
Timing is Everything
Asset protection only works if implemented BEFORE problems arise:
- Set up trust before starting risky business ventures
- Transfer assets before professional liability increases
- Plan for aged care at least 5 years in advance
- Gift to trust well before relationship issues emerge
Relationship Property Considerations
The Property (Relationships) Act 1976
New Zealand's relationship property laws significantly affect estate planning. Understanding these rules is essential.
What is Relationship Property?
After 3 years together (or shorter with children), most assets acquired during the relationship are relationship property and divided 50/50 on separation, regardless of who earned the money or whose name is on the title.
Relationship property includes:
- The family home (even if owned before relationship after 3 years)
- Family chattels
- Property acquired during relationship
- Increase in value of separate property during relationship
- KiwiSaver and other retirement savings
Separate property includes:
- Property owned before relationship (except family home after 3 years)
- Inheritances received during relationship
- Gifts from third parties during relationship
- Property acquired under contracting out agreement
Contracting Out Agreements (Prenups)
Couples can "contract out" of relationship property rules with a written agreement before or during relationship. Requirements:
- Both parties must receive independent legal advice
- Lawyers must certify advice was given
- Agreement must be in writing and signed
- Must be fair at the time (courts can set aside unfair agreements)
Death and Relationship Property
When one partner dies, the surviving partner has options:
- Take what the will gives them, OR
- Claim 50% of relationship property under the Property (Relationships) Act
The survivor chooses whichever option is more favorable. This can significantly affect estate distribution.
Tax and Estate Planning in New Zealand
Good News: No Estate Tax
New Zealand has no:
- Estate tax (death duties)
- Inheritance tax
- Capital gains tax (generally)
- Gift duty (abolished 2011)
Tax Considerations That Still Matter
Trusts and Income Tax
Trustees pay tax on trust income at 33%. Income can be distributed to beneficiaries who pay tax at their personal rate (which may be lower).
Residential Land Withholding Tax (RLWT)
Non-resident beneficiaries may face RLWT on property disposals or distributions.
Foreign Tax Implications
If you or your beneficiaries live overseas, their home country's tax rules may apply to inheritances. Seek specialist advice.
KiwiSaver and PIE Funds
KiwiSaver passes outside your will directly to nominated beneficiaries (or estate if no nomination). Prescribed Investor Rate (PIR) should be reviewed annually.
Common Estate Planning Mistakes to Avoid
1. Not Having a Will
Over 50% of New Zealanders don't have a will. Dying intestate creates unnecessary stress and expense for your family.
2. DIY Wills Without Legal Advice
Online templates and kits often miss crucial details about relationship property, family trusts, and NZ-specific law. Mistakes can invalidate your will.
3. Not Updating After Major Life Events
Marriage automatically revokes existing wills. Divorce, children, new assets all require will updates.
4. Ignoring Relationship Property Rules
Many people don't realize their will can be overridden by relationship property claims.
5. Setting Up a Trust Without Professional Help
DIY trust deeds often fail to achieve asset protection goals and may not comply with Trusts Act 2019.
6. Poor Trust Administration
Not maintaining annual minutes and proper records can invalidate trust protection and result in IRD penalties.
7. Not Coordinating Wills and Trusts
Your will should work with your trust structure. Conflict between documents causes problems.
8. Appointing the Wrong Executors or Trustees
Choose people who are capable, willing, and likely to outlive you. Have alternates.
9. Forgetting Digital Assets
Cryptocurrency, online accounts, social media, cloud storage all need planning.
10. Not Discussing Plans With Family
Surprises after death cause family disputes. Open communication prevents conflicts.
How to Get Started With Estate Planning
Step 1: Assess Your Situation
Take our free consultation quiz to understand what you need:
Start Free Consultation Quiz →Step 2: Gather Information
Prepare a list of:
- All assets (property, investments, KiwiSaver, business interests)
- All liabilities (mortgages, loans, debts)
- Family members (spouse, children, dependents)
- Preferred executors and attorneys
- Specific wishes for particular items or people
Step 3: Understand Your Options
Review our comparison guides:
- Will vs Trust: Which Do You Need?
- Wills & Enduring Powers of Attorney
- Family Trusts Guide
- Transparent Pricing
Step 4: Get Professional Advice
Estate planning involves complex legal, tax, and relationship property issues. Professional advice ensures your plan works effectively.
Ready to Protect Your Family?
Book a free 30-minute consultation to discuss your estate planning needs.