When you’re planning the move of a lifetime, there are a million and one things to do. Most are fun: finding that perfect home, furnishing your property, but some, like updating your will, often get left to another day. However, this is crucial to giving you peace of mind, so find out what the key inheritance rules are in New Zealand.
When you’re planning the move of a lifetime there are a million and one things you will need to do before you can finally feel settled in New Zealand. While some are fun – finding that perfect home, buying a car, furnishing your property – others you might prefer to put off until another day. Updating your will is most likely to fall in that latter category. Just a little planning can give you the peace of mind of knowing the people you love the most will be provided for in the future. Today we’re looking at how inheritance law and tax works in New Zealand and answering the most important questions in relation to how you can best protect your assets.
Where there is no will, estates are deemed ‘intestate’ and assets will be distributed in accordance with New Zealand law.
What inheritance laws apply?
The primary laws applying to inheritance matters in New Zealand include The Wills Act 2007, the Administration Act 1969, the Family Protection Act 1955, the Property (Relationships) Act 1976, the Law Reform (Testamentary Promises) Act 1949 and the Estate and Gift Duties Act 1968.
Who do these laws apply to?
Inheritance laws apply to everyone who owns property in New Zealand, regardless of whether or not the person resides in New Zealand permanently or what nationality or religion they are. The exact same laws that apply to New Zealand citizens apply to all foreign property owners. All legal decisions concerning who inherits property are made by New Zealand’s High Court.
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What happens to property without a will?
In New Zealand, estates of any size are managed in accordance with the terms of the deceased’s will. However, where there is no will, estates are deemed ‘intestate’ and the law will step in to determine who is entitled to the estate, or their share of it. This also applies in cases where the property owner attempted to make a will, but it wasn’t completed properly. Who is entitled to benefit is laid out in section 77 of the Administration Act 1969, which states:
- Where there is a spouse/ partner, but no parents, children or other descendants – the spouse or partner will receive the whole estate. Civil union partnerships, de facto partners or same sex partners are all included. Should there be more than one spouse or partner, they will share the estate equally amongst them.
- Where there is a spouse/ partner AND children or other descendants, the spouse/ partner will receive the personal chattels (i.e. boats, cars, furniture, clothing, jewellery etc) plus $155,000 (with interest) and one third of anything that is left over. The amount of $155,000 increases in line with inflation. Interest is payable on this amount from the date of death to the date it is paid out. The rate of interest paid on it also increases in line with inflation. The children/descendants will receive the remaining two thirds. If they have passed away, their share will go to their children, and so on for each generation.
- Where there is a spouse or partner AND parents, but no children/ descendants, the spouse/ partner is entitled to personal chattels, $155,000 and two thirds of what is left. The parents will be given the final third.
- Where there are children/ descendants but no spouse/ partner, the estate will be shared equally among the children. If any of the children/descendants have died, their children will receive their share.
- Where there is no spouse/ partner, no children/descendants, but there are parents, the estate will be divided equally amongst the parents.
* Where there is no spouse/partner, no parents, no children/descendants but there are siblings, the whole estate will be divided equally amongst these siblings, or their children if they have passed away.
- Where none of the above survive, but there are grandparents or uncles/aunts, half the estate will go to the mother’s side of the family, and half will go to the father’s side.
- If the deceased is not survived by any of the above – all of the estate will belong to the New Zealand government. If you were dependant, or have reasonable grounds to have benefitted from the estate, you can apply to the New Zealand Treasury to receive your share.
Can I leave property to a minor?
For the purpose of inheritance law in New Zealand, a minor counts as someone under the age of 20. They can inherit assets through a will – however, often the title deeds of the property will remain registered to the executors of the will until the beneficiary becomes a legal adult. If you want to leave assets to a minor, you can opt to include appointing a guardian within the will.
Can your will be disputed?
New Zealand law doesn’t make it so that certain parts of your estate must, by law, go to certain people. However, if what is outlined in the will doesn’t fulfil the responsibilities of the deceased, under the Family Protection Act and the Property (Relationships) Act, the New Zealand courts are able to override it.
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The Family Protection Act places a ‘moral duty’ on certain people to provide for close relatives – typically just their spouse and their children. Under this law, the spouse or the child who is contesting the will has 12 months in which to challenge it.
Under the Property (Relationships) Act, in the case of wills made by married people or de facto couples, the surviving partner has the option to have the provisions of the Act apply rather than the will. The Act effectively ensures that when a partner dies, the spouse or de facto partner receives at least 50% of the property.
When you make a will, you have control over who gets what, and the amounts that they receive.
Why make a will?
When you make a will, you have control over who gets what, and the amounts that they receive. Wills can be as detailed as you like. To ensure your hard-earned money and property goes to those you care about most, and to avoid the prospect of your surviving family arguing over who gets what, we highly recommend taking out a will to protect all of your UK and New Zealand assets. It provides certainty, keeps things as simple as possible and reduces administration costs.
Your will relating to your New Zealand ‘immovable property’ will need to be made in accordance with New Zealand law, but this does not mean that it needs to be made in New Zealand. In order to be valid it needs to be:
• In writing,
• The person making the will needs to sign the documents
• The will needs to be witnessed and signed by two people in the presence of the testator.
There is no estate/ inheritance tax in New Zealand. In practice, this means that the taxpayer will not have to pay tax if they inherit an estate from someone else. If you made a gift on or after 1st October 2011, you won’t have to pay a gift duty. If the gift was made before 1st October 2011, gift duty will need to be paid if the combined total of all gifts made in a 12-month period was over $12,000. To find out more about gift duty liabilities, get in touch with a legal expert using our enquiry form below.