New Zealand has a range of tax regimes that can apply, including income tax, trust taxes and property-related taxes.

• Personal income tax operates on a progressive tax system, with rates currently ranging from 10.5% for income up to NZD15,600 to 39% for income over NZD180,000, with intermediate brackets at 17.5%, 30% and 33%.
• The trustee tax rate is set at 39%, effective from 1 April 2024 (although trust income distributed to beneficiaries will be taxed at the income tax rate applicable to that individual, rather than 39%).
• The “bright-line” test is an income tax rule that effectively operates as a targeted capital gains tax, taxing gains on certain residential properties sold within a specified period of acquisition, with a two-year bright-line period applying to disposals on or after 1 July 2024. The capital gain will be taxed at the relevant income tax rate. There are some exceptions, including an exemption for the “main home”.
• Presently no estate, inheritance tax, wealth or gift duty applies.
• Goods and Services Tax (GST) 15% – applicable to most goods and services.

There are currently no estate, inheritance, wealth or gift taxes in New Zealand. There are no exemptions applicable.

It is common for independent and up-to-date market valuation to be carried out before transferring residential property into a trust. This is done for the purposes of establishing an up-to-date “base-line” value, and is particularly relevant if the property has appreciated in value since its original acquisition (but prior to transferring that property into a trust).

Following the transfer into the trust, if the property needed to be sold within the bright-line period, for whatever reason, the base value established via the market valuation could be used, rather than the original, historical purchase price, when determining the capital gain and any tax payable under the bright-line rules. This circumstance can arise where a property is required to be sold sooner than anticipated – eg, on the breakdown of a marriage/relationship, or business failure.

The usefulness of obtaining a valuation may depend on the surrounding factual context and the bright-line settings in force at the relevant time. That is particularly relevant in New Zealand, where the bright-line regime and timeframes have been altered by successive governments.

A further planning opportunity arises in relation to the distribution of trust income. Where trust income is distributed to beneficiaries who are taxed at a marginal rate below the flat 39% trustee rate, the overall income tax burden of the trust can be reduced. This has become an increasingly important consideration following the increase in the trustee tax rate to 39% from 1 April 2024, which aligned the trustee rate with the top personal tax rate.

New Zealand does not have a formal pre-immigration tax regime, but individuals moving to New Zealand may be able to undertake effective pre-arrival planning. In particular, new migrants and returning New Zealanders who have not been New Zealand tax residents in the previous ten years may qualify as transitional residents, giving them a temporary exemption from New Zealand tax on most foreign-sourced income for approximately four years after becoming resident.

Before arriving in New Zealand, it is common for an individual to first review the timing of their move and consider the point at which they may acquire a permanent place of abode, the ownership and location of investment assets, foreign superannuation and trust arrangements, and whether income or capital gains can be realised before New Zealand residence begins.

On leaving New Zealand, planning generally focuses on ensuring that New Zealand tax residence has ceased, including management of days of presence (more than 325 days in any 12-month period) and any continuing permanent place of abode, and reviewing the ongoing taxation of New Zealand-sourced income as a non-resident.

An individual must ensure to file an individual tax return and to inform Inland Revenue (IRD) of plans to change their income tax status. After an individual ceases to be a New Zealand tax resident, if the individual still earns income from a New Zealand source, then they will most likely still be liable to pay tax in New Zealand and an individual tax return must still be filed.

Non-residents and non-citizens selling residential property in New Zealand within the applicable bright-line period are subject to income tax on any gain in the same way as New Zealand residents. Where the vendor is an “offshore RLWT person” (broadly, a non-New Zealand citizen, non-permanent resident, or a New Zealand citizen absent for more than 12 months), Residential Land Withholding Tax (RLWT) is withheld at settlement at the lesser of 10% of the gross sale price or 39% of the vendor’s gain (28% for a company vendor), and operates as a prepayment against the vendor’s final tax liability.

Residential property may also be held through a New Zealand company with a mix of resident and non-resident shareholders, which may avoid “offshore RLWT person” status and benefits from the lower 28% corporate tax rate on rental income. Where shares in a property-owning company are sold rather than the land itself, the bright-line test, which applies to disposals of land, will not apply; however, other land taxing provisions under the Income Tax Act 2007 may still apply depending on the purpose of acquisition and the nature of the shareholders’ activities, so the position should be considered carefully. The key limitations of the company structure are the added compliance costs and the fact that it does not provide the asset protection or succession planning benefits of a trust.

Recent and potential developments include the following.

• A wealth tax, inheritance tax, gift tax and/or a more comprehensive capital gains tax could be introduced in the future, depending on government policy, though no plans are confirmed as of 2026.
• Bright-line rules may be adjusted post-election, as seen historically. The bright-line period has previously been extended from two years to five years in 2018 and to ten years in 2021, before being reduced back to two years by the National Party government from 1 July 2024.
• The bright-line test currently taxes gains on residential property (excluding the main home) at the owner’s income tax rate, with applicable periods depending on the date of acquisition:
1. two years for properties bought on or after 1 July 2024;
2. ten years for those bought between 27 March 2021 and 30 June 2024; and
3. five years for those bought between 29 March 2018 and 26 March 2021.
• Exemptions apply for the main home, inherited property, and certain trust transfers with rollover relief.

New Zealand has taken steps to address tax avoidance and enhance transparency by implementing OECD-aligned Base Erosion and Profit Shifting (BEPS) measures, including strengthened transfer pricing rules, anti-hybrid provisions and limits on interest deductions. These measures are primarily directed at multinational and cross-border arrangements, but they form part of a broader policy trend towards increased scrutiny of tax planning structures.

New Zealand participates in global information-sharing initiatives through full adoption of the Common Reporting Standard (CRS) into domestic law and a Model 1 Intergovernmental Agreement under the US FATCA regime. Under these regimes, reporting financial institutions are required to identify and report certain foreign account holders to Inland Revenue, which may then exchange that information automatically with relevant overseas tax authorities. New Zealand is not subject to the EU DAC6 mandatory disclosure regime, although it is otherwise an active participant in international exchange of information frameworks.

While New Zealand does not currently have a public beneficial ownership register, there have been proposals to introduce one in response to Financial Action Task force (FATF) recommendations. These measures do leave clients feeling more exposed to increasing disclosure requirements, which may deter some individuals from setting up effective structures.

There is also currently no system that publicly reveals the beneficial owners of companies and limited partnerships, but this is under discussion under the Corporate Governance (Transparency and Integrity) Reform Bill. New Zealand remains an environment where careful use of trusts and limited partnerships may still offer a degree of privacy, provided that full compliance with tax and anti-money laundering laws is maintained.

It is common for the younger generation to need assistance from the older generation when entering the housing market.

Most banks require parental funding for home purchases to be classified as a “gift” for mortgage approval, although families often prefer to treat that support as a loan so they can retain control, ensure repayment in the future, or equalise benefits among children.

Documenting financial assistance from parents as a loan, with a formal agreement, allows parents to recover funds if needed and reduces the risk of family disputes later on. This is particularly relevant where assistance is provided to a child and their spouse or partner, because a relationship breakdown may otherwise result in a 50:50 split of assets under the Property Relationships Act 1976. Structuring assistance as a loan can safeguard wealth for the family and child, preventing unintended loss to an ex-spouse or partner.

Over time, parents can still choose to forgive the debt (in whole or in part) or to account for it when distributing their estate, for example by offsetting the amount advanced against that child’s eventual inheritance if equalisation among siblings is desired.

When putting in place a succession plan, it is essential to understand who the beneficiaries are and how any cross-border legal, tax or compliance issues in their jurisdictions may affect what is intended.

For example, a distribution from a New Zealand trust to a UK resident beneficiary may trigger UK capital gains tax on unrealised gains in the trust, even if the UK link is recent.

Likewise, a distribution from a New Zealand estate may face inheritance tax in the beneficiary’s jurisdiction, depending on the beneficiary’s domicile and location of assets.

Specialist advice in the beneficiary’s jurisdiction is key to avoid unexpected tax or legal issues.

New Zealand does not have any forced heirship laws and generally honours testamentary intentions. However, functional limits contained in legislation such as the Family Protection Act 1955, Property (Relationships) Act 1976 and Testamentary Promises Act 1949 impose restrictions that, in certain circumstances, can modify or override a will’s terms to ensure fairness or fulfil obligations.

The Family Protection Act 1955 imposes a moral duty on parents to provide adequate support and maintenance for their children. If a parent excludes a child from their will, that child can claim against the estate, arguing that the parent failed to meet this moral duty. If successful, the court may adjust the will to the extent necessary to remedy the breach and provide adequate provision for the child’s support and maintenance.

The Testamentary Promises Act 1949 allows a person who was promised provision in a will for services provided (eg, caregiving) to claim against the estate if excluded. If the claim is upheld, the court may award provision from the estate, potentially reducing the share intended for children.

The Property (Relationships) Act 1976 entitles a spouse or de facto partner to claim a division of relationship property before the estate is distributed. If a claim is successful, the spouse or partner’s entitlement may take priority, reducing the estate available for distribution to children as per the will.

Claims under these Acts can be resolved outside the court system through consensual agreements, provided all parties obtain independent legal advice.

The Property (Relationships) Act 1976 (PRA) governs property division for married, civil union and de facto partners (including same-sex couples) in New Zealand, applying to relationships of three years or more, or shorter with specific circumstances (eg, a child or significant contributions).

Property Classification

The PRA uses a deferred community property regime. Property is not automatically “joint” during the relationship but all “relationship property” is divided equally (50:50) upon separation or death, unless otherwise agreed.

• Relationship property – includes the family home, chattels, joint property, and income/assets acquired during the relationship, subject to equal sharing.
• Separate property – covers pre-relationship assets, inheritances or gifts, unless intermingled with relationship property (eg, using personal income to improve a separate asset).

Transfer of Property

A partner cannot transfer relationship property to defeat another’s PRA rights without consent. Key legislation and remedies available under the PRA, Family Proceedings Act 1980 (FPA) and common law include the following.

• Section 44 (PRA) – If property is transferred (eg, to a trust) to defeat a partner’s rights, courts may order its return or compensation, unless the recipient acted in good faith for adequate consideration.
• Section 44C (PRA) – If relationship property is transferred to a trust during the relationship, defeating a partner’s rights (without intent), courts may order compensation from relationship/separate property or trust income.
• Section 182 (FPA) – Courts may vary nuptial trusts upon marriage/civil union dissolution to address benefit disparities.
• Constructive trust – Arises if a partner contributes to trust property with a reasonable expectation of benefit, requiring compensation.

Prenuptial/Postnuptial Agreements

Section 21 of the PRA allows for couples to “contract out” of the default equal sharing provisions. There are some formal requirements, including:

• agreement must be in writing, signed and witnessed by lawyers;
• both parties must receive independent legal advice; and
• terms of the agreement must be fair and reasonable.

Courts may set aside agreements where the circumstances could amount to causing “serious injustice” (Section 21J, PRA) considering the overall fairness of the agreement, the amount of time that has elapsed, and any other circumstances that may apply.

Formal relationship property agreements that comply with the technical provisions of the PRA are essential for clarifying and confirming how assets should be owned, in the event of a marriage or relationship breakdown.

Transfers of property in New Zealand generally do not give rise to immediate tax for recipients, whether received during life (by gift or trust distribution) or on death (via a will or estate distribution). There is no inheritance tax, gift tax or capital gains tax on receipt.

However, a future tax liability may arise on a later sale. Where property is acquired by purchase, the cost used for future tax calculations (for example, under the bright-line test or depreciation rules) will be the purchase price, allocated between land, buildings and chattels as required.

Where property is received by gift, inheritance or trust distribution, there is no purchase price, and the cost and acquisition date used for future tax purposes are instead determined by the relevant New Zealand tax rules for that type of asset and transfer – which may, in some cases, trace back to the transferor’s original cost and acquisition date rather than the market value at the time of receipt.

Specialist tax advice should be sought prior to transferring assets, especially into or out of trusts and particularly where depreciable assets are involved.

As New Zealand has no death taxes, estate duties or gift taxes, assets can pass tax free to the younger generation via wills, and no tax is payable on distributions of capital from trusts.

This has historically made discretionary trusts a useful vehicle for intergenerational wealth transfer, although the trustee tax rate has increased in recent years (meaning income retained in the trust, and not distributed to beneficiaries at their applicable marginal rate, is now taxed at 39%).

Digital assets are personal property and are treated as such under general property law.

There is currently no specific legislation that addresses digital asset administration. To ensure smooth management and transfer of assets after death, individuals should take care to:

• include reference to their digital assets in their will;
• provide account details, passwords or access instructions to their executor; and
• consider appointing an executor who is comfortable with technology.

In the case of cryptocurrency, it is particularly important to ensure the executor has access to private keys or wallet credentials, as without them the assets may be irretrievable regardless of the terms of the will.

In New Zealand, trusts and similar entities are widely used for tax and estate planning to protect assets, manage succession and optimise tax outcomes. The primary types include the following.

• “Discretionary” trusts – These are used to ring-fence personal assets from business risk and/or to facilitate succession and tax planning.
• Funeral trusts – Prepaid trusts (up to NZD10,000) to meet funeral expenses. Due to ownership of the funds being transferred during the lifetime of the settlor, this removes the funds from the settlor’s estate at time of death. Probate of those funds is therefore not necessary, and they can be immediately available for payment upon the death of the settlor.
• New Zealand foreign trusts – Established by non-residents with New Zealand trustees, these are tax-exempt on foreign-sourced income, ideal for international wealth planning.
• Limited partnerships – Tax-transparent entities often paired with trusts, these are used for offshore planning and recognised as separate legal entities abroad.
• Charitable trusts – Established for charitable purposes, these are popular due to their relative ease of establishment and the benefits of charitable registration (ie, status tax exemptions). Foundations are uncommon due to the lack of specific domestic legislation.
• Foundations are uncommon due to the lack of specific domestic legislation.

Recent Developments Affecting Benefits

Recent developments include the following.

• Trusts Act 2019 (effective January 2021) – This modernised trust law clarifies the duties owed by trustees to beneficiaries. The updated legislation better equips beneficiaries for holding trustees to account and empowers them to request information about the trust from the trustees.
• Trustee tax rate increase (April 2024) – The rate was raised from 33% to 39%, aligning with the top personal tax rate. The higher taxation encourages income to be distributed to lower-taxed beneficiaries (rather than retained, taxed at 39% and added to the trust corpus).
• Enhanced disclosure rules (2021–22) – Trusts must file detailed financial statements and beneficiary information (eg, settlor details, distributions).

The changes largely maintain the protection offered by trusts, but increase the administrative and compliance burden.

Trusts are recognised and respected in New Zealand as an established structure for estate planning and asset protection, governed by the Trusts Act 2019. They are commonly used for:

• succession planning purposes (particularly given the rise of second/third marriages and blended families); and
• safeguarding family assets from third-party creditors and business risk.

Unlike companies, trusts are not legal persons; they are fiduciary relationships where trustees legally own and manage assets for the benefit of the beneficiaries, in accordance with the terms of the trust deed. The separation of legal and beneficial ownership is a cornerstone of their protective function, and is recognised and understood by New Zealand courts and legislation.

The Supreme Court in Regal Castings Ltd v Lightbody [2008] NZSC 87 affirmed trusts’ ability to protect assets from creditors, provided:

• the trust is established for legitimate purposes (eg, asset protection or succession planning) without intent to defraud creditors; and
• the settlor was solvent at the time the assets were transferred into the trust.

In New Zealand, tax consequences for residents involved with trusts will depend on the trust’s status (complying, foreign or non-complying) under the Income Tax Act 2007.

As a fiduciary (trustee), the following tax consequences may apply.

• Foreign trust – No tax on foreign-sourced income if registered with Inland Revenue within 30 days and compliant with disclosure (Tax Administration Act 1994, Section 59C). New Zealand-sourced income is taxed at 39%.
• Risk – A settlor becoming a New Zealand resident makes the trust non-complying unless elected as complying within 12 months, taxing distributions at 45%.

The transitional residency exemption has the following effect.

• New Zealand’s four-year transitional residency period allows a new resident settlor to maintain foreign trust status temporarily, delaying tax on worldwide income. Within 12 months of residency, the settlor can elect for the trust to become a complying trust to avoid non-complying status and 45% distribution tax.

As a beneficiary, the following tax consequences may apply.

• Income distributions are taxed at the beneficiary’s marginal rate (between 10.5% and 39%). Capital/corpus distributions are tax-free (no general capital gains tax). Non-complying trust distributions face 45% tax. Offshore investments over NZD50,000 may trigger Foreign Investment Fund (FIF) tax (5% imputed income).

In response to the above-mentioned tax consequences, below are some planning opportunities to consider.

• New Zealand foreign trusts can be an effective ownership vehicle for non-residents to hold offshore assets, tax-free.
• Trusts can be effectively paired with limited partnerships, improving offshore flexibility.
• In circumstances when a settlor wishes to become a New Zealand resident, the four-year transitional residency period can be used to avoid non-complying status, avoiding 45% tax.

Consider distributing income to lower-taxed beneficiaries (applying the beneficiary’s marginal tax rate rather than the flat trustee rate of 39%). However, this is subject to the minor beneficiary rule, which imposes the trustee tax rate on income distributed to beneficiaries under the age of 16 if it exceeds NZD1,000 per year from trusts settled by related parties.

In New Zealand, there are no specific tax charges that arise solely because a beneficiary or donor of a trust also serves as a fiduciary (for example, as a trustee). Trust taxation is driven by the settlor-based regime – whether a trust is complying, foreign or non-complying – and by the source of income, rather than by whether a person holds overlapping roles.

Where a donor retains significant powers as trustee, Inland Revenue will scrutinise whether there has been a genuine divestment and who should be treated as “settlor” for tax purposes, including in relation to interest-free loans or debt forgiveness. In extreme cases where the structure is a sham or alter ego, income and gains can be taxed directly to that individual rather than under the ordinary trust rules.

By contrast, a beneficiary who is also a trustee is taxed on trust distributions in the usual way (beneficiary’s marginal rates for income, generally no tax on capital; 45% for non-complying trust distributions), with the fiduciary role itself not altering those basic outcomes.

Trusts are widely regarded as the most popular method for asset protection in New Zealand due to their versatility, robust legal framework and ability to shield assets from various risks. It is estimated that New Zealand has between 300,000 and 500,000 trusts, against a population of approximately five million.

However, transfers to trusts can be set aside under relationship property and creditor-protection legislation. For example, this may occur where assets are settled to defeat a partner’s rights under the Property (Relationships) Act 1976 or to prejudice creditors under the Property Law Act 2007 and related insolvency provisions.

Excessive settlor control or failure to observe and uphold trustee duties can also invite “sham” arguments, with the risk that assets are treated as still owned personally rather than by the trust.

Trusts are often regarded in New Zealand as the cornerstone of family business succession planning, with the “dual trust structure” being popular for holding business interests, safeguarding family assets and providing a clear mechanism for transferring wealth and control across generations.

A well-considered succession plan can optimise tax and minimise the potential for inter-family conflicts.

The dual trust structure typically takes the form of a “business trust”, which holds shares in a trading company or other business interests, sitting alongside a separate “family trust”, which holds personal assets and can benefit family members directly (especially when doing so from the business trust is not desirable).

For blended families, multiple family trusts can be formed and appointed as beneficiaries of the business trust, if deemed necessary or prudent, allowing for equitable distributions across the family and minimising the potential for disputes to arise.

Some advantages and considerations of the dual trust structure include the following.

• Tax efficiency – Company profits are taxed at 28%, lower than the 39% trustee rate, reducing business income tax.
• Flexible dividend distribution – The business trust can funnel company dividends via the family trust to its beneficiaries, where they can be taxed at the recipient beneficiary’s marginal rates (10.5%–39%, based on personal income), saving tax if that rate is below 39% (subject to the minor beneficiary rule: see 3.3 Taxation of Trusts, Foundations and Similar Entities Located in Other Jurisdictions).
• Capital distributions – Capital distributions are tax-free.
• Planning across blended families – In the context of “blended families”, separate family trusts can be formed to cater to different “branches” of the family tree, with the ability for distributions to flow from the business trust, equally or disproportionately (if that is desired, to reflect differing levels of entitlement) to the family trust(s).
• Succession planning – The business trust ring-fences personal/family assets from business risk and third-party creditors. The structuring of the family trusts, combined with clear guidance from the settlor (in the form of a memorandum of wishes), ensures benefits ultimately filter through to the intended recipients.

If multiple shareholders are involved with the operating company and business, a shareholder agreement with buy/sell provisions and reciprocal life insurance policies can help ensure business continuity upon the settlor’s death, ensuring there is funding available to facilitate the surviving shareholder purchasing the deceased’s shares, and ultimately providing funding for the value of the business interests to the family trust.

A further layer of protection to the structure might involve a relationship property agreement (under Section 21 of the Property (Relationships) Act 1976), to safeguard the trusts and business interests from claims under relationship property legislation.

As there is no gift duty, estate duty or tax payable on capital distributions, no planning is therefore required to adjust values for the purposes of reflecting a lack of marketability or control.

In New Zealand, cases disputed in the highest court in relation to both trusts and estates have been much discussed amongst legal practitioners in relation to their implications and contribution to the development of the law of private wealth.

A recent notable case in the Supreme Court is the case of Cooper v Pinney [2024] NZSC 181. This case discussed the controversial case of Clayton v Clayton [2016] NZSC 29, where the same court viewed that Mr Clayton’s vast powers in his trust, including the ability to remove all other beneficiaries, were tantamount to ownership, and held that Mr Clayton’s powers were personal interest subject to relationship property division under the Property (Relationships) Act 1976. This line of argument failed for Ms Cooper in the Supreme Court in Cooper v Pinney because Mr Pinney’s powers in his trust were more restricted. This is an important development as the court has set a boundary to the application of Clayton v Clayton.

A recent notable estate and trust dispute is the case of A, B and C v D and E Limited as Trustees of the Z Trust [2024] NZSC 161. The adult children of the deceased challenged the transfer the deceased made into the trust prior to his death for the purpose of not leaving inheritance to his children. While the children succeeded in the High Court, they failed in the Court of Appeal: it ruled that, given the children are now adults, any fiduciary duties a parent had for their children would have ceased. The Supreme Court confirmed the Court of Appeal’s findings. If the assets were not in a trust, but under the father’s personal estate, the children may have a chance of a successful claim under the Family Protection Act 1955. The Supreme Court expressed that, without anti-avoidance provisions in legislation, the courts would not have the jurisdiction to revoke the transfer made into the trust.

The Trusts Act 2019 (which came into effect in 2021) made changes to how trust disputes are potentially heard and resolved. Section 145 of the Trusts Act 2019 gives the court discretion to compel trustees and beneficiaries to use alternative dispute resolution (ADR) to resolve matters. The court has exercised this power in a number of cases, whereby arbitration, mediation or other methods of disputes resolution have been used, with the benefit of resolving sometimes sensitive family matters in private.

Other common forms of trust disputes include challenges such as:

• whether trustees are complying with their duty of care;
• whether trustees should be indemnified for various forms of costs and liabilities; and
• disputes leading to the removal of trustees.

In relation to estate disputes, common forms include challenges such as those concerning the following:

• the interpretation of wording in a will;
• the testamentary capacity of the deceased when the last will was made, in order to invalidate the last will; or
• testamentary promises made to a party not named in the will.

In relation to wealth disputes involving trusts or estates that go through New Zealand’s court system, compensation for the aggrieved parties may come in various forms.

In trust disputes – for example, if a trustee is challenged for breach of its duties, and should such breach cause loss to the trust property or interest to beneficiaries which is not covered by the trustee’s indemnities – the trustee may be ordered to restore such losses from their own pocket back to the trust fund.

In cases where property has been disposed to a trust to avoid obligations to third parties in circumstances such as those outlined in the Property Law Act 2007 or Property (Relationship) Act 1976, the court has the discretion to make orders to “claw back” this property to the transferor, and any obligations the transferor tried to avoid would apply accordingly; the aggrieved party would be entitled to such share of the property as they would have been had the property not been disposed to the trust. The court may order compensation to the aggrieved party whose claim or right was defeated by the disposition, such as a lump sum of money or a regular payment of income from the trust property.

In cases where the court considers that it would be unconscionable for an individual to be denied beneficial interest attached to a property held by another party, the court may find that the legal owner in fact is holding such property on constructive trust for the individual being denied beneficial interest. The court may give effect by order to transfer or pay a proportionate amount for compensation.

When property is transferred to a “trust” that is invalid, the invalidity may lead to a finding of resulting trust, where the transferee holds such property for the transferor as beneficial owner. A resulting trust may also be found when the payer pays to the recipient a sum of money to contribute to a purchase of property but such payment bears no characteristics of being a gift: the recipient of the payment will then hold a proportion of the purchased property on resulting trust for the payer.

For estate disputes, such as challenging the interpretation of a will, the court may order variation of the will in order to clarify, and order the administrator to give effect to the varied will. In some situations, the court may adjust the division of the property in dispute to reflect what the court thinks fit. In the event a trustee or administrator is found to not be adhering to their duties, the court may order specific performance and demand that a specific obligation be fulfilled. The court generally has wide discretion to award compensation, and may take into consideration the parties’ conduct in the matter and the reasonableness of the parties, when determining the amount of compensation or the terms to be attached to the court order.

Corporate fiduciaries, such as trustee companies established by law firms or accounting practices, are widely used as trustees. The involvement of professionals is often sought due to their expertise, impartiality and ability to manage high-value or blended family trusts effectively.

Settlors often engage corporate fiduciaries in order to ensure proper administration and compliance obligations are adhered to, and to minimise conflict in the family, through the involvement of impartial voices.

The default duties contained in the Trusts Act 2019, in particular the general duty of care and duty to invest prudently, impose a higher standard of conduct on corporate and professional fiduciaries (eg, lawyers, accountants), although these duties could be modified in the terms of the trust deed.

• Section 29 provides that trustees must exercise reasonable care and skill in trust administration, having regard to their special knowledge or experience.
• Section 30 requires trustees to invest trust property with the care and skill of a prudent business person.

The elevated duties imposed on professionals reflects their remuneration and expertise compared to lay trustees.

The concept of “piercing the veil” does not apply to trusts, as they are not legal entities with separate personality. Instead, trustees are personally liable for trust debts, including tax liabilities (which are particularly enforceable against trustees, even corporate ones) and this exposure can be exacerbated by breaches of fiduciary or statutory duties under the Trusts Act 2019.

However, trustees can seek reimbursement from trust assets for properly incurred liabilities; but this right to indemnity is lost if expenses are not reasonable or have arisen due to breaches in fiduciary/statutory duties.

Breaches (eg, mismanaging funds or failing to file taxes) can lead to personal liability for tax debts, penalties and beneficiary claims, with no indemnity if improperly incurred.

In practice, trustees also commonly seek to include limitation of liability clauses in contractual arrangements entered into on behalf of the trust. Such clauses typically operate to limit the trustee’s personal liability to third parties to the assets of the trust fund from time to time, so that the trustee’s own personal assets are not exposed. Where such clauses are accepted by counterparties, they provide a meaningful practical protection that supplements the trustee’s statutory right of indemnity from trust assets. However, under Sections 40–41 of the Trusts Act 2019, such protections cannot extend to losses caused by a trustee’s dishonesty, wilful misconduct or gross negligence, which remain a personal liability of the trustee regardless of any contractual or trust deed limitation.

The Trusts Act 2019 sets out a default duty under Section 30 for trustees to invest prudently, requiring the care and skill of a prudent business person managing the affairs of others. Professional trustees, with specialised expertise, are held to a higher standard. Unlike mandatory duties – such as acting for the benefit of the beneficiaries (Section 26) or exercising powers properly (Section 27) – this duty can be modified by the trust deed.

Section 59 of the Trusts Act guides trustees to consider factors like diversification, risk, capital growth, income return and the trust’s objectives, in order to balance risk and reward. If a breach occurs, Section 128 ensures courts review the trustee’s investment strategy holistically, protecting strategic decisions made in good faith.

The duty to invest prudently interplays with others, including the following.

• Section 35 (default duty of impartiality) ensures trustees balance income and capital beneficiaries’ interests, promoting equitable investment choices.
• Section 29 (default duty of care) requires reasonable skill, encouraging non-professionals to seek expert advice when needed.
• Section 32 (default duty to consider powers) demands active review of investment options, ensuring proactive management.

The interweaving duties and obligations create a framework for trustees to adopt a strategic, diversified approach towards investment that prioritises the financial interests of beneficiaries.

New Zealand’s prudent person regime requires trustees to invest with the care and skill of a prudent business person managing others’ affairs, factoring in their expertise or professional standards.

The prudent person regime integrates Modern Portfolio Theory (MPT)’s focus on diversified portfolios to balance risk and return. However, unlike MPT, which optimises returns for a given risk, the regime prohibits speculative investments and focuses on prudent processes.

Diversification is expected unless exempted by the trust deed, with failure to do so risking personal liability (Section 128 of the Trusts Act 2019).

Trusts can hold active businesses (eg, controlling shares) if permitted by the trust deed. However, the following apply.

• Trustees must actively oversee businesses, seeking information (eg, board reports) and intervening if needed.
• Inclusion of anti-Bartlett clauses in the trust deed may limit monitoring duties.
• Trustees must consider and balance the interests of any income beneficiaries against beneficiaries entitled to receive capital – catering to one class may be detrimental to the other.
• Failure to properly monitor or fulfil obligations risks incurring personal liability of the trustees.
• Responsibility for management can be delegated (Section 67), but oversight from the trustee is still required (Section 68).

In New Zealand, domicile refers to a person’s permanent home where they intend to reside indefinitely.

Tax residency in New Zealand is established if an individual spends more than 183 days in New Zealand within a 12-month period or has a permanent place of abode in the country.

New Zealand residency is granted through a residence visa: various visa categories lead to the grant of a residence visa. Once an individual holds a residence visa for 24 months and meets other requirements, that individual will be able to apply for a permanent residence visa, which allows indefinite stay and does not require the individual to establish or maintain fiscal residency in order to retain it.

New Zealand citizenship can be acquired by birth (subject to parental status) or by grant after meeting residency, character and language requirements. New Zealand allows dual citizenship.

New Zealand does not have a formally recognised expeditious or fast-track pathway to citizenship for most individuals. Citizenship is generally obtained through grant, with the requirement of a standard five-year residence period and compliance with all statutory criteria. However, there are limited exceptions where citizenship may be granted more quickly at the discretion of the Minister of Internal Affairs, but these are rare and exceptional.

New Zealand provides flexible trust law and statutory mechanisms to support minors and adults with disabilities. Discretionary trusts, with clear guidance expressed to the trustee, can be applied towards looking after a minor or for adults with disabilities.

One may also use wills to set up testamentary trusts to appoint a trustee to manage the inheritance of a minor until they reach the age of majority or a disabled adult.

Where an adult becomes incapacitated, an applicant may apply under the Protection of Personal and Property Rights Act 1988 for the court to appoint a property manager and welfare guardians. Enduring power of attorney for property or personal care and welfare can ensure long-term care and financial protection for individuals who become incapacitated.

The New Zealand government provides a range of financial support for minors and adults with disabilities, aiming to enhance their quality of life and facilitate community participation. In relation to minors under the age of 18, the Child Disability Allowance offers non-means-tested financial assistance to caregivers of children who require constant care due to a serious disability.

For adults, the Disability Allowance is a payment scheme from the government to help cover ongoing costs associated with their condition, such as medical expenses, travel and special equipment. In addition, the Supported Living Payment is another scheme which provides income support to individuals who are unable to work on a long-term basis due to a significant health condition or disability.

In New Zealand, in the event a parent dies leaving a minor without a surviving legal guardian, the Family Court has jurisdiction to appoint a guardian of the minor under the Care of Children Act 2004.

In the event an adult loses mental capacity, the appointment of a welfare guardian or conservator (property manager) requires a court application under the Protection of Personal and Property Rights Act 1988, and the appointee is subject to ongoing court supervision and obligations to submit annual statements. These safeguards are designed to protect vulnerable individuals and ensure decisions made on their behalf are in their best interest.

In New Zealand, the principal legal mechanism for planning for mental incapacity is an enduring power of attorney (EPA/EPOA), which must be made while the donor has mental capacity. There are two types of EPA: an EPA for property, which allows the attorney to manage the donor’s financial and property affairs, and an EPA for personal care and welfare, which allows the attorney to make decisions about the donor’s health, welfare and living arrangements if the donor becomes mentally incapable supported by a medical certificate.

A property EPA may take effect immediately or only if the donor becomes mentally incapable, depending on how it is drafted, whereas a personal care and welfare EPA takes effect only once the donor has lost capacity.

In practice, EPAs are commonly used as part of estate and succession planning to avoid the need for a Family Court application for a welfare guardian or property manager under the Protection of Personal and Property Rights Act 1988. They are often prepared alongside wills, trusts and advance care planning documents, and should be reviewed periodically to ensure the appointed attorneys remain appropriate and willing to act.

New Zealand supports its citizens and residents in preparing financially for longer lifespans through a combination of public and private initiatives. These include the KiwiSaver scheme, which is a voluntary long-term retirement savings plan with employer and government contributions.

The New Zealand Superannuation is a universal public pension for eligible residents in New Zealand. The current age of eligibility for New Zealand Superannuation is 65 and over.

There is a range of legal and estate planning tools to assist with individuals who may live longer but have lost mental capacity due to old age. While they still have capacity, they have the option to plan for the contingency of losing capacity by setting up enduring powers of attorney for both property and personal care and welfare.

Public financial education, led by organisations like the Retirement Commission and Sorted, also plays a vital role in promoting financial literacy and long-term planning.

In light of the longer average life span, the trust law in New Zealand has also been adjusted: the latest Trusts Act 2019 repealed the Perpetuities Act 1964, which confined the perpetuity period to 80 years. The Trusts Act 2019 currently imposes a maximum trust period of 125 years.

New Zealand’s Status of Children Act 1969 ensures equal treatment for all children, eliminating distinctions like “illegitimacy”.

• Children born out of wedlock – treated equally to children born within marriage for all legal purposes, including inheritance.
• Adopted children – where a child is formally adopted under the Adoption Act 1955, they are treated as the legal child of the adoptive parents for succession and trust purposes. Māori customary care arrangements (whāngai) are not legal adoptions, and the child usually remains the legal child of their birth parents, so their rights can differ and depend on the specific context (eg, Māori land).
• Surrogate children – the surrogate mother and her consenting partner (if any) are the legal parents at time of birth. The intended parents must adopt the child to gain legal parenthood.
• Posthumously conceived children – may be recognised as the deceased’s children if conceived via assisted reproduction with consent, but any inheritance rights will depend on the timing and on the terms of the deceased’s will, and the law in this area remains unsettled.

Where a parent has not provided for their child, living at their death, in their will (eg, a biological child born out of wedlock), that child may be able to bring a claim for further provision, against the deceased parent’s estate, under the Family Protection Act 1955 (see 2.3 Forced Heirship Laws).

With respect to trusts, the terms of the trust deed, including its beneficiaries, can be drafted to include specific children. There is no obligation for a settlor to include all their children as beneficiaries of a trust.

Same-sex marriage has been legal in New Zealand since August 2013. Previously, “civil unions” were more widely used. Same-sex spouses and civil union partners are treated in the same way as opposite-sex couples for most relationship property, succession and tax purposes.

New Zealand recognises de facto relationships (including same‑sex and opposite‑sex couples) where two adults live together as a couple but are not married or in a civil union. After three years, the Property (Relationships) Act 1976 generally treats de facto partners like married or civil union couples, with equal sharing of relationship property on separation or death, subject to limited exceptions.

On death, a surviving de facto partner has broadly similar rights to a spouse or civil union partner on intestacy, and may elect to claim relationship property instead of taking under the will or intestacy, while shorter relationships attract more limited rights unless there is a child of the relationship or significant contributions. With respect to tax, New Zealand taxes individuals rather than households, so being in a de facto relationship does not change income tax rates or create joint filing obligations.

New Zealand promotes charitable giving through tax incentives under the Income Tax Act 2007, which is based around “donee status” for approved charities or entities (eg, registered charities, schools).

Donations to a charitable entity with donee status allow donors to receive a 33.33% tax credit for cash donations of NZD5 or more (up to the amount of the donor’s taxable income).

Companies and Māori authorities may deduct donations to donee organisations from their taxable income, generally up to the level of their net income. New Zealand does not have estate or inheritance taxes, so charitable bequests in a will are not subject to estate tax.

New Zealand’s charitable planning primarily utilises charitable trusts, incorporated societies and charitable companies, which become “registered charities” when they register under the Charities Act 2005 and, in that capacity, can obtain donee status and associated tax benefits from Inland Revenue.

In order to qualify as a charity, the structure must align with one of the four charitable purposes:

• relief of poverty;
• advancement of education;
• religion; or
• community benefit.

Charitable trusts, governed by the Trusts Act 2019, are popular for their simplicity and flexibility. Customisable trust deeds can support goals like education or welfare, with amendment powers (used cautiously to preserve charitable purposes).

Registered charities (including charitable trusts) are exempt from income tax and resident withholding tax on non-business income and, once donee status is active, enable 33.33% donor tax credits. However, trustees face personal liability for breaches, and the Charities Act 2005 compliance can be rigorous. Scalability is limited by reliance on donations, small trustee groups and restricted commercial activities, which must directly serve charitable goals.

Incorporated societies, distinct entities under the Incorporated Societies Act 2022, may register as charities if pursuing charitable purposes. They offer limited liability, democratic governance suited for community initiatives, and tax exemptions if registered. However, complex rules, mandatory meetings and membership management demand time and resources. If the society participates in non-charitable activities, it risks deregistration.

Charitable companies, formed under the Companies Act 1993 and registered as charities, suit larger operations. They provide limited liability, commercial flexibility to fund charitable purposes, and tax exemptions. However, dual compliance with the Companies Act 1993 (Section 131) and Charities Act 2005 increases costs. Commercial activities may attract scrutiny, deterring donors, and winding up can be complex due to the requirement to transfer assets to a charity with similar purposes.