Estate Planning Guide — Wills, Trusts, and Tax Planning in NZ
the estate planning in New Zealand. The guide covers the wills and the testamentary trusts, the use of the family trust for the estate planning, the enduring powers of attorney, the taxation of the deceased estates, and the strategies for the asset protection and the wealth transfer.
Estate Planning Tools
The estate planning in New Zealand involves: (a) the will — the legal document directing the distribution of the assets after the death, (b) the testamentary trust — the trust established under the will to hold the assets for the beneficiaries (the "trust under the will"), (c) the inter vivos trust (the "living trust" — the trust established during the lifetime for the asset protection and the succession planning), (d) the enduring power of attorney (EPA) — the legal authority for the appointed person to manage the financial and the personal affairs, and (e) the property sharing agreement — the contracting out of the Property (Relationships) Act 1976.
Taxation of the Deceased Estate
New Zealand does not have the inheritance tax or the estate duty (abolished in 1992). The deceased estate is treated as the separate taxpayer for the tax purposes. The personal representative (the "executor") must: (a) file the final tax return of the deceased for the period up to the date of the death, (b) file the estate income tax return (the IR6) for the income earned by the estate during the administration period, and (c) the trustee rate of 33% applies to the estate income (the "estate income"). The capital gains on the assets transferred to the beneficiaries are generally not taxed (the "no CGT" rule). See our Deceased Estates Guide → for the detailed rules.