How Inheritance Works in New Zealand
🏡 The big picture
Inheritance is the process of passing on what someone owns after they die. In New Zealand that process is shaped by three things: whether the person left a valid will, who is entitled to claim from the estate, and the practical steps of proving the will and gathering the assets. The good news for most families is that New Zealand does not tax an inheritance at all, so the whole of an estate can pass to the people who receive it without a death tax taking a slice. What can still catch families out is the paperwork and the law that decides who gets what when there is no will, or when a will does not provide for someone the law expects to be looked after. This guide walks you through the tax position, wills versus dying without one, probate and the current threshold, the role of the executor and Public Trust, relationship property and family claims, how KiwiSaver and life insurance are treated, and how gifts made before death interact with the rest home care means assessment. Every figure below is checked against official sources, and the rules that changed recently are flagged with the date they took effect.
New Zealand has no death tax
New Zealand once had estate duty and gift duty, but both have gone. Estate duty was reduced to zero for deaths from late 1992, and gift duty was abolished for gifts made on or after 1 October 2011. That means when you inherit money, a house, shares or KiwiSaver from a New Zealand estate, there is no separate tax to pay on the inheritance itself. This is different from many other countries, where an inheritance or estate tax can take a large share of what is passed on.
The inheritance is tax free, but what the assets produce afterwards is not. If you inherit a rental property, the rent is taxable income. If you inherit shares or a term deposit, the dividends or interest are taxable. There can also be a bright-line test issue if you inherit and then sell residential land within the relevant period, so it pays to get advice before selling.
Words you will meet
| Term | What it means |
|---|---|
| Estate | Everything the person owned in their own name at death, minus their debts |
| Will | A legal document setting out who gets what and who is in charge |
| Executor | The person named in the will to carry out the wishes and settle the estate |
| Administrator | The person appointed to settle the estate when there is no will (or no named executor) |
| Intestate | Dying without a valid will |
| Probate | The High Court confirming a will is valid so the executor can act |
| Beneficiary | A person who receives something from the estate |
What is in the estate, and what is not
Not everything a person used or lived in forms part of their estate. The estate is made up of assets held in the deceased person's sole name. Some important things pass outside the estate and are not controlled by the will:
- Jointly owned property: A house or bank account owned as joint tenants passes automatically to the surviving co-owner by survivorship, outside the estate.
- Life insurance with a nominated beneficiary: Paid directly to the named person, outside the estate.
- Assets in a family trust: Owned by the trust, not the person, so they are not part of the estate.
Everything else the person owned alone, including KiwiSaver, bank accounts, shares, vehicles and solely owned property, forms the estate and is distributed by the will or, if there is no will, by the intestacy rules.
📜 Dying with a will, or without one
Whether or not there is a valid will changes who decides and who inherits. With a will, the person chose their executor and set out their wishes. Without a will, the law makes those choices instead, using a fixed formula that leaves no room for what the family thinks the person would have wanted.
When there is a will
A valid will names an executor and sets out who receives what. The executor gathers the assets, pays the debts, funeral costs and any tax owing, and then distributes what is left according to the will. In New Zealand a will normally must be in writing, signed by the will-maker and witnessed by two people who are not beneficiaries. A will made before a marriage or civil union is usually revoked by that marriage unless it was made in contemplation of it, which is a common trap.
Even a clear will can be adjusted by the courts. A surviving spouse or partner can choose to divide relationship property instead of taking the will gift, and close family can claim if the will fails to provide for them. Those two rules, covered later, sit above the will.
When there is no will (intestacy)
If someone dies without a valid will, they die intestate, and their estate is shared out under a set formula in the Administration Act 1969. A family member applies to the High Court to be appointed administrator, and the estate is then distributed strictly by the rules below. There is no discretion: the formula decides, even if everyone in the family agrees something else would be fairer.
The intestacy order under the Administration Act 1969
| Who survives | How the estate is shared |
|---|---|
| Partner, no children, no parents | The partner takes the whole estate |
| Partner and children | Partner takes all personal chattels, plus a $155,000 statutory legacy, plus one third of the rest. Children share the other two thirds equally |
| Partner and parents, no children | Partner takes all personal chattels, plus a $155,000 statutory legacy, plus two thirds of the rest. Parents share the other one third |
| Children, no partner | Children take the whole estate in equal shares |
| No partner, no children | Parents, then brothers and sisters, then grandparents, then aunts and uncles, in that order |
| No relatives at all | The estate passes to the Crown (bona vacantia) |
"Partner" here means a spouse, civil union partner or de facto partner. "Personal chattels" covers the everyday personal property such as cars, furniture, appliances and jewellery, but not land, buildings or money. The $155,000 statutory legacy is a fixed sum set under the Act, and it is paid to the partner first, before the remainder is split, together with interest from the date of death.
The formula can produce results a family would never have chosen. A surviving partner does not automatically inherit everything if there are children, and a de facto partner must be able to prove the relationship. Stepchildren who were not adopted are not included at all. Making a will is the only way to choose for yourself, and it usually makes the estate faster and cheaper to settle.
⚖️ Probate, the executor and Public Trust
Once someone dies, the person in charge of the estate has to prove they have the authority to deal with the assets. That is what probate does, and it is often the step families understand least.
What probate is
Probate is a grant from the High Court confirming that a will is valid and that the named executor has authority to act. With the grant in hand, the executor can require banks, KiwiSaver providers, share registries and Land Information New Zealand to release or transfer the assets. Where there is no will, the equivalent grant is called letters of administration, and it appoints an administrator instead of confirming an executor.
When probate is needed: the current threshold
Probate is not always required. For small holdings, institutions can release funds without it. The threshold that decides this changed recently and is now higher than it was for many years.
There are important exceptions to keep in mind:
- Real estate always needs a grant. If the deceased owned land or a house in their sole name, probate or administration is required no matter the value, so the title can be dealt with.
- Government stock and company shares still use $15,000. The increase to $40,000 does not apply to government or local authority bonds and securities, or to company shares, where the threshold remains $15,000.
- Jointly owned assets need nothing. Assets held jointly pass to the survivor automatically and are outside the estate, so no grant is needed for them.
The old $15,000 figure was set in 2009, before KiwiSaver balances grew. Many estates now hold more than $15,000 in KiwiSaver alone, which forced families through the High Court for otherwise simple estates. Lifting the threshold to $40,000 lets more modest estates be settled without a formal grant.
The executor's job
The executor or administrator is responsible for the whole settlement. In practice the work includes:
- Finding the will and applying for probate if needed
- Identifying and valuing all the assets and debts
- Paying funeral costs, debts and any tax owing
- Filing a final income tax return for the person to the date of death
- Distributing what is left to the beneficiaries and keeping records
An executor can be personally liable if they distribute the estate wrongly, for example by paying out before a valid claim is resolved, so many wait until the claim periods have passed before making final distributions.
Public Trust and other professional executors
You do not have to name a family member. Public Trust is a Crown entity that acts as a professional executor and administrator for many New Zealanders, and trustee companies and law firms offer the same service. A professional executor is often chosen where the estate is complex, where family relationships are difficult, or where there is no obvious person to take on the role. Public Trust also holds many wills and can apply for probate and administer intestate estates. Professional executors charge fees, usually based on the size and complexity of the estate, which are paid from the estate itself.
👪 Relationship property, claims, KiwiSaver and life insurance
A will or the intestacy formula is only the starting point. Two areas of law can change who ends up with what: relationship property and family provision claims. On top of that, KiwiSaver, life insurance and gifts made before death each work in their own way.
Relationship property: Option A or Option B
Under the Property (Relationships) Act 1976, when a partner dies the surviving spouse, civil union partner or de facto partner has a choice. They can take what the will or intestacy gives them (Option B), or they can apply to divide the relationship property instead (Option A). Option A treats the death like a separation for property purposes, and the starting point is an equal split of the relationship property, which mainly covers the family home, its contents and assets built up during the relationship.
The surviving partner generally has six months from the date of death, or from the grant of administration, to choose Option A. Choosing Option A means giving up what the will left them, even if the property claim turns out to be worth less. Because the choice is one way and time limited, legal advice early is important.
Family Protection Act claims
The Family Protection Act 1955 lets certain people ask the court to change how an estate is shared if they were not adequately provided for. Eligible claimants include the spouse, civil union or de facto partner, and children of any age, and in some situations grandchildren, stepchildren being maintained by the deceased, and parents. The claimant must show the will-maker breached a moral duty to make proper provision for their maintenance and support. If the court agrees, it can redistribute the estate, which means even a clear will can be adjusted. Claims usually must be filed within twelve months of the grant of probate or administration.
KiwiSaver passes through the estate
KiwiSaver does not let you nominate a beneficiary the way some overseas schemes and insurance policies do. When you die, your whole KiwiSaver balance, including your contributions, your employer's, the government's and the investment returns, is paid into your estate and then distributed under your will or the intestacy rules. If the balance is $40,000 or less, the provider can usually release it to your next of kin without probate. If it is above $40,000, the executor generally needs a grant before the provider will pay it out.
Life insurance depends on the nomination
Life insurance is treated differently depending on how the policy is set up. If you nominated a beneficiary on the policy, the payout goes straight to that person and never enters the estate, so it is not affected by the will, by creditors or by the probate threshold. If no beneficiary is nominated, the payout is made to the estate and is then distributed under the will or intestacy along with everything else. Naming a beneficiary is a simple way to make sure money reaches a specific person quickly.
Gifts before death and the rest home care means assessment
Because there is no gift duty, you can give assets away during your life without a tax bill. But gifting is not a free way to qualify for the Residential Care Subsidy. When Work and Income does a financial means assessment for long term residential care, it looks back at gifts you made and adds excessive gifting back into your assets as though you still owned it. The allowances are:
- Within the last five years: up to $8,500 of gifting a year is allowed (up to $42,500 over the five years). Anything above that is counted back into your assets.
- Before those five years: up to $27,000 of gifting a year is allowed. Gifts above that amount are also added back.
To receive the subsidy, your assets must be under the means assessment threshold. As set out on the Work and Income page, a single person (or a couple both in care) can have total assets of $300,811 or less including the home and car, while a couple with one partner in care can instead choose a threshold of $164,731 or less excluding the home and car. Large gifts made to get under these limits are usually clawed back, so gifting late in life rarely helps.
🔢 Worked New Zealand examples
These examples put the rules together. The figures are illustrative but the method and the amounts follow the current law.
Situation: Aroha dies intestate. The family home was owned jointly with her partner, so it passes to him by survivorship and is outside the estate. Her estate is made up of $305,000 held in her sole name (bank, investments and KiwiSaver) plus personal chattels (car, furniture and jewellery) worth $25,000.
Step 1: Set aside the partner's entitlements
Step 2: Split the remainder one third and two thirds
Step 3: Totals
Situation: Tama dies with a will that leaves his whole estate to his adult children from an earlier relationship, and nothing to his wife Manaia. The couple's relationship property totals $800,000. Of that pool, $500,000 sits in Tama's estate and $300,000 is in Manaia's name.
Option B: accept the will
Option A: divide the relationship property
Here Option A leaves Manaia $100,000 better off, so she would likely choose it, giving up any inheritance under the will (which was nothing anyway). She could also consider a Family Protection Act claim. The choice must be made within six months, so timing and advice are critical.
Situation: Sophie dies with a will. She owned no property. Her assets are KiwiSaver of $28,000 and a bank account of $9,000. Her executor wants to know whether probate is needed.
Testing each holding against $40,000
If Sophie's KiwiSaver had instead been $45,000, that holding would sit above $40,000 and the provider would generally require probate before releasing it. The threshold applies per institution and per holding, not to the estate as a whole.
If part of Sophie's savings had been company shares or government bonds, the old $15,000 threshold still applies to those, not $40,000. So a $20,000 shareholding would need a grant even though a $20,000 bank balance would not.
Situation: Rangi is single and is moving into long term residential care. In the five years before his means assessment he gave away $250,000 to his children, hoping to qualify for the Residential Care Subsidy. Work and Income reviews the gifting.
How much gifting is allowed back over five years
Because $207,500 is treated as though Rangi still owns it, the gifting does not push him under the asset threshold. Gifting to qualify for the subsidy is largely undone by the clawback, and it can create family disputes later. There is no gift duty to pay, but there is a real cost to gifting late in life.
Sources
Figures and rules in this guide were checked in July 2026 against the following official and primary sources:
- Administration Act 1969, sections 65 and 77 (intestacy order, statutory legacy and probate threshold), New Zealand Legislation (legislation.govt.nz)
- Ministry of Justice, "Increased probate threshold good news for bereaved families" ($15,000 to $40,000 from 24 September 2025, Administration (Prescribed Amounts) Amendment Regulations 2025), justice.govt.nz
- Community Law Manual, "Distributing the property" (personal chattels, $155,000 legacy, one third and two thirds shares), communitylaw.org.nz
- Public Trust, guidance on wills, executors and administration (publictrust.co.nz)
- Family Protection Act 1955 and Property (Relationships) Act 1976 (family claims and the Option A / Option B election), legislation.govt.nz
- Inland Revenue, gift duty abolition from 1 October 2011 (ird.govt.nz)
- Work and Income, "Residential Care Subsidy" (asset thresholds of $300,811 and $164,731, gifting allowances of $8,500 and $27,000 a year), workandincome.govt.nz
Note: dollar thresholds for the Residential Care Subsidy are reviewed each year, so confirm the current figures with Work and Income before relying on them. This guide is general information, not legal advice.
Related tools and guides
- Inheritance Split Calculator - work out each person's share of an estate
- Estate Value Calculator - add up the assets and debts in an estate
- Wills, EPAs and your estate
- Probate explained
- Estate planning basics
- How GST Works, a related guide in the same area.
- How Insurance Claims Are Assessed, a related guide in the same area.
- How Insurance Premiums Are Calculated, a related guide in the same area.
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