Cross-Border Estate Planning for New Zealanders

by Emma Marshall

5 March 2024

In an increasingly interconnected world, many New Zealanders have diversified their assets globally, which can present unique challenges for estate planning. Whether it’s a holiday home in France, bank accounts and pensions in the United Kingdom or investments in the United States,  the international dimension of asset ownership means that careful and comprehensive estate planning is needed.

In New Zealand, although there are various laws under which aggrieved persons can make claims against estates[i], individuals enjoy testamentary freedom, meaning they have the autonomy to distribute their assets according to their wishes through a legally valid will.  However, where international assets are involved, complexities can arise due to different legal frameworks in different jurisdictions, and it is crucial for New Zealanders to consider how foreign laws may intersect with their intentions recorded in their wills.

Many countries in Europe (for example, Austria, France, Germany, Italy, Spain, Switzerland), have forced heirship rules, which dictate that a set portion of an individual’s estate is inherited by specific family members, such as children or spouses, regardless of the deceased’s wishes expressed in a will. Under French law, for example, the deceased’s estate vests in the heirs on the testator’s death with a portion reserved for specific heirs (called the réserve héréditaire) varying according to the number of heirs and their degree of relationship to the will-maker. If, for instance, the deceased left three children, the estate is divided into four, with each of the children inheriting a quarter, and the balance (i.e. the portion that will-makers can bestow freely, called the quotité disponible) passing according to the deceased’s wishes. These types of rules can potentially conflict with the provisions in a New Zealand will recording how the property owned in one of these jurisdictions is to be distributed.

Although New Zealand currently does not impose estate taxes or death duties, many countries do, and taxes or death duties may apply to assets owned by you in a country outside New Zealand.  In the United Kingdom (UK) for example, inheritance tax is payable when an estates asset value exceeds a certain amount. This tax may apply to non-UK residents particularly where land and buildings is owned.

Where assets are spread across different jurisdictions, having separate wills made pursuant to the laws of the country where those assets are situated often helps to streamline the estate planning process and ensures appropriate and tailored legal and tax advice is obtained in each jurisdiction. It also serves to focus the mind on where (in which jurisdictions) a grant of Probate will or won’t be required and may help to reduce the costs of estate administration and delay.

If you do have multiple wills, to prevent any one  will from inadvertently revoking another, it is important to ensure that the wills are consistent, that provisions recording the revocation of earlier wills are carefully drafted and that each Will records the scope of the assets it is intended to cover.

Cross-border estate planning for New Zealand residents with international assets is not a one-time task but a process that necessitates regular review as it may need to be updated over time due to changes in personal circumstances, laws, and how and where your asset are held.  

Be proactive and seek professional guidance so you can safeguard your assets, minimise legal and tax complications, and make sure that your wishes for what you want to happen to your property when you pass away, can be given legal effect.   

We are experienced in and can assist you with your estate planning matters pursuant to New Zealand law.  We can work with your lawyers overseas, or where you don’t have one,  through our membership of STEP (the international Society of Trust & Estate Practitioners) we can put you in contact with lawyers with the necessary expertise.

If you would like more in-depth advice or further information about the content of this article, please get in touch with the team at Pitt & Moore on 03 5488349, and ask to speak with Emma Marshall, Partner.

[i] By way of example, the Family Protection Act 1955 provides that certain people including the spouse or partner and children of a deceased person are entitled to make a claim against the estate if they believe that they have not been appropriately provided for in the Will, the Property (Relationships) Act 1976 provides that a spouse or partner may elect equal division of all relationship property (which includes the family home) prior to distribution under the Will and the Law Reform (Testamentary Promises) Act 1949 under which a person can make a claim against an estate if the deceased promised to leave the claimant something in their Will in return for services rendered or work done and has not fulfilled their promise. All of this legislation has specific requirements which must be met in order for a claim to be successful.

Disclaimer: The information contained in this publication is of a general nature and is not intended as legal advice. It is important that you seek legal advice that is specific to your circumstances.