NEW ZEALAND Law and Practice Contributed by: Brent Wicks, Violet Yu, Jonathon Russell and Sandy Chen, Cone Marshall Limited
compliance issues may disrupt what is intended. This will require identifying all beneficiaries and evaluat - ing cross-border legal or tax issues that could disrupt intentions. For example, a distribution from a NZ 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 NZ 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. 2.3 Forced Heirship Laws New Zealand does not have any forced heirship laws and generally honours testamentary intentions. How - ever, legislative provisions like the Family Protection Act 1955, Property (Relationships) Act 1976 and Tes - tamentary 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 mainte - nance 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 the claim succeeds, 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 per - son 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 rela - tionship property before the estate is distributed. If a claim is successful, the spouse or partner’s entitle -
ment 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, pro - vided all parties obtain independent legal advice. 2.4 Marital Property The Property (Relationships) Act 1976 (PRA) governs property division for married, civil union and de facto partners (including same-sex couples) in New Zea - land, applying to relationships of three years or more, or shorter with specific circumstances (eg, a child or The PRA uses a deferred community property regime. Property is not automatically “joint” during the rela - tionship but all “relationship property” is divided equally (50/50) upon separation or death, unless oth - erwise 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 leg - islation and remedies available under the PRA, Family Proceedings Act 1980 (FPA) and common law include the following. • Section 44 (PRA) – If property is transferred (e.g., to a trust) to defeat a partner’s rights, courts may order its return or compensation, unless the recipi - ent 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/sepa - rate property or trust income. significant contributions). Property Classification
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