Learn how to safeguard inheritances from relationship property claims in New Zealand. Explore legal tools like trusts, contracting out agreements, and expert guidance from Core Legal.

Protecting Inheritances from Relationship Property Claims in New Zealand

At Core Legal, we frequently assist clients in Masterton, Wellington, and beyond who want to ensure their children and grandchildren don’t lose their inheritance through relationship property claims. With marriage rates declining and separation rates increasing in New Zealand, this concern is both real and common.

Understanding how inheritance interacts with relationship property law can help you make informed decisions when preparing your Will or estate plan.

Inheritance & Relationship Property: What Does the Law Say?

Under New Zealand law, inheritances are initially considered separate property. This means that when a person in a relationship receives an inheritance, it is not automatically included in the pool of relationship property that would be divided upon separation or death.

However, this protection is not absolute. Inheritances can quickly become relationship property through intermingling—for example:

• Money deposited into a joint account
• A house used as the family home
• A vehicle or valuable asset used by both partners

Even if a beneficiary receives their inheritance while single, entering into a long-term relationship later can expose those assets to claims—especially if the inherited asset is used for the benefit of both parties. This can significantly impact what your grandchildren or other family members eventually receive.

Common Legal Tools for Protecting Inheritances

1. Contracting Out Agreements (“Prenups”)

A legally binding contracting out agreement under the Property (Relationships) Act 1976 can define what will remain separate property during a relationship. These agreements:

• Must be in writing
• Require independent legal advice for both parties
• Are commonly used to ring-fence inheritances and family heirlooms

The challenge? You can’t force your children or grandchildren to enter into these agreements. They may be unwilling to approach their partner, especially in long-standing relationships.

2. Establishing a Family Trust

A family trust is another way to shield assets from future relationship property claims:

• Assets are owned by the trust, not the individual
• Trustees can control distributions to named beneficiaries
• Partners and spouses can be excluded as beneficiaries

This offers long-term protection—but trusts come with administrative costs and obligations under the Trusts Act 2019. They may not be necessary for smaller estates or where family dynamics pose minimal risk.

Important tip: Be cautious about who you appoint as trustee. A trustee sympathetic to a partner could dilute the trust’s protective structure by expanding the beneficiary pool or mismanaging distributions.

Tailored Advice Is Key

No one-size-fits-all solution exists when it comes to protecting your estate. Factors to consider include:

• The value and nature of your assets
• The relationship status of your children or grandchildren
• Your family’s views on financial independence and trust structures

Whether you’re creating a new Will or updating your estate plan, expert legal advice is essential to ensure your wishes are honoured, and your family’s future is secure.

Talk to Core Legal – Experts in Estate Planning and Trusts

At Core Legal, we’re committed to helping individuals and families in Masterton and Wellington make informed, cost-effective decisions about inheritance protection. We offer fixed-fee Initial Consultations, so you can explore your options without financial pressure.

Contact Core Legal today to discuss how you can best protect your family’s future.