Blended Family Estate Planning NZ: Protecting Children From a First Relationship

Re-partnering after children changes who inherits what. Here is how relationship property can override an old will, and the practical tools NZ parents use to provide for their own children directly.

When you re-partner after having children, the plan you had for your assets quietly stops matching the law. A will you wrote years ago may say one thing, but New Zealand's relationship-property rules can override it, and the people you most want to provide for, your own children, can end up with far less than you intended. None of this is obvious until it is too late to fix.

This guide explains why blended families are a planning blind spot, how the default rules actually work on death, and the practical tools re-partnered parents use to provide for their own children directly.

TL;DR: When a partner dies, the survivor can usually elect to divide relationship property starting at a 50/50 split ¹, which can override an old will and leave children from a first relationship short. Life cover paid to named beneficiaries sits outside the estate ⁷; contracting-out agreements and trusts are the other common tools. This is general information, not advice.

Why are blended families a financial planning blind spot in NZ?

Most people set up their estate planning once, early, and rarely revisit it. A will written when you were single, or in your first relationship, can sit unchanged for a decade. Re-partnering changes the picture in ways the old documents never anticipated.

The blind spot is that two separate areas of law collide on death: what your will says, and what relationship property rules allow your surviving partner to claim. People assume the will wins. Often it does not. A new partner can have a legal claim against assets you intended for children of a first relationship, and that claim can take priority over the gifts in your will.

This matters for a large and growing group: parents who have children from one relationship and have since formed a new one. The tools to manage it exist, but they only work if they are put in place before they are needed.

What happens to your assets if you die and your new partner survives you?

Under the Property (Relationships) Act 1976, when a married, civil union or de facto partner dies, the surviving partner faces a choice. They must elect between two options ¹:

• Option A — apply for division of relationship property, which starts from a 50/50 split of the relationship property pool.
• Option B — take whatever the will leaves them (or, if there is no will, the entitlement set out in the Administration Act 1969).

The survivor must make this election within 6 months of the grant of administration or probate. If they make no election, they are deemed to have chosen Option B and take under the will ².

The catch for blended families is Option A. If your will leaves most of your estate to your children but your partner chooses Option A, they can claim their half of the relationship property first. Your children then share only what is left after that division. The will does not protect the children from this; the survivor's election can override it.

How does relationship property override your old will?

The Property (Relationships) Act applies automatically to married, civil union and de facto couples. The equal-sharing regime generally applies once a relationship has lasted at least 3 years. Shorter relationships are treated as "relationships of short duration" under different rules ³.

The three-year point is the part that surprises people. A relatively new partner, three years in, can have a claim against the relationship property even though much of it may have come from your earlier life and was always intended for your children. The will expresses your wishes; the Act gives your partner a separate, overriding right to claim a share.

If you die without a will at all (intestate), the default is set by statute, not by what you would have chosen.

The $155,000 prescribed sum above is the figure that applied to intestacies as at 30 June 2025 ⁴. As you can see, none of these default paths reliably delivers what a blended-family parent usually has in mind.

Can you use life insurance to provide for your own children directly?

This is one of the cleaner tools available. Life insurance paid to a named beneficiary is paid directly to that person and passes outside the estate ⁷. Because it never enters the estate, it is not caught by relationship-property division on death.

For a parent in a blended family, that means a life policy with your own children named as beneficiaries can provide for them directly, regardless of how the relationship-property election plays out over the rest of your assets. It is a way to ring-fence a defined sum for your children without depending on the will surviving a partner's claim.

A few things are worth weighing up rather than treating this as a complete answer:

• Naming a beneficiary on the policy is what keeps the proceeds outside the estate. How you set this up matters, and minor children cannot simply receive a large lump sum directly, so the structure (for example, payment held on their behalf) needs thought.
• Life cover is subject to the terms of the policy. Whether a claim is paid depends on the policy wording, exclusions, stand-down periods, underwriting and your disclosure.
• The right sum insured depends on your circumstances, debts, other provision and what you want each child to receive.

How an adviser sets the cover amount and ownership is covered in how an adviser structures life cover in NZ, and the wider context for parents is in life cover for parents.

Should you consider a trust, a contracting-out agreement, or both?

Beyond life cover, two legal tools come up repeatedly in blended-family planning.

A contracting-out agreement lets a couple opt out of the equal-sharing regime. It is made under section 21 of the Property (Relationships) Act 1976, and is sometimes called a "pre-nup" style agreement even when signed during a relationship. To be valid, each partner must get independent legal advice, and a lawyer must certify that they understand the effects ⁹. This is what lets a couple agree, in advance, that certain assets stay separate, which can protect what you intend for your children.

A trust holds assets separately from your personal estate, which can keep them outside both the relationship-property pool and the estate on death. Trusts carry ongoing cost and administration, and the rules around them are involved, so they are not right for everyone.

These two are often paired because a contracting-out agreement sets the rules between the partners while a trust holds the assets the agreement is protecting.

Setting up a trust or a contracting-out agreement is legal work. Smiths Financial does not provide legal advice or draft these documents. This is general information only, and you should work with a lawyer on the structure itself.

How do KiwiSaver and the family home complicate things?

Two assets cause particular trouble in blended families: KiwiSaver and the home.

KiwiSaver cannot be left to a named beneficiary, held jointly, or held in a trust. On death, a member's KiwiSaver balance forms part of their estate and is distributed under their will, or under the Administration Act 1969 if there is no will ⁶. That means it is exposed to the same relationship-property election and Family Protection Act claims as the rest of the estate. You cannot ring-fence KiwiSaver for your children the way you can with a life policy. We cover this in detail in what happens to KiwiSaver on death.

The family home is usually the largest relationship-property asset, and it is often where the equal-sharing claim bites hardest. If the home was brought into the relationship or bought partly with money intended for your children, an Option A election can put half of its value in play. Whether the home is owned jointly or as tenants in common, and whether it sits in a trust, changes the outcome significantly, which is again a legal-structure question.

One practical note on smaller estates: as at 30 June 2025, assets up to $15,000 held in the deceased's sole name at any one institution could be released without a grant of probate or letters of administration ⁵. Above that, formal administration is generally needed, which is part of why the estate route is slower and more exposed than a direct life-policy payment.

What should you and your new partner agree on now?

The common thread is that the default rules rarely match what a blended-family parent intends, and the fixes have to be put in place in advance. A practical starting point is to be clear, together, on a few things:

• Which assets each of you wants to keep separate for your own children, and which you intend to share.
• Whether a contracting-out agreement and updated wills should reflect that, drafted with a lawyer ⁹.
• Whether life cover naming your own children is a sensible way to provide for them outside the estate ⁷.
• How KiwiSaver and the home fit, given KiwiSaver cannot be ring-fenced the same way ⁶.

Estate documents, wills and enduring powers of attorney sit alongside this; our estate documents checklist is a useful companion. Where insurance is part of the plan, an adviser can help size and structure the cover so it does what you intend.

Frequently asked questions

Can my new partner override the will I made for my children?

In effect, yes, to a degree. When a partner dies, the survivor can elect to divide relationship property starting from a 50/50 split (Option A) rather than take under the will ¹. They can also bring a Family Protection Act claim if the will does not make adequate provision for them, and a court can rewrite the distribution ⁸. An old will on its own does not guarantee your children receive what it says.

Does life insurance for my children get caught by relationship property?

Life insurance paid to a named beneficiary is paid directly to that person and passes outside the estate, so it is generally not caught by relationship-property division on death ⁷. That is why naming your own children as beneficiaries is a common way to provide for them directly. The setup matters, and a claim is always subject to the policy terms, so it is worth getting the structure right.

What happens to my KiwiSaver when I die in a blended family?

KiwiSaver cannot be left to a named beneficiary or held in a trust. On death it forms part of your estate and is distributed under your will, or under the Administration Act 1969 if there is no will ⁶. That means it is exposed to the relationship-property election and Family Protection Act claims, and cannot be ring-fenced for your children the way a life policy can.

How long do we have to make the relationship-property election?

The surviving partner must make the Option A or Option B election within 6 months of the grant of administration or probate. If no election is made, they are deemed to have chosen Option B and take under the will ².

Do we both need separate lawyers for a contracting-out agreement?

For a section 21 contracting-out agreement to be valid, each partner must have independent legal advice, and a lawyer must certify that each understands the effect of the agreement ⁹. Smiths Financial does not draft these agreements; that is work for a lawyer. We can help with the insurance side of a blended-family plan.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances. Smiths Financial does not provide legal advice; please consult a lawyer about wills, trusts and contracting-out agreements. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Whether a claim is paid depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure. Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Figures are correct as at 30 June 2025. Last reviewed 30 June 2025.