Think you're getting an inheritance? Here’s how to squander it before the money arrives

Saturday, 13 June 2026

Legal battles over sentimental items can wipe out half an estate's value, fuelled by emotional entitlement.

Wills cannot override assets held in family trusts, often leaving adult children empty-handed.

Rising retirement costs and grandparents skipping a generation to help grandkids mean smaller inheritances.

Paddy Gamble has seen it all when it comes to family members bickering over what they believe they’re entitled to.

One example that stands out to the CEO of Perpetual Guardian involves a family squandering approximately 50% of the value of an estate, arguing over who should inherit a guitar.

“People will often assume the law works in a particular way,” says Gamble, explaining that they’ll then respond by lawyering up to challenge the will.

Among the many mistakes Kiwis make, there are two that stand out to Gamble.

The first comes down to assuming they are entitled to something in a certain way without realising that the law might have an entirely different perspective on the matter.

And the second comes down to the assumption that the pot of money they inherit will solve all their problems.

Both of these issues can create a toxic cocktail of familial animosity that can prove damaging to both personal relationships and the value of the estates.

Calm conversations

Gamble says many families tend to leave the key discussions until it’s too late.

“They don’t talk about things when everything’s calm,” he says, with many preferring to avoid awkward conversations.

Gamble’s advice is to have these discussions as early as possible and to ensure everything is documented accurately, so there’s less scope for confusion further down the line.

Beware the trust and will combination

Many Kiwis mistakenly assume that if they write something in their will, it automatically applies to everything they own.

However, Gamble warns this doesn’t always apply when some of the estate is housed within a trust structure.

“The trust is a distinct legal entity,” says Gamble.

“So, when someone dies, nothing will happen to the assets within the trust. People might say: ‘Dad died and he had millions of dollars of property.' But actually, Mum and Dad had no property. Mum and Dad had maybe a couple of cars, some personal effects, but everything else was in the trust.”

Under these circumstances, the next steps are determined by the trust deed rather than the will. A will cannot override or dictate decisions regarding any assets owned by the trust, as that property is not owned by the deceased as an individual.

The trustees listed on the trust will then be responsible for effecting the instructions listed under the trust deed. Trustees are typically a combination of the people putting their property into the trust (the settlors), trusted family members and an independent professional trustee (such as a lawyer, accountant or trustee company).

This isn’t just a niche issue. There are approximately 300,000 to 500,000 trusts across New Zealand, many of which are so-called inactive family trusts, designed specifically to hold a family home for asset protection.

Understanding the relationship between trusts and wills is integral in ensuring the inheritance process runs according to plan.

Trusts have declined in popularity following the introduction of the Trusts Act in 2021, but there is still a significant contingent of New Zealanders who have key assets separated from their personal ownership.

Don’t run the numbers too early

Another mistake families make is assuming that inheritances today will be as large as those we’ve seen in the past.

The sheer cost of modern retirement means that even a decent estate can decline over time.

Gamble says one of your parents could ostensibly retire at 65 but then live into their 90s, chipping away at a retirement with every passing year.

When you factor in the costs of retirement villages or the necessity for care later in life, a large inheritance windfall can start to appear quite distant.

“A lot of people underprepare for retirement,” Gamble says.

“And a lot of people over-rely on a pot of money they think will arrive in the future.”

This disconnect between expectations and reality can sometimes lead to tense family circumstances, especially among adult children who feel entitled to an inheritance from their parents.

Skipping the kids

Another thing to consider is that parents don’t necessarily need to leave anything to their adult children, especially not if they feel they’re in a decent position.

Gamble has seen more grandparents skipping a generation and setting up trusts or special inheritance provisions to help their grandchildren get on the property ladder.

“If you’re in your 50s and entered the property market in the early 2000s, then you’re probably fine,” says Gamble.

“But if you’re 30 or below, then it’s a very different situation.”

Many early boomer grandparents, says Gamble, are now looking at how they can help their grandkids onto the property ladder in the future.

“Instead of selling their family home, [these grandparents] put the house in a trust with a view that the asset could back the deposits of all the grandchildren, enabling them to borrow against it for their own houses.”

If anything, it reiterates the old point that just because your parents have an asset or a bit of money, it doesn’t necessarily mean you’ll get your hands on it.

Do you have a question or a story to share about wills, trusts or inheritances? Let us know in the form below.