Estate Planning & Succession

Carbon forestry creates long-term assets and obligations that span generations. Proper estate planning ensures your carbon investments transfer smoothly and don’t create unexpected burdens for your heirs.

What Transfers on Death

ETS Registration

When you die, your ETS registration and all associated obligations transfer to whoever inherits the land:

The inheritor becomes the ETS participant automatically.

Carbon Units (NZUs)

NZUs held in your NZETR account are personal property:

Land with Carbon Registration

The land transfers subject to ETS obligations:

Notification Requirements

Within 20 Working Days (Usually)

Normally, land transfers must be notified to MPI within 20 working days.

For inheritance, the rule is different:

“Where the responsibility for the land changes through an inheritance after someone passes away, you must tell us as soon as you can.”

How to Notify

Use MPI’s form: “Tell us about a change of land ownership by succession”

This must be completed by:

Submit through Tupu-ake (MPI’s online system).

Consequences of Not Notifying

Trusts and Carbon Assets

If Land Is Held in a Trust

When a trustee dies:

This is one advantage of trust ownership for carbon assets.

If Beneficiary Dies

If a beneficiary of a trust dies:

Tax on Death

General Position

Death does not itself trigger income tax on forestry assets.

Section FI 6 provides rollover relief:

Carbon Units Specifically

NZUs are trading stock for tax purposes. On death:

Estate Distribution

When the estate distributes carbon assets:

Get professional tax advice for estates with significant carbon assets.

Planning Considerations

Communicate with Heirs

Your heirs should understand:

Surprises create problems.

Update Your Will

Specifically address:

Consider Ownership Structure

Personal ownership:

Trust ownership:

Company ownership:

Appoint Capable Executors

Executors need to:

Consider whether your chosen executor has these capabilities.

Practical Steps

Document Everything

Maintain clear records:

Leave Instructions

Create a guide for your executor:

Review Regularly

As carbon assets grow in value:

Specific Scenarios

Scenario 1: Farm Succession

Situation: Parent passing farm to child during lifetime

Considerations:

Scenario 2: Death with Significant Carbon Asset

Situation: Owner dies with 100 hectares registered, substantial unit balance

Steps:

  1. Executor identifies carbon assets and obligations
  2. Estate lawyer reviews ETS position
  3. Notify MPI of succession (as soon as possible)
  4. Emissions return may be required to date of death or transfer
  5. Units in holding account distributed per will
  6. New owner assumes ongoing participation

Scenario 3: Multiple Heirs

Situation: Land left to three children equally

Complications:

Scenario 4: Permanent Forestry

Situation: 40 years into 50-year permanent commitment

Implications:

Common Problems

Heirs Unaware of Obligations

Heirs discover registration after taking over land:

Prevention: Clear communication and documentation

Unit Balance Disputes

Multiple heirs disagree about carbon units:

Desire to Exit

Heirs don’t want to continue carbon farming:

No Estate Planning Done

Owner dies without addressing carbon assets:

Professional Help

When to Engage Professionals

Who to Consult

Key Takeaways

  1. ETS obligations transfer with land — Heirs inherit responsibilities
  2. NZUs are personal property — Can be bequeathed separately
  3. Notification required — Tell MPI as soon as possible after death
  4. Trusts smooth succession — Consider for significant carbon assets
  5. Communicate with heirs — Don’t leave surprises
  6. Document and instruct — Make it easy for executors

Next Steps

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