Financial close-out
The financial close-out stage involves filing the deceased's final tax return, paying all debts, waiting out the creditor period, and preparing estate accounts before distributing to beneficiaries. An estate accountant can guide you through this.
General guidance only — not legal or financial advice. Every estate is different. Consult a professional for your specific situation.
Final income tax return
A final income tax return must be filed for the deceased for the period from 1 April to the date of death. The estate may also need to file a return if it earns income (e.g. rental income, interest) during the administration period. IRD must give clearance before the estate is distributed. An estate accountant or your probate lawyer can handle this.
Pay all debts
All known debts must be paid from the estate before distribution. This includes mortgages, credit cards, personal loans, utility bills, and any outstanding tax. Executors who distribute before paying debts can be held personally liable for those debts.
Notifying creditors
To protect yourself as executor, you must give written notice to potential creditors in a way that is likely to come to their attention — under the Trusts Act 2019, a newspaper advertisement alone is no longer sufficient. In practice this means direct written notice to known creditors, plus a notice in the NZ Gazette or other appropriate publication. Creditors must be given at least 30 days to lodge a claim. After this period expires and all claims are settled, you can distribute without personal liability for unknown creditors who did not come forward.
Estate accounts
Before distributing, prepare a set of estate accounts showing all assets, all debts paid, all costs of administration, and the final amounts available for distribution. Each beneficiary is entitled to see these accounts. An estate accountant can prepare these for you.
Distribution
Once IRD clearance is received and the creditor period has expired, you can distribute the estate according to the will. Get a signed receipt from each beneficiary for what they receive. Keep all records for at least seven years.
Checklist — Financial close-out
- File the deceased's final income tax return with IRD
- File estate income tax return if the estate earned income
- Pay all known debts and liabilities
- Advertise for creditors (starts 6-month creditor period)
- Obtain IRD clearance before distributing
- Prepare estate accounts
- Distribute the estate and obtain signed receipts
- Retain all records for at least 7 years
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