Many questions arise when dealing with an inheritance. What about the distribution, who gets what? Without a will, statutory inheritance law applies. The surviving spouse lives on undisturbed and the children only receive their inheritance later. Today’s families are often more complicated than in the past. Cohabitation, remarriage and the arrival of stepchildren require a good arrangement. Prevent disagreements through clarity and smart omission, for example by donating regularly.
What is the legacy?
The inheritance is the sum of all assets minus debt. Assets are all things that can be expressed in money, such as a bank account, shares, art or a car. Debt refers, for example, to a personal loan or an outstanding mortgage. If the testator is married in community of property, the inheritance he/she leaves is half the value of the joint property. When someone dies, his or her bank account(s) are blocked. To cancel this, a declaration of inheritance is required. This is drawn up by a notary. Only when this is in place can banking matters be arranged, the house cleared, subscriptions and memberships cancelled, benefits agencies and insurance companies informed, the contents distributed, any home sold and tax returns filed.
Legal inheritance law
As current inheritance law looks, the surviving spouse of a couple will have access to the entire inheritance, i.e. all property, assets and debts. The children retain their inheritance share (a claim) until the other parent also dies. At that point, the entire estate is theirs. If nothing has been arranged, this is how it happens, and this is also what most people want. Until 2003, the arrangement was different: Children then still had the right to immediately claim their share of the inheritance as soon as one parent had died and the other was still alive, with the result that he sometimes had to sell his home. Only a will could change this. Nowadays, the surviving spouse is protected by law so that the financial situation is not changed too much.
According to the Civil Code, there are four groups of heirs, derived from family law relationships. The term used by the law is hereditary succession . If a family member is present in the first group, he or she is considered an heir. If there is no one in the first group, the next group is eligible, and so on. The heirs in the same group are all entitled to an equal share of the inheritance, with the exception of the husband/wife, for whom separate rules apply. The same applies to the parents: they each inherit a quarter. In any case, children have a leading role, because of the right to the legitimate share , the inheritance to which they are in any case entitled (legal child share). This inheritance is half of the child’s actual inheritance. A registered partner is legally equal to a husband/wife.
- Group 1: The husband or wife and the children, followed by any grandchildren and great-grandchildren.
- Group 2: The parents together with brothers and sisters of the testator, and children of brothers/sisters by substitution if their parent, who is a brother/sister of the deceased, died before the testator.
- Group 3: The grandparents or possibly substitution, therefore descendants of these grandparents.
- Group 4: The great-grandparents or possibly filling in place, therefore descendants of these great-grandparents.
Anyone who wants to undo the rules of the legal division can go to the notary for an undoing. This is a statement stating that the money and assets, for example, must still be distributed according to the old legal regulations, i.e. the legitimate portion goes to the children immediately after the death of a parent and not only after the death of both parents. This is possible, for example, if the children can use the money or if they will take over the business from the parents. An annulment must be recorded within three months of the spouse’s death. After that period, the surviving spouse can only send money to the children through donations.
Anyone who wants to view the legal inheritance law differently must have a will (last will and testament) drawn up. This is possible from the age of 16. A will is a unilateral and personal document and is recommended in the following cases:
- If you are not married, but live together. This is because you are not automatically each other’s heir.
- If you want a friend to inherit.
- If you want to inherit a good cause. Such an inheritance is called a legacy, the recipient is called a legatee.
- In case you want to (partly) disinherit a child or want a different division of the inheritance.
- If you also want a brother or sister who would not receive anything to inherit under the normal arrangement.
- If you have children from a previous marriage and want to secure the inheritance for them. You can choose whether or not there is a retention obligation for the surviving partner.
- If you want to prevent the inheritance from ending up with a son-in-law or daughter-in-law (exclusion cause).
- When you want stepchildren and their children to inherit. Restrictions are possible.
- For the appointment of a guardian in the event of the death of both parents. This prevents different family members from claiming responsibility for the children.
- A two-step making, i.e. you appoint an heir for a specific heir and also appoint the heir of this heir.
- If you want to make a donation during your lifetime and whether or not to attach a contribution obligation to it (whether or not to add it to the inheritance).
- For the appointment of an executor (this is usually the remaining partner). Prior consultation is required.
- If you own real estate abroad and/or have very large assets.
No partner and no children
If you are single without a will and you die, the inheritance will go to brothers, sisters and parents, or if they have already died, to nephews and nieces. If parents are present, they each receive at least a quarter. It is true that they have to pay a much higher rate of inheritance tax than their own children and grandchildren. You can count on at least a quarter going to taxes. This can be prevented with a will, for example by naming a charity. If there are no heirs in any of the four groups, the inheritance goes to the State of the Netherlands.
Where is the will?
Everyone who has ever made a will is registered with the Central Will Register in The Hague. You can inquire here in writing and by sending a death certificate at which notary the will was drawn up. You can obtain an extract or copy of the death certificate for a fee from the municipality of death. As soon as it is known which notary has the will, a copy can be requested.
How much does a will cost?
You can arrange a no-obligation consultation with the notary. Request a global cost quote. The costs of a will vary widely, ranging from several hundred euros for a simple deed to thousands of euros for large estate divisions. Because family and inheritance law has many options, the time the notary spends on it may be longer than you had previously estimated, causing costs to increase. General quotes and price comparisons do not mean much, because a will is a deed that must be drawn up specifically for your situation.
Not everything has to be in a will
If it is not about money or a house, you can also suffice by drawing up a codicil . This has the same legal validity as a will, although much less can be arranged in it. The codicil must be handwritten, dated and signed, and the original must be kept in a clear but safe place. Goods that can be allocated to others include jewelry, books, clothing, furniture, etc., but it can also be determined what the funeral should look like and who will arrange it. A major advantage of a codicil is that it can be easily changed, a disadvantage is that relatives sometimes do not know about the existence of a codicil, find out about it too late or do not act on it. It is best to provide heirs and beneficiaries with copies of the codicil.
Usufruct upon remarriage
In the event of remarriage of the surviving partner, the family property is in danger of being endangered. The children can prevent this by claiming the claim, because of their will rights . However, the surviving spouse, including the new partner of their father or mother, has the right to continue living undisturbed. The surviving spouse thus receives usufruct over the goods and money. The inheritance for the children has been secured, but cannot yet be claimed until the surviving spouse also dies. These will rights allow items of emotional value to be secured.
Taxes come into play when the inheritance is divided. The larger the inheritance, the higher the inheritance tax that must be paid to the tax authorities. To minimize this, many parents and grandparents donate money to their future heirs. They save their children taxes and can see how the money is spent. A child may receive 4,556.00 (2009) annually from the parents (tax-free), in addition a child – between the ages of 18 and 35 – may receive a one-off 22,760.00 (2009) tax-free. If the child has passed this age, it is still allowed provided his or her spouse is younger. When donating ‘duty-free’, the giver pays the gift tax (the tax due), and that is pleasant for the recipient. Please note: The Succession Act stipulates that donations made 180 days before the donor’s death are considered not to have been made, unless it concerns a one-off donation to children up to the age of 35.
Advance on inheritance
Receiving money or goods in advance as an ‘advance on the inheritance’, but with an obligation to contribute to the inheritance, means that the intention is that the other children are not disadvantaged. It is always about the value of this advance that must be added to the other properties and then divided. If a child received too much during his lifetime, the difference must be settled with the other heirs. If there is no obligation to contribute to the estate, the other children/heirs cannot oppose this unless their legal share is affected. The recipient must be able to demonstrate that the inheritance in question does not need to be added to the estate, i.e. that it was a donation.
Inheritance tax return
Tax must be paid on an inheritance, the so-called inheritance tax or inheritance tax. If you inherit more than the exemption, you as an heir are obliged to declare it. In most cases you will receive an inheritance tax return form from the tax inspectorate . This follows in response to the income tax return and the capital gains tax. In case of doubt, the heir will receive an information form, after which a declaration form can follow. This must indicate which assets and debts the testator had on the day of death. Within eight months after death, the inheritance tax must be paid by the heirs themselves or through the notary, but you can request a postponement of tax return. This may mean that provisional assessments are imposed. It is best to file a tax return together (as a family) and not separately.
Inheritance tax exemption
Inheritance tax must be paid on the inheritance for the children, even if the children do not yet receive their inheritance due to the survivorship rule. The law stipulates that the surviving parent must pay the inheritance tax assessment in addition to the entire inheritance . This amount may be deducted from the children’s claim. It is possible that the surviving spouse has little or no money for this, for example because the inheritance mainly consists of a house and goods. In some cases, the claims that the children inherit remain subject to the exemption, so that nothing has to be paid. This exemption amounts to 10,323.00 for children and 532,570.00 for partners (2009 figures). It is wise to have a notary record the exact claims, otherwise there is a chance that the children will still have to pay tax on the first inheritance if the second parent dies.
Inherit debts and refuse the inheritance
If the debts exceed the assets, you as an heir can do two things. The first option is to reject the inheritance . To do this, you go to the notary where you sign a power of attorney for a statement at the court registry. You are then no longer an heir, so you are not liable for debts, but you are also no longer entitled to property from the inheritance. The other option is also done via a power of attorney with the notary and is called beneficiary acceptance . You hereby accept the inheritance if it is positive. Beneficiary acceptance also involves creditors because the debts are paid as much as possible. Minors and persons under guardianship always accept an inheritance in this way. If you do not want the inheritance, do not start cleaning up the deceased’s house, selling things, etc., because you are indicating that you accept the inheritance.
Power of attorney for handling inheritance
The heirs usually give one heir power of attorney to handle the deceased’s inheritance. This transfers the rights of the heirs to the authorized heir , although this authorized representative is often not expert or experienced. An outsider can also be appointed to settle the case. A power of attorney is practical when signing important documents or visiting the bank. All heirs must make decisions about the distribution together. ‘Most votes count’ does not apply here, because all heirs must agree with all decisions. If one person does not agree with something, division cannot take place.
Estate Planning or roughly ‘How do I pay as little inheritance tax as possible’ is a new concept, brought over from the United States. Estate is the English word for inheritance. And Estate Planning actually means looking ahead to the division and transfer of family assets after death. A well-considered plan is drawn up, in which the assets are transferred from one generation to the next as cheaply as possible. This includes donations, securities for the surviving spouse, business succession, etc. Estate planning is especially suitable if you are single with only a few relatives, if you have children from a previous relationship, if you have a second home abroad, if you have a mentally have a disabled child or if you want to leave a significant portion to a good cause. There are specialized notaries with knowledge of both inheritance law matters and additional tax law. They are affiliated with the Association of Estate Planners in the Notarial Profession (EPN).
Arguing over the inheritance
It is becoming increasingly common for intense disputes to arise between family members when the inheritance is divided. No fewer than three-quarters of notary offices report that there is more disagreement today than in the past. The causes are diverse: a growing number of step-relationships, the lack of a will, larger inheritances and, above all, old injuries . Reasons include the division of belongings, jewelry and items with sentimental value, the value of the house, taking over a family business, etc., but above all the pieces and/or money already acquired during life so that the other heirs feel subordinated. The settlement of an inheritance can therefore be greatly delayed and degenerate into years of struggle and refusal to cooperate, until the court has to intervene. “It is a truth universally acknowledged that a married man in possession of a good fortune must be in want of an heir.” ~ Julia Quinn