Many cohabitants or married couples want to leave their partner well-cared for upon death. For married and registered partners, the law has what is known as statutory distribution. By will, you can deviate from this. This may be desirable, for example, if not everything should go to the surviving partner or if you want to ensure that less inheritance tax is due upon death.
There is no legal arrangement for unmarried cohabitants. If they want to leave each other well cared for, they will have to make a will.
Wills in which cohabitants or married couples make arrangements for each other are often referred to as "living wills". There are many different forms of a longevity will.
Parental property division or legal division
Until 1 January 2003, we knew the parental division of estates made by will. With effect from that date, parental distribution of assets can no longer be included in a will. In its place is the statutory distribution, which applies if married couples or registered partners with children have not stipulated anything else. Although there are differences between the two arrangements, they both boil down to the fact that the surviving spouse and the children are heirs and the surviving spouse becomes sole owner of all property. The children get a claim in cash equal to their inheritance share. This claim is only payable on the death of the surviving person, and in some other cases. In this way, the longest living person can continue living undisturbed.
Unanimous legal distribution
If application of the legal distribution (for whatever reason) would not be desirable, a will can be made departing from the legal distribution. Should there be no will deviating from the legal distribution, there is still a possibility - within three months after the death of the first deceased - to undo the legal distribution. However, this undoing usually does not offer the advantages of a good will deviating from the legal distribution.
For tax reasons, it may be desirable that the surviving partner is disinherited or receives a very small inheritance share. The advantage of this is that assets are not taxed twice with inheritance tax.
Usufruct will
When you give usufruct to your partner by will , he or she has the right to use the components of the estate and reap the benefits. The (other) heirs are formally owners but are not allowed to use these assets. It is possible to stipulate that the usufructuary also has the power to create or dispose of the assets on which the usufruct rests. The usufructuary can then basically just behave as an owner.
The advantage of usufruct is that the increase in value of the items subject to usufruct accrues to the heirs. On the second death, the usufruct evaporates and no inheritance tax has to be paid on the usufruct assets by the heirs.
Instead of or in addition to usufruct, an inheritance bequest can be included. Such a bequest gives the surviving partner the right to "buy" the components of the estate. The amount to be contributed, the 'purchase price', may then often be owed for life. The surviving spouse does not notice any of that debt and, unless otherwise stipulated, can also make up everything.
Appointment of surviving partner as sole heir
Sometimes the choice is made to appoint the surviving person as sole heir. If the inheritance of the surviving spouse then remains within the exemption, no inheritance tax is due on the first death. On balance, in this case, more inheritance tax is almost always due after the death of both partners than if one of the other variants were chosen.
A will in which the surviving partner is appointed sole heir often includes a two-step bequest. Bequests for the children can also be included.
Combination wills
For somewhat larger assets, a combination will is also sometimes used. This is a combination of the various basic forms of surviving wills. Such a combination will has the advantage that upon the death of the first of the two partners, the most convenient variant can be examined, or a combination of the variants is desirable. With such a will, you do not go for one anchor, but keep several options open. This can be of great importance for the inheritance tax to be paid.
Cohabitants
Under the law, if you are not married or have not entered into a registered partnership, you are not automatically each other's heirs. Not even when there is a cohabitation agreement. However, it is possible - apart from the legal distribution - to opt for one of the basic variants described above. But this requires a will.
Care based on the law
For the situation where the surviving partner receives nothing or too little based on a will, the law grants a number of rights to the surviving partner. For example, the surviving partner (including the cohabitant) may continue to live in the home and use its contents for a period of six months. When necessary for her or his care, the surviving spouse or registered partner is entitled to establish usufruct on the home and its contents. If the surviving spouse or registered partner is indigent, they may additionally claim usufruct to the remaining assets of the estate.
For more information on surviving wills, please contact us. We will be happy to help.
pkooijman@kooijmanautar.nl
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