Today, more and more couples are living together unmarried. Whereas in the past in most cases people did not start living together until after marriage, nowadays nobody is surprised by the fact that couples living together unmarried. What many couples do not realize, however, is that the Dutch wet here barely adapted to it. As strong as married people are protected by the legal right of inheritance, so little is legally regulated for unmarried cohabitants. So time to take a brief look at this and draw attention to the importance of making your own arrangements.
Partner for estate tax purposes
Although it is often assumed in practice that having a cohabitation agreement automatically means that you qualify as each other's partner, this is not the case for Inheritance Tax purposes. If you do not qualify as each other's tax partner for inheritance tax purposes, there are serious consequences in the event of your death. After all, you then do not claim the high partner exemption (2023: € 723,526) and the low rate (10% to 20%) for inheritance tax and must make do with the exemption for third parties (2023: € 2,418) and a rate of 30% to 40%.
To qualify as tax partners for Inheritance Tax purposes, you must meet one of the following conditions:
- You are married or in a registered partnership
- You are unmarried but meet the following conditions for at least six months prior to death (cumulative):
- You have agreed on a notarized cohabitation contract with mutual care obligation*;
- You are both of legal age;
- You live with your partner at the same residential address (registered in BRP);
- You are not blood relatives in the direct line;
- You meet these criteria with no one else.
Therefore, be sure to have a notarized cohabitation agreement with mutual care obligation drawn up in a timely manner, so that in the event of your partner's unexpected death, you will not face any more unpleasant surprises.
Notarized cohabitation contract
In a notarized cohabitation contract, you can make arrangements with your partner about the legal and financial consequences of cohabitation. You can only agree on the assets that you own together or will acquire together in the future, such as the joint home (and mortgage) and the joint bank account. For other assets, you each keep your own assets. Nor do you become liable for each other's debts, unless you make yourselves jointly and severally liable for them.
Thus, even with a notarized cohabitation contract, there is no community of property as with married and registered partners. If cohabitation ends, the partner with the lower income is (usually) not entitled to alimony. So what can you arrange in the notarized cohabitation contract, besides the mutual care obligation?
For property you own together, you can determine what happens to it if the cohabitation ends due to separation and/or death. In the event of death, it is possible to agree on a so-called "residence clause. This means that upon the death of the partner, the joint assets (and associated debts) pass to the surviving partner. If you have additional assets of your own, such as a private account, these do not automatically go to your partner, which requires a will.
Claim to the estate
Unmarried, cohabiting partners do not automatically inherit from each other by law. If, upon death, it appears that no will has been drawn up, the statutory provisions of the law of succession apply. The law successively designates the following groups of heirs:
- the testator's spouse and children.
- The testator's parents and siblings. For example, should a sibling already be deceased at the time of the testator's death, any descendants (nephews and nieces) will take their place.
- The grandparents or great-grandparents of testator.
Unmarried partners without a will thus run the risk that upon the death of either of them, all or part of the testator's assets will accrue to others than the surviving partner. This may result, for example, in the private bank account being allocated to the parents as heirs, rather than the partner. If you have children but have not made a will, then your children will inherit your (private) assets instead of your partner. This may not be practically desirable if your partner continues to care for the children.
If you want to claim (part of) each other's estate as unmarried partners, you will need to draw up a will in which the partner is named as heir. Keep in mind, however, that for cohabitants in a will the legal distribution cannot simply be applied (the legal inheritance law for married and registered partners). As a result, a will for cohabitants involves the necessary complexity and attention. Therefore, get proper advice.
In conclusion
Do you have any questions as a result of this article or would you like advice on how to avoid the above risks? Please feel free to contact us using the contact form below or your own Govers contact person.
* The requirement of a notarized cohabitation contract does not apply if at the time of death you have both been registered at the same residential address (registered in BRP) for a continuous period of at least five years.