Death & Taxes

It’s been relatively quiet here lately, which has a very good reason: Death & Taxes. Recently my dad has passed away after being ill for a short period of time. It’s been a roller coaster ride, which ended with a funeral and a look into a will and associated (estate) taxes.


In the introduction I noted that my (Mr. CF) dad was ill for a short period of time. This is only half true. It actually already began in the 1990’s. My dad suffered from several intracranial hemorrhages. He was operated and the burst vessel in his brain was clamped. The surgery itself was a big success. However, my dad had already suffered some brain damage. Physically he was fine, mentally not so much.

After his recovery from surgery my dad went back to work. But it soon became pretty clear that he was not able to perform the works he used to. As a result of the brain damage, my dad also developed epilepsy. The new “stress” he incurred from being back at work, in combination with his brain damage, resulted in his first epileptic attack. More attacks were to follow. Needless to say that this caused more brain damage.

Over the years the brain damage increased, also with the diagnosis of vascular dementia, which led him to need constant supervision from my Mom. He was not able to count anymore, handle money, take care of himself or have a normal conversation.

We “lost” our dad the day he had his initial surgery. But we also experienced a train wreck in slow-motion in the following decades. We saw the man who used to be loving and caring, turn onto a helpless and seemingly emotionless person. We often wished that my dad would have died on the operating table. This would have been very painful at that time, but it would have saved our family decades of emotional suffering. Heck, even my dad might have been better off. However, with the brain damage, it was hard to find out how he felt about it all. We often wonder what was going on in his head, but we rarely got clues what he was thinking or experienced.

It sounds harsh, but for those of you who have relatives that suffer from brain damage, it probably sounds all too familiar. Life can be very cruel sometimes.

Death & Taxes A life journey
Death & Taxes A life journey

The last stretch

A few weeks back we had dinner together at our place. This was actually a fun time, even my dad seemed to enjoy the food and being around our little Miss CF. Later that evening, when my parents drove home, my dad complained about pain in his leg.

It turned out he had a blood clot in his leg, below the knee. He was rushed to the hospital, where they operated on him to remove the blood clot. This was unsuccessful due to various underlying medical conditions. Amputation was not an option considering his overall health (and for “quality of life” considerations). In short, his leg would start to die off and my dad would likely develop sepsis and would probably die within about a week. This was the message we received less than 24 hours after the fun evening dinner.

We knew his overall health was not that great, but this still came as a shock. Considering this was going to be the end of his life, we transported my dad home. Where he received palliative care for the last few days. Despite the morphine and great care from the various healthcare professionals, he still experienced pain on occasion and was uncomfortable several times. He passed away 4 days later surrounded by his direct family.

It was both a extremely sad and somewhat beautiful thing to see. The pain disappeared, his body relaxed and he shed one final tear. My dad still managed to make it to his early 80’s, despite all the hurdles life threw at him. May he rest in peace.

Death & Taxes: the End
Death & Taxes: the End


There are two things that are certain in life: Death & Taxes. After experiencing the first, it was time to look into the second. Without providing the (personal) details, we’ll take a look at the the inheritance and associated estate taxes (erfbelasting).

For this case let’s assume the following:

Just to be clear, the dog is screwed. It’s not going to get anything (unless it was specifically mentioned a will).

Inheritance Tax and Deductions

If you visit the site of the Dutch tax department for estate tax/inheritance tax and associated deductions, you will find the following overviews (references included in captions).

Inheritance Value Partner
Child, stepchild, disabled child
Grandchildren other decedentsOther relatives/persons
(e.g. brother/ sister/ parent)
€ 0 – € 126.72310%18%30%
€ 126.724 and more20%36%40%
Tax rates and brackets
You areTaxes exempt for following amounts
Spouse, registered partner, financial partner€ 661.328
Child (by marriage, adopted or birth)€ 20.946
Grandchild€ 20.946
Great grandchild€ 2.208
Disabled child€ 62.830
(conditions apply)
Parent(s)€ 49.603
Other (brother, sister, friend, etc.)€ 2.208
Tax exemptions for inheritance tax
Death & Taxes: light at the end?
Death & Taxes: light at the end?

Inheritance Tax without a Will

In case people have no will, the “Wettelijke verdeling” will take effect. This is the division of the inheritance as described by law in the Netherlands. This division of the inheritance is actually pretty simple.

The remaining parent already owns 50% of the total wealth of the family. The other 50% (the part of the parent that passed away), is divided into 3 equal portions. In case of a €600.000 total wealth, the remaining parent maintains it’s rightful 50% (€300.000), but also inherits 16.667% (€100.000). Each kid also inherits 16.667% (€100.000).

Based on the above, the kids will be required to pay inheritance tax (10%) on €100.000 – €20.946 = €79.054 * 10% = €7.905,40.

However, in reality it’s actually the remaining parent that has to pay this inheritance tax. Why? As the “longest living” parent will get full control over the inheritance (“vruchtgebruik”) and is required to pay the inheritance tax on behalf of any children. The children will not have access to these funds until their final parents passes away. But because of this, they will also not be required to pay any wealth (box 3) tax on this inheritance either. That being said, the longest living parent will thus be required to pay either income (box 1) or wealth tax (subject to the distribution of wealth/assets).


It now get’s more complicated. The fact that the remaining parent is entitled to use the entire inheritance and has full control over it, results in “less” for the children. Why? Legally fixed interest (“rekenrente”), which is 6% to be exact (I assume here that no interest rate has been defined, which is possible!)

The inheritance is corrected using a factor, which depends on the age of the remaining parent (see this table). If say the remaining parent of the above noted example is 76, it means the inheritance for the kids is corrected (as well as for the remaining parent) with a factor 5.

The corrected inheritance is €100.000 – (€100.000 * 5 * 6%) = €70.000 for each kid. A total of €70.000-€20.946 = €49.054 * 10% = €4.905,40 is to be paid by the remaining parent in inheritance taxes. The remaining parent will now inherit (for tax purposes) €300.000 + €100.000 + €30.000 * 2 = €460.000 (which is all exempt from taxation, see above thresholds).

When the longest living parent would eventually pass away too, say 10 years later (and the total wealth and tax rates would remain unchanged). The inheritance for the two kids will be €400.000 (as the initially received inheritance of €100.000 is still exempt from taxation). Each kid will this get €200.000 before taxes and (€126.723 *10% + €52.331 * 20% = €23.138,50) €176.861,50 after taxes.

More interest examples are shown here (in Dutch).

Death & Taxes: the Will
Death & Taxes: the Will

Why would you make a Will

There are many reasons you would make a will. Some include (you can make this list very long if you want!):

  • Clearly defining your heirs;
  • Define the split in the inheritance (including definition of any charitable donations);
  • Defining who will execute the will;
  • Who is in charge of your funeral arrangement;
  • Who will be the legal guardian of your kid(s); and,
  • Indicate ways to reduce taxes 🙂

Obviously, that last part is what you are here for, right? It’s important for your legacy how you arrange everything around your death & taxes.

Interest Clause

One of the tools to limit your inheritance taxes is the “interest clause”. It roughly does the opposite to what happens with the “wettelijke verdeling” and the corrections for “vruchtgebruik” or “use” of the inheritance/wealth by the remaining parent in the above noted scenario without a will.

Assuming the “wettelijke verdeling” for the division of the inheritance stays (so no “opvullegaat” is being used). The kids would inherit €100.000 each. In this case no “vruchtgebruik”is used, so no shift for the inheritance tax from kids to parent happens. The remaining parent will have to pay the full inheritance tax (10%) on €100.000 – €20.946 = €79.054 * 10% = €7.905,40 for both kids. So initially you pay more.

In the example we assumed that the remaining parent would live for another 10 years and the wealth and tax rates stay the same. What happens now is that the €100.000 each kid received will “grow” with 6% per year under this interest clause (compounded!). After 10 years the “debt” (or “vordering”) the remaining parent has to both kids will be €179.084.77. Now the total inheritance is only €600.000 – €179.084,77*2 = €241.830,46. Each kid will thus inherit €120.915,23. Taxes will be €9.996,92 per child.


In the first case without a will, the total tax burden was €4.905,40 + €23.138,50 = €28.043,90 per child. In the second case with a will, the total tax burden was €7.905,40 + €9.996,92 = €17.902,32 per child. A difference of €10.141,58! That’s a ton of money.

Considering a will will cost you anything between €350 and €1.000 per person (depending on how complicated your situation is and whether you go online or in person to a notary), it’s potentially money well spent!


Now, this is only one example and simplifies the situation. If both parents would die quite shortly after, the benefit of the interest clause will be limited (if not even worse than the situation without a will). If there is a big age difference between parents, and they die say 30 years from each other, it can be very beneficial. In such a case it could be that no taxes are owed once the longest living parent passes away. It all depends on your personal situation, your wealth, health and preferences.

Problem is that you don’t know what happens. Having a good will, can give you maximum flexibility and allows you to use tools to limit taxes. An online will might not be the smartest thing to do, especially for people aspiring to FIRE (inheritances can be substantial in such cases). I would hardly recommend you spend a bit of time and money talking to a specialist and notary. It could save your family and heirs a lot of money in the long run. Not to even mention any major issues that could have been prevented with a good will.

We ourselves are about to (finally) complete ours in the coming weeks. Let’s hope we can get some grip on our Death & Taxes.


  1. Wat je beschrijft is herkenbaar. Ik vind het vaak moeilijk om hardop twijfel uit te spreken over hoe ‘gelukkig’ het is dat mijn moeder het heeft overleefd. (Daar horen veel nuances bij, maar daar gaat het nu niet om.) Het is prettig te merken dat we daarin niet alleen zijn. Dank voor het delen.
    Ik wens je sterkte en ruimte voor rouw en mooie herinneringen.

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