Divorce and exclusion clauses

Divorce and exclusion clauses under Dutch law: inheritances

There is no global consensus as how to best divide the assets of divorcing couples. Thus, there are sharp differences between the divorce laws across countries. Expats in the Netherlands are often in for a big surprise when they discover they have to share their inheritances with their (former) spouse. Read this article to learn about divorce and exclusion clauses under Dutch law.

Dutch matrimonial law before 1 January 2018 and exclusion clauses

If you are married before 1 January 2018, under Dutch law, the ‘general community of property’ applies to your property. In short, this means that you share all debts and assets with your spouse from the moment you marry. This applies for debts and assets acquired either prior to the marriage or amassed following an inheritance or gift. This is independent of the name in which the assets or debts have been registered. This can have tremendous financial consequences when a couple decides to divorce.

However, if you got married before 1 January 2018, you could have avoided these far-reaching and often undesirable consequences of the Dutch ‘general community of property’ by making a pre- or post-nuptial agreement. With this, spouses can agree on which extent they want to share their debts and assets. The testator can include an exclusion clause in his/her will stating the inheritance will not fall into the community of property. Sometimes, this exclusion clause is automatically incorporated in the testator’s will.

An example: what happens if the husband inherits a sum of money and the couple is married before 1 January 2018 in community of property?

Option 1: No exclusion clause in the testator’s will

When there is no exclusion clause in the testator’s will, the inheritance falls within the community. This means that the wife has the right to half of it. This can lead to many conflicts when the partners get a divorce and will have to share their belongings, including their inheritances. The husband might find the situation unreasonable, especially when he is, for instance, not entitled to the inheritances of the wife.

Option 2: Exclusion clause in the testator’s will

If there is an exclusion clause in the will, the wife does not have the right to a share of the inheritance. So, no problems here. But what if the husband has (partly) spent the inheritance?! Did the husband used (part of) the inheritance to purchase the matrimonial house? Then he will receive a refund for that particular amount. If the property increases considerably in value, the law might even entitle him to the increased value of the property. In those cases, the remaining of the inheritance and the extent to which he financed the house from his inheritance need to be established.

Now, suppose that the husband in our case used his inheritance for house hold costs or to finance a nice holiday. The wife could argue that his inheritance is exhausted, that the husband wanted to spend his money the way he did. She could argue, that therefore the law does not entitle him to restitution. In most cases, however, the judge does not accept this argument! Even if he exhausted the entire inheritance and benefited, the man can claim the amount of his inheritance.

Dutch matrimonial law after 1 January 2018

As of 1 January 2018, the new Limited Community of Goods Act has entered into force. Couples who are married after 1 January 2018 without making a prenuptial agreement, are automatically married in a limited community of property. For acquired inheritances, this law has the following consequences. Inheritances and gifts received during and before the marriage remain outside the community. In fact, you only share the assets accrued during the marriage with your spouse. Exclusion clauses in the event of an inheritance are therefore no longer necessary.

Conclusion

Did you get married before 1 January 2018? Then make sure you are fully aware of your situation to prevent unpleasant surprises when it comes to your inheritance.

Do you need advice on Dutch matrimonial law and exclusion clauses? Please contact us for advice.