NETHERLANDS Law and Practice Contributed by: Willemijn van Duren and Rowena Zee, Arcagna
6. Lifetime Succession Planning Mechanisms 6.1 Common Planning Techniques
is conditional (eg, qualification as business assets versus investment assets, and meeting holding/ continuation-type requirements). These conditions can be a deal-breaker in some cases and often affect timing, meaning families may postpone a transfer or restructure first to preserve eligibility. • Gifts combined with intra-family leverage (parent loans) – where children/grandchildren invest using (partly) debt funding from parents, a key issue is whether the interest rate and loan terms are arm’s length. A non-businesslike rate may trigger chal- lenge and (partial) recharacterisation as an addi- tional gift, so careful alignment between client and adviser and proper documentation are important. Another relevant consideration with minors is that the order of steps matters. For example, a gift “subject to a charge/obligation” in favour of minor children can- not always be implemented freely and may require approval from the subdistrict court ( kantonrechter ), which can impact feasibility and timing. Control and disposition of digital assets is in principle determined by succession law. However, the contrac- tual terms of service of digital service providers (such as email, cloud storage and social media platforms), and privacy and confidentiality rules may restrict access and transfer. In practice, executors and heirs may face practical barriers, such as providers refus- ing to grant access to accounts or content, or where the disclosure of data is limited because it contains personal data of the deceased and/or third parties. Cryptocurrency raises additional concerns. Control is typically determined by control over private keys and other access credentials; without these, assets may be irretrievable. 7. Succession of Digital Assets 7.1 Legal Framework Where crypto is held through an intermediary (for example, an exchange), regulatory requirements (including KYC and anti-money laundering checks) may affect the release or transfer of assets to heirs. In addition, estates often need to address valuation
In the Netherlands, lifetime wealth transfers are com- monly made through gifts. Such gifts are often struc- tured with protective clauses that allow the donor (and/ or the family) to retain a degree of control, for example by placing the gifted assets under an administration ( bewind ) and/or by transferring wealth in phases so that the next generation gradually assumes respon- sibility. Lifetime succession planning is often structured around three main approaches: • Lifetime transfer of qualifying business assets – where available, a combination of business suc- cession relief for gift tax purposes and income tax roll-overs can materially reduce the overall tax cost; this is generally more limited for investment assets. • Gifting to children followed by family investment planning – an outright gift (often cash/securities) followed by a jointly aligned investment approach, with the aim that future investment returns and value growth accrue (in part) to the next genera- tion. • Generation-skipping investing – gifts made directly to grandchildren combined with long-term invest- ing, to have future growth accrue to the intended end beneficiaries earlier and potentially reduce taxation at the intermediate generation. The transfer of wealth commonly involves the incorpo- ration of a Dutch foundation with fiduciary purposes ( Stichting Administratiekantoor , STAK) to separate economic ownership from voting control, allowing the transfer of wealth while retaining influence and control. 6.2 Tax and Regulatory Constraints In the Netherlands, the use of lifetime succession planning mechanisms is influenced by the conditions of tax law and practical “defensibility” considerations. • Business succession relief (gift/inheritance tax) and income tax roll-overs – the availability of relief
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