It is of course sad when one of the parents in a family dies prematurely. It is even sadder for the surviving partner and any children when it turns out that the finances are not properly arranged. Can you continue to pay the mortgage? Can the next of kin continue to live as they were used to financially? In this article, we will briefly discuss this topic. Perhaps not the nicest topic to consider. But we think it is important to exchange ideas with you about this as well.
How can you arrange that your loved ones are left well cared for?
In many cases, there is no good financial arrangement if one of the parents of a family dies prematurely. This is partly because we have different and often complicated facilities in the Netherlands. How can you arrange that your loved ones are left well cared for? In many cases, there is no good financial arrangement if one of the parents of a family dies prematurely. This is partly because we have different and often complicated facilities in the Netherlands.
Basic provision: Surviving Dependents Act (Anw)
In the event of premature death of one of the parents, a right to a benefit under the Surviving Dependents Act arises under certain conditions. This benefit can be seen as a basic income and amounts to a maximum of 70% of the net minimum wage. If there is no further income, this is not a fat pot. The right to benefits can subsequently end for various reasons. One of the most common reasons is that the youngest child in the family turns 18. If there are no children or only children aged 18 or older, you are therefore not entitled to any benefit under the Anw!
Second provision: General Dependant’s Pension
Was the deceased parent in paid employment? Then there is a good chance that he participated in a pension scheme. A pension scheme often consists of a retirement pension and a survivor’s pension. There are two types of survivor’s pension:
- a survivor’s pension on a risk basis and
- a survivor’s pension on an accrual basis.
In conversations with our relations, we notice that not everyone is aware of this. The difference between these two forms of survivor’s pension has significant practical consequences.
With a risk-based survivor’s pension, the survivor’s right to benefit lapses if the employee no longer participates in the pension scheme. The benefit will therefore stop if you change jobs, for example. Should the parent die, the surviving relatives are therefore not entitled to a pension that has been accrued with the previous employer (s)!
With a survivor’s pension on an accrual basis, the surviving relatives do retain the right to the pension accrued with the previous employer.
Third provision: the life insurance policy that you have taken out yourself
A final source of income for the surviving relatives can be the payment on the basis of life insurance policies taken out by the parents themselves.
Make sure the picture is clear for your situation!
Do you know what the financial situation will be if one of the partners dies? Often there is no entitlement under the ANW. For example, because the children are already 18 years or older. Often there is also no entitlement to a survivor’s pension because, for example, the deceased parent was self-employed and not in paid employment. It is also possible that the parent was employed, but that the employer had a very meager pension scheme for surviving dependents. Or that there was a risk-based survivor’s pension and the deceased had changed employer! We believe it is important that everyone knows what the income and financial costs will be after the death of one of the partners. Can you continue to pay the mortgage? Can you continue to live in the same house? Can you pay for the children’s education, even if they are 18 or older? Can the next of kin continue to live as they were used to financially? If a financial gap arises such as ‘BitCoin‘ due to the premature death of a partner, this risk can be covered at a very low cost by, for example, a life insurance policy. You can often arrange greater financial security for a few tens a month!