The importance of a Living Will and Last Will for expats

Global mobility involves many legal and tax risks. For employers it’s important to know the importance of a living will and a testament for expats. Without these documents, serious medical decisions can be delayed, financial transactions blocked, and inheritance disputes may arise. HR and mobility teams can play a role in making these processes known to the international workforce.

What is a Living Will and why is it important for employers?

A Living Will is a document that includes two powers of attorney; one deals with financial affairs, the other one relates to personal and medical circumstances. For the financial part it is strongly advised to involve a Dutch notary as banks and other institutions might not accept a financial power of attorney without formalizing it. For the personal/medical part this is not a strict requirement but strongly advised.

In the Living Will a person is or persons for the two powers of attorney are appointed. This person/they can decide on the employee’s behalf about his/her financial and medical situation when a situation arises as mentioned in the Living Will.

A relative of mine, who is of legal age, appointed a friend as her financial representative. I am her representative for personal and medical matters. If she becomes unconscious or otherwise unable to make her own decisions for an extended period, her friend may propose selling her home. My relative has clearly expressed her wishes regarding medical treatment; for example, she does not want to undergo any life-prolonging treatment. If she is no longer able to communicate this to the doctors herself, I will do so on her behalf.

The Living Will could also be a document your employee makes in case he/she decides to temporarily move abroad.

Maybe your expat already made a Living Will back home. Depending on the applicable law stated in the document, it might be valid in the Netherlands as well. However, a (complementary?) Living Will in the Netherlands always has the preference. This also works the other way around, if your expat still has estate in the home country it’s best to have a Living Will there as well.

Summarizing: a Living Will appoints someone to take decisions about financial, personal and medical situations on behalf of the expat if they become incapacitated. Without it, banking and housing arrangements may stall, leading to problems for the partner/family. Guiding your international talent on this topic demonstrates duty of care and prevents operational issues.

What is a Last Will and why is it important for HR?

A Last Will or testament in the Netherlands ensures that your foreign employees have control of who will inherit the estate after passing and how this estate will be distributed. Without a Last Will, the Dutch inheritance law decides who gets what. If a foreign resident dies without leaving a will or making an official declaration on which law they wish to apply, the law of the country in which they resided for the last five years will apply. EU citizens can choose between the inheritance law of their nationality or the Dutch law.

A testament defines how the estate is distributed after passing. For employers, this matters in death procedures, insurance payouts, and avoiding legal conflicts. Including a choice of law (e.g., Dutch law) prevents unexpected application of foreign inheritance rules.

Legal and tax considerations for employers

The passing of one of your employees has a large impact; on the company, the colleagues and foremost on the family. Preparation of the right framework can be hugely beneficial for the families or your deceased employee. This will create a clear path ahead in those already difficult times.

Employers in the Netherlands are legally required to pay a death benefit equal to one month’s salary (including holiday allowance) to the surviving spouse or minor children. This mandatory payment is exempt from income tax, payroll tax, and inheritance tax.

To reduce the tax burden further, employers should consider the following:

Limit additional payments to three months’ salary
Under Dutch tax law, death benefits up to three months’ salary are exempt from payroll tax. However, for inheritance tax purposes, only the first month is fully exempt. Any amount beyond that may be subject to inheritance tax if paid under the employment contract.
Structure extra support as a voluntary payment
If the employer provides additional financial support outside the employment agreement (as a gesture of goodwill), it may fall under gift tax rather than inheritance tax, which can sometimes be more favorable depending on exemptions.
Offer non-cash assistance
Helping with funeral costs, administrative support, or covering legal fees can reduce the family’s financial burden without triggering significant tax liabilities.
Consult a tax advisor for cross-border implications
For foreign employees, inheritance and gift tax rules may differ based on residency and treaties. Professional advice ensures compliance and optimal tax outcomes for the family.

Practical HR Tips

Include this topic in expat onboarding/in your HR company handbook. In some cultures, the topic might be difficult to discuss, providing information is the least you can do.
Partner with specialized tax advisors and/or notaries.
Inform about the European Certificate of Succession.
Maintain a compliance checklist.

Checklist for Employers

Educate expats on living wills and testaments during onboarding.
Advise on whether or not choosing Dutch law in the testament.
Facilitate contact with a Dutch tax advisor and/or notary.
Review tax implications for death benefits.
Ensure translation of documents if needed.
Update internal HR policies for international compliance.

Conclusion

Although this subject is not an area of expertise for Anywr Netherlands, we do know the importance of of a living will and testament for expats.

We strongly advise employers to at least provide information or rather discuss this topic with your international talent, so they have arranged the needful before issues arise.