This section is about inheriting in two steps or not paying any inheritance tax when the first parent dies.
The possibility exists to inherit in two steps by means of the 'two-step testament.' How does it work ?
Statutory distribution does not always result in a positive outcome
A standard provision of current Dutch inheritance law is the 'statutory division', but this does not always produce a positive outcome. In short, the statutory division means that the surviving parent and each of the children all inherit equal parts. However, the children only get a claim for the amount of the part they inherit, which will not be distributed until the surviving parent has died. But often, the children will have to pay some inheritance tax on this claim.
The risk of wasting money. There is a risk that the surviving partner, for whatever reason, may use up all the money or assets and there is nothing left to be distributed to the children. In this case, it is a waste of money if inheritance tax is paid upon the first parent dying.
Is there a possibility of avoiding this inheritance tax and still making sure that the surviving parent is properly taken care of? Yes, by having what is a known as a 'tweetrapsmaking' or 'testament with a two-step arrangement' drawn up.
Testament with a two-step arrangement
This is a last will and testament in which the surviving parent is designated the sole heir and in which it is provided that, when the surviving parent dies, the children will inherit the same estate or what is left behind of the estate.
A foreign national can also have such a testament drawn up by a Dutch notary by including the provision that Dutch law will apply. If certain provisions are complied with, this will have the same fiscal benefits described below as would be enjoyed by a Dutch citizen with a similar testament.
The effect of the partner's exemption. Due to the high inheritance tax exemption threshold, of nowadays around € 650,000, that the surviving parent is entitled to, he or she will not have to pay any inheritance tax if the joint capital was of an 'average' level. When this partner dies, it must then be determined whether anything has been left behind for the children from the first estate. If this is the case, they will then receive the remainder and they will not have to pay inheritance tax, if any, until the appropriate moment.
Example:
There is a community of property between a married couple who have two children. They own a € 350,000 house and there is an € 80,000 mortgage.
Statutory distribution. When one parent dies, the estate is half the value of the community of property, i.e. € 135,000. This will go to the surviving parent, who is 65 years old at that time. Each child will get a € 45,000 claim on the surviving parent. For tax purposes, this claim is worth € 23,400 before the exemption threshold of nowadays of around  € 21,000. Each of them therefore directly owes € 240 in inheritance tax on this amount without knowing whether they will actually inherit any money. As this inheritance tax must be paid by the surviving parent as an advance payment, this will directly affect his or her budget.
Testament with a two-step arrangement. The surviving parent initially inherits the entire estate and does not pay any inheritance tax, due to the high exemption threshold.
When this parent dies ten years later, he or she leaves capital of € 76,000. Half of this can be attributed to the estate left by the parent who died first. The rest of this estate has been spent or has been given to the children tax-free. This means that the estate left by the second parent is € 38,000.Pursuant to the testament, the children now both inherit two times € 19,000 from two estates. Due to the exemption of € 21,000 per child per estate they will not have to pay any inheritance tax. This means that they will actually get everything that has been left to them without paying any inheritance tax. The ultimate purpose of this last will is to avoid any inheritance tax at the decease of the first parent.

Note. A disadvantage of the two-step arrangement is that it does not enable any fiscal choices to be made anymore. If the parental capital grows significantly, or if it does not become less due to the parent's actual spending, the option to make certain fiscal choices may be important for the children to enable them to pay less inheritance tax.

Nowadays, there are also other possibilities to avoid the abovementioned inheritance tax.

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