Requesting the appointment of an trustee of an estate in the Netherlands
AMS often blogs about the settlement of estates. The Dutch settlement procedure is a multifaceted procedure which in principle should be followed by acceptance with the benefit of inventory of an estate by one or more heirs. However, sometimes it is also possible to apply to the Court for the appointment of a trustee. Dutch insolvency lawyer, Hidde Reitsma, who is regularly appointed by the Courts as trustee, explains.
In the Netherlands, estates have to be settled with acceptance under the benefit of inventory
In the Netherlands, when one or more heirs have accepted an estate under benefit of inventory, the estate will be settled (in principle: by the heirs), unless an executor with power of disposition can demonstrate that the goods of the estate are more than sufficient to meet all liabilities of the estate (Article 4:195 DCC in conjunction with Article 4:202 DCC). This is the so-called “statement of ample sufficiency.” In other words, as soon as even one heir accepts the estate under the benefit of inventory, the estate must be settled as a starting point in accordance with the provisions of Article 4:202 and further, DCC. However, as long as the heirs have to execute the estate themselves, they are exempt from some obligations that do apply to court-appointed trustees. For example, they do not have to call up the creditors to submit their claims, and they do not need to deposit any reports and distribution lists (unless the Subdistrict Court stipulates that they should do so, Article 4:221 paragraph 1 DCC).
What does “light settlement” mean?
The aforementioned settlement of an estate by heirs who have accepted the estate under the benefit of inventory is common. Because these heirs are in principle exempt from quite a number of obligations, this variant is also called the “light” settlement. This is contrary to the settlement by a court-appointed trustees (called “heavy” settlement: this procedure is couched with more guarantees for creditors, and is therefore much more like a bankruptcy.).
Dutch Court may appoint trustee after acceptance under benefit of inventory
In the case of acceptance under the benefit of inventory, the Court may appoint an trustee under certain circumstances (Article 4:203 DCC), namely:
- At the request of an heir, or
- At the request of an interested party, if (1) the person responsible for the management of the estate seriously fails in fulfilling his obligations, is unsuitable for this, or does not comply with an order to provide security, (2) if the liabilities of the estate appear to exceed the assets, or (3) if the estate is divided before its settlement.
Task executor expires on the appointment of trustee
In this case, the court-appointed trustee takes the place of the heirs. The task of any executor ends with the appointment of an trustee (Article 4:149 paragraph 1 under d, DCC). Therefore, under this provision an trustee may be appointed by the Court when the estate is negative, or if the heirs do not prove to be suitable for their task as trustee. In practice, there regularly appears to be a need for this. A creditor who is faced with an estate accepted under the benefit of inventory of which the settlement goes awry because it proves too complex for the heirs, can ask the Court to appoint an trustee.
Appointment of an trustee of an estate that is not accepted under the benefit of inventory
If an estate is not accepted under the benefit of inventory, the Court may appoint an trustee in the following cases:
• At the request of an interested party or of the public prosecutor if there are no heirs, if it is not known whether there are any heirs or if the estate is not managed by an executor and the known heirs leave it unattended;
• At the request of a creditor of the estate when proceeding to a division of the estate before its outstanding debts have been settled, or when there is the danger that he will not be satisfied. This may be the case if the estate is insufficiently or not well managed and settled, or because a creditor seeks recovery from the assets of the estate.
• At the request of one or more other creditors of an heir when their interests are seriously affected by the conduct of the heirs or the executor.
Pauliana settlement in the event of renunciation of an estate
Finally, a creditor of an heir who has renounced the estate, and who is apparently at a disadvantage because of this – because after all, the creditor can seek recovery from the estate – can ask the Court to decide that the estate will also be settled in the interest of the creditors of those who have renounced the estate. In fact, this provision is an application of the actio pauliana.
Appointment of trustee: first pay debts, then distribute
If the Court appoints an trustee, the settlement procedure is in many cases similar to that of bankruptcy proceedings. The trustee must write to the known creditors and let the Court set a deadline for the creditors to file their claims. The trustee must assess the creditors’ claims and sell (settle) the assets of the estate to the extent necessary for the payment of those debts. Next, the trustee will draw up a report and a distribution plan, which he will submit to the Court. The creditors may raise an objection to the report.
Division of estate after distribution list has become irrevocable
Once the distribution list has become irrevocable, the trustee will pay all that to which the creditors are entitled according to the distribution list. The estate may only be distributed once all creditors have been paid. In other words, the goods of the estate that have not yet been sold must be divided among the heirs.
AMS advices on estate settlement or appointment of trustee
AMS Advocaten have extensive experience both at home and abroad in estate settlements and assisting clients who are creditors of an estate, or in fact heirs. If you want the Dutch Court to appoint an trustee, a lawyer will have to submit an application to the Court. AMS Advocaten are happy to provide this service to you.