Advantages and disadvantages of a Berliner Testament

In a so-called “Berliner Testament” (Berlin will), spouses mutually appoint each other as sole heirs. This is meant to provide the surviving spouse with economic security. The children are usually designated as final heirs.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: According to the rules of intestate succession, following the death of a spouse it is the surviving spouse and the children who shall inherit. This arrangement can be circumvented if the spouses mutually appoint each other as sole heirs in a Berliner Testament. This guarantees economic security for the surviving spouse. The children are usually designated as final heirs and do not inherit until after the death of the second parent.

Having said that, a Berliner Testament can also give rise to difficulties and inheritance disputes within families. By mutually appointing each other as sole heirs, the spouses disinherit the children they have in common for the purposes of the first devolution of an inheritance. The latter do not become heirs until after the death of the surviving parent. However, the children are able to assert their statutory right to a compulsory portion even in cases involving a Berliner Testament. This then has to be paid by the surviving spouse. For this reason, it might be advisable to include a so-called “Pflichtteilsstrafklausel” (compulsory portion penalty clause) in the will. This kind of clause can stipulate, e.g. that even after the second devolution of an inheritance a child shall not receive anything in addition to his or her compulsory portion. Alternatively, it is also possible to leave a bequest in favour of the children. This is generally less than the compulsory portion and exposes the surviving spouse to a lower financial burden.

Additionally, the binding effect associated with a Berliner Testament can prove to be disadvantageous. If one of the spouses has passed away, the jointly agreed provisions can only be amended with great difficulty. It is possible to include provisions in the will that at least partially relieve the surviving spouse of this binding effect.

It is also important in cases involving a Berliner Testament to consider the tax allowances for inheritance tax. If a spouse’s tax allowance, currently set at 500,000 euros, is exceeded upon accrual of an inheritance, inheritance tax will fall due because the children’s tax allowances cannot then be utilized.

Lawyers who are experienced in the field of succession law can advise on preparing a will, Berliner Testament or contract of inheritance.

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