What is a Berlin Will?
A “Berlin Will” is a joint will made by spouses that follows a specific structure. The spouses appoint each other as sole heirs, while their children inherit only after the death of the surviving partner. This arrangement provides financial security for the surviving spouse but can lead to tax disadvantages, as the estate of the first deceased is taxed twice. In addition, such wills are often binding, meaning that the surviving spouse cannot easily change them. To minimize potential disadvantages, it is advisable to seek notarial advice.
To what extent am I bound by a Berlin Will?
As with any joint will, the provisions made in a Berlin Will become binding after the first spouse passes away if it can be assumed that the dispositions of one were made in reliance upon those of the other (mutual dependency). Berlin Wills are often composed of just two sentences, combining two equivalent dispositions: the appointment of the spouse as sole heir and the designation of the children as substitute or final heirs. In such cases, courts typically presume mutual dependency between these dispositions. This means that changes to the final heirs are no longer possible, making the will binding for the surviving spouse. The binding effect takes hold upon the death of the first spouse. Until then, each partner may revoke their disposition, provided the revocation is notarized and delivered to the other spouse. Considerable time may pass between the two deaths, during which personal or family circumstances can change. It may also happen that one heir claims their compulsory portion after the first death, thereby benefiting twice if the will remains unchanged.
What options do I have once the will becomes binding?
The binding effect ceases if the surviving spouse renounces their inheritance. However, this defeats the purpose of the Berlin Will, as the spouse is then only entitled to the compulsory share, losing full financial security. This issue can be addressed through careful drafting, such as including a modification clause. Such a clause can be tailored to the couple’s needs—for example, allowing certain aspects (like the circle of heirs) to remain unchangeable while leaving flexibility in other areas.
What tax disadvantages may arise?
If inheritance tax allowances (currently EUR 500,000 for spouses and EUR 400,000 for each child) are exceeded, the Berlin Will can have double tax consequences: the estate of the first deceased is taxed twice—once when inherited by the surviving spouse and again when passed to the children as final heirs. The children’s tax allowances after the first parent’s death remain unused. The final estate then includes the combined assets of both spouses, quickly exceeding the available tax exemptions.
A so-called “super-legacy” (Supervermächtnis) can help avoid these disadvantages. It allows the surviving spouse to distribute assets within the family in a tax-efficient way while maintaining maximum flexibility for their own financial planning. This ensures both the surviving spouse’s financial security and optimal use of available tax allowances.
Before drafting a will, it is strongly recommended to seek notarial advice to avoid the binding and tax traps of the Berlin Will.
