Table of contents
Spouses often resort to a Berlin will. In this case, the spouses appoint each other as sole heirs. Their joint children are to be final heirs. The basic idea here is that the surviving spouse is sufficiently provided for financially. The children only inherit upon the death of the second parent.
If the spouses have only very limited assets, the idea of a Berlin will may be understandable. As the family’s assets grow, the spouses often outgrow the Berlin will without noticing and overlook the impending inheritance tax liability. Ultimately, when the first spouse dies, the inheritance tax allowances are forfeited. The assets accumulate with the surviving spouse and are regularly subject to higher tax rates upon their death (‘tax progression’)
Through a legacy, the testator bequeaths, for example, a certain part of the estate to his children without appointing the child as a legatee as an heir. The children are only entitled to the transfer of the legacy object from the surviving parent. If spouses appoint each other as sole heirs, the surviving spouse may, for example, be obliged to pay a certain amount as a legacy to the joint children in order to take advantage of inheritance tax allowances.
This means that the inheritance tax allowances can already be used upon the death of the first parent.
In the case of a super legacy, the surviving spouse is free to determine the amount of the legacy, the objects of the legacy and the date of transfer. This means that the tax allowances can be used in full upon the death of the first parent to die, without restricting the economic self-determination of the surviving spouse.
Inadequate wording or loopholes in the provisions governing the purpose and due dates of legacies may result in the tax office not accepting the intended tax savings. In any case, spouses should seek individual advice on the options for optimising inheritance tax. To avoid tax losses, joint wills of spouses should be reviewed.