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Many spouses use a Berlin will, in which they appoint each other as sole heirs. This means that when one spouse dies, the other inherits everything and the children only inherit after both parents have died. The aim is to ensure that the surviving spouse is financially secure.
The problem? If the family has a large estate, this model can lead to significant tax disadvantages. Why? Because tax allowances are not used when the first spouse dies. The assets are then pooled with the second parent and often taxed at a higher rate upon their death.
This is where the ‘super legacy’ comes in. It is a method that can be used to achieve inheritance tax advantages. In short, it allows the spouse who dies first to pass on part of their assets to their children as a legacy rather than as an inheritance. The great thing about this? The surviving spouse can still determine how much, what exactly and when they pass on this legacy to the children. This means that you can save on tax without restricting the financial freedom of the surviving spouse.
But be careful! In order for the super legacy to be recognised for tax purposes, it must be formulated correctly. Unclear wording or gaps in the provision may result in the tax savings not being recognised. It is therefore important to seek good advice and ensure that the will contains all the necessary details.
The Berlin will has tax disadvantages and is inflexible.
The super legacy offers much more flexibility and preserves your economic self-determination.
Although it is always advisable to seek expert advice on all tax matters, this is particularly true for super legacies. In order for them to be fully effective, you need to pay particular attention to a few points – their complexity and error-free wording.
Complexity: The super legacy is very complex in its design and application.
Formulation risk: If the wording is inadequate or unclear, the desired tax result may not be achieved.
I therefore advise you to take advantage of our consulting services to ensure that the super legacy is formulated correctly and effectively.