Spouses frequently draft a Berliner Testament, literally a “Berlin will”, by mutually appointed each other as sole heirs. Before doing so, it ought to be examined whether a Berliner Testament is the most appropriate form.
There are a number of advantages to a Berliner Testament for spouses. They mutually appoint each other as sole heirs and generally their children as final heirs. Should one of the spouses pass away, the remaining partner is afforded financial security by virtue of their status as sole heir. This is because the children are not entitled to inherit until both parents have died. This can be particularly helpful, e.g. if property becomes part of the estate.
That being said, a Berliner Testament also has its pitfalls. It has a strong binding effect. We at the commercial law firm GRP Rainer Rechtsanwälte note that the dispositions can no longer be unilaterally altered if no provisions have been agreed to that effect. For this reason, it should first be assessed whether a Berliner Testament is the most suitable arrangement for the testamentary dispositions.
When a Berliner Testament is being drawn up, there is often a failure to consider the possibility of a dramatic change to living conditions, for example the marriage falling apart, one of the partners starting a new relationship or falling out with the children. The joint testamentary provisions are nonetheless binding. This means that a spouse’s new significant other could end up empty-handed or the children definitely remain final heirs, regardless of the extent to which the relationship may have broken down in the meantime. The provisions cannot be amended unilaterally, not even after one of the spouses has died. To circumvent this strong binding effect, it is possible to incorporate clauses that ease the effect somewhat. Spouses should therefore carefully consider whether they wish to grant the surviving spouse a certain amount of freedom to amend the will again.
Tax allowances are another thing that should always be taken into account when considering inheritance tax. If a spouse becomes the sole heir, the tax allowance may be exceeded and the taxman might come knocking. If, on the other hand, the estate is distributed among several heirs, the individual tax allowances can be used more effectively.
Those who wish to prepare a Berliner Testament should therefore properly inform themselves about the legal consequences. Lawyers who are experienced in the field of succession law can offer advice.
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