The Berlin will is a form of joint will that can only be drawn up by spouses or registered partners. It stipulates that the spouses appoint each other as sole heirs and that the estate only passes to the children or other final heirs after the death of both spouses.

The Advantages The main advantages of the Berlin will lie in the protection of the surviving spouse and can be summarised as follows:

  • Safeguarding the partnerThe surviving spouse initially receives the entire inheritance and is thus protected and can continue to live in or rent out the joint property or access all accounts.
  • Clear regulationThe Berlin will is relatively easy to formulate, creates clear conditions and generally does not require interpretation. This can initially avoid disputes.
  • Simple creationA joint will can be drawn up by hand - one person writes, both sign. Notarisation, on the other hand, creates legal certainty, but is not mandatory.
  • Revocation only jointlyA joint will creates legal certainty beyond one's own death. After the death of the first to die, the will can no longer be changed unilaterally without an opening clause.

The Risks & disadvantages The main disadvantages of the Berlin will are inheritance tax and are as follows:

  • High binding effectThe fact that a Berlin will can only be changed jointly creates legal certainty (see last point above). However, this commitment can also be disadvantageous if life circumstances change. This can be countered with an opening clause, according to which the longer-living spouse can still change the will - either generally or in certain cases.
  • Taxes are incurred twiceThe biggest disadvantage is that the children's inheritance tax allowance (€400,000 each) is only utilised once, after the death of the last deceased, but would apply to each parent. One tax-free amount then remains unused. In addition, the accumulation of all family assets increases the tax rate for the longer-living spouse, which has a progressive effect, i.e. higher assets are taxed at a higher rate - in tax class I it is between 7% and 30%. This has no effect on smaller assets. In the case of larger assets, the distribution of assets between the spouses should therefore be checked on the one hand; on the other hand, bequests made by the first spouse on their death can already utilise the tax-free allowances. The family remains particularly flexible with a so-called "super legacy", which gives the longer-living spouse a right of determination within a certain framework.
    A common drafting error when drawing up Berlin wills is the granting of legacies in favour of the children and at the expense of the first spouse to die with (later) maturity on the death of the surviving spouse. The aim of this arrangement was to reduce inheritance tax by reducing the first acquisition of the surviving spouse and utilising the tax-free amount of the children after the first deceased. Due to the statutory provision of Section 6 (4) ErbStG, according to which bequests due upon the death of the beneficiary are to be treated as subsequent inheritances, this tax objective can often not be achieved. Instead, the same assets are taxed twice - once for the surviving spouse and once for the children. We recommend checking Berlin wills for unsuccessful legacy arrangements.  
  • Children's compulsory portionAs the children do not inherit at the first death, they can claim their compulsory portion - half of the statutory inheritance share. This claim is in money and is therefore particularly problematic in the case of illiquid assets in the estate, such as a company or property, which must then be sold or encumbered. If you want to prevent this, you can include a clause stating that children who claim their compulsory portion in the first inheritance are also reduced to the compulsory portion in the second inheritance, making this unattractive.
  • RemarriageIn a Berlin will, the surviving spouse receives the entire estate of the first deceased. If the surviving spouse remarries, the new spouse has a right of inheritance.

The above risks can be countered with the following alternatives or additions:

  • The so-called. Sylt will is an alternative to the Berlin will. In this case, the children inherit on the first death; the surviving spouse receives usufruct over certain assets, such as the home or a deposit, or a legacy over certain items of the estate. Inheritance tax allowances can be distributed within the family. Caution is required if the estate contains assets for which a material exemption from inheritance tax applies, such as business assets or a family home. In this case, so-called deduction restrictions may apply to the heir(s), for example for bequests, which increase the overall tax burden.
  • Super legacySuch a legacy can supplement a Berlin will. In this case, the first to die sets a framework for the surviving spouse, within which the latter has a right of determination, for example with regard to the person(s) of the legatee(s) and the amount of the legacy. This offers flexibility for the surviving spouse and the opportunity to utilise the first deceased's allowances for children and, if applicable, grandchildren.
  • Opening clausesYou can make the Berlin will more flexible for the surviving spouse. The spouses are free to decide how far the binding effect is opened up.
  • Remarriage clauseThe above-mentioned risk of assets migrating to another family if the widow/widower remarries can be countered by a clause stipulating that a legacy is to be surrendered to the final heirs if the widow/widower remarries.

When is a Berlin will worthwhile and when is it not?

The Berlin will is particularly useful for smaller assets and a high need for provision on the part of the spouses.

For larger assets that exceed the inheritance tax allowances (€500,000 for spouses, €400,000 per child), a different structure should be chosen, as otherwise allowances are "given away" and assets are unnecessarily subject to inheritance tax twice.

The Berlin will is also disadvantageous in the case of illiquid assets in the estate, as compulsory portion claims can put the surviving spouse in the situation of having to sell assets. This can trigger income tax and possibly give rise to holding period violations, which can lead to increased inheritance tax.

Conclusion & recommendation for action

The Berlin will offers Clear protection for the surviving partner and a clear succession. However, it can Higher inheritance tax and harbours Mandatory portion risks. Tax and inheritance law advice is highly recommended, especially for larger assets

If you are looking to TAXGATE for assistance with estate planning or drawing up or amending a Berlin will, we offer expert advice that takes both legal and tax aspects into account. Lawyer and tax consultant Markus Schenk and, Attorney at Law Dr Gerhard Balz and tax consultant Stephan Scheffold are experts in succession planning in Stuttgart and will be happy to answer any questions you may have.