As of: February 28, 2024, 11:21 a.m
By: Bona Hyun
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The Federal Finance Court has decided on the so-called Berlin Testament.
© Sven Hoppe/dpa
The Federal Finance Court has ruled on the tax consequences of the so-called Berlin Will.
In this, spouses name each other as heirs.
Berlin – At first glance, the Berlin will may seem an attractive option for estate planning.
However, the tax aspects should not be ignored.
Depending on the structure and inheritance assets, there may be tax disadvantages.
This emerges from a ruling by the Federal Finance Court, which was presented at the annual press conference in Munich on Tuesday (February 27th).
Berliner Testament is attractive – but there are also disadvantages to consider
The Berlin will stipulates that married couples are the sole heirs.
The children only inherit when the second parent has also died.
The basic idea is usually that the surviving parent will otherwise have to pay off the children and perhaps even have to sell the marital home that they continue to use.
However, in the case of high inheritance assets, this clause already has the disadvantage that only the longer-living parent can claim their allowance of 500,000 euros; the child allowances of 400,000 euros each remain unused, explained BFH judge Anette Kugelmüller-Pugh.
In other words: The child loses a personal tax allowance of 400,000 euros because the parent who lives longer inherits everything.
Each child is normally entitled to the allowance of 400,000 euros per inheritance from each of their parents.
Tax disadvantages can arise with a Berlin will
In addition, the children can demand a so-called compulsory portion of the inheritance.
To prevent this, a “penalty clause” is often incorporated: a child who demands his compulsory share upon the death of the first parent to die will then only receive the compulsory share even after the death of the longer-living parent.
However, it is possible that this child will fare better with the compulsory portion if the parent who lives longer uses up large parts of the assets, for example through long-term care.
When does a Berlin will make sense?
A Berlin will makes sense if spouses want to protect each other and ensure that the surviving spouse is taken care of after the death of the other spouse.
According to Erblotse
, it also
makes sense if the spouses want to ensure that the joint assets pass to their children after their death.
Groundbreaking judgment: Berlin will probably has tax disadvantages
In the dispute on which the BFH decided, a couple from Hamburg wanted to counteract this with the so-called Jastrow clause.
According to the clause, it is agreed that any heir who does not demand payment of his compulsory share after the death of the first spouse will also receive a legacy from the deceased's inheritance.
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The person who dies first practically grants a promise of money to the children who do not demand a compulsory share.
However, this is only paid out after the death of the longer-living parent.
This should mathematically reduce the inheritance bequeathed by the first deceased and thus also the compulsory share of the children who claim it.
However, as the BFH has now decided, this does not work.
The estate of the first deceased is not reduced by the legacy and is subject to inheritance tax for the surviving parent.
In addition, according to the Munich ruling, the legacy is again subject to inheritance tax if the second parent also dies.
The Federal Finance Court has described the legal construction of the Berlin will as compliant, but also makes it clear that it can have tax disadvantages.
(bohy with agencies)