date | theme

4. May 2021 | Empowerment needs test and save inheritance tax

16. June 2021 | Trust agreements of large auditing companies: Gift tax relevance

23. June 2021 | No gift tax or inheritance tax in Austria

24. August 2021 | Pre-inheritance and post-inheritance: inheritance tax treatment § 6 ErbStG

06. June 2022 | Berliner Testament – compulsory part entitlement can be deducted as an estate liability! (this contribution)

Succession is often regulated by a Berlin Testament. The Berlin Testament is a rule of interpretation. Therefore, it applies if the will is not sufficiently defined. This interpretation rule is standardized in § 2269 BGB. Therefore, in this case, there should be no pre-inheritance and post-inheritance. Rather, the Berlin Testament stipulates that two spouses act as full heirs at the death of one and that the child becomes the sole heir at the death of the last dying spouse. Therefore, the child inherits the entire estate of the two spouses.

However, it seems questionable whether the child can then still assert the compulsory share claim against the first deceased spouse as an estate liability and if so, how this is possible. Therefore, the Berlin Testament must be assessed for inheritance tax. This question is clarified by the contribution.

The Berlin Testament is only possible for spouses and life partners. It serves as a rule of interpretation and states that no so-called pre-inheritance and post-inheritance should occur. The last heir should rather inherit the entire remaining estate of the deceased spouse from the last deceased spouse. However, the inheriting spouse is not limited in his power of disposal over the property acquired by the other spouse, but sole heir. Otherwise, all regulations that were clearly made in the will should be applied. In the case of pre-inheritance and post-inheritance, on the other hand, the pre-inheritance manages the property for the post-inheritance and is therefore also limited in the power of disposal.

For example, an ambiguous formulation would be: “If one spouse dies, the other spouse should first inherit and then the children should become heirs.”

It is possible to optimize the Berlin Testament inheritance law. For example, one can spoil the assertion of the compulsory part by the children at the death of the first spouse. You cannot prevent the assertion. Nevertheless, regulations are possible, stating that if the compulsory part is asserted in the case of death of the first spouse, only the compulsory part can be asserted in the case of death of the second spouse. But you can also grant legacies in advance.

The Berlin Testament has a considerable tax disadvantage. Namely, the child can no longer claim the allowance he had against the first deceased spouse with the second deceased. Therefore, the child inherits more assets at once, but can only claim an allowance instead of two. It may also happen that the allowances differ. For example, if the last heir is the brother of the first spouse. This problem can be optimized by admitting legacies that are valid or due only at the death of the second spouse.

Technical advice for

optimized succession?

It now has to be clarified whether the child can deduct the right to a compulsory share in respect of the first deceased spouse as a liability for the succession in the context of the Berlin will. It is therefore ultimately a question of whether one can still assert the compulsory part against himself after the death of the obligated party (here the second spouse). In principle, a compulsory part claim arises only if it is asserted. The person entitled to the compulsory share shall only owe the tax on the compulsory share if he has also claimed it. Otherwise, he may be forced to claim it to pay the inheritance tax. Correspondingly, only the claim for a compulsory share can be deducted as an inheritance liability. Therefore, peace in the family should be maintained

Here both the entitlement to the compulsory part and the obligation to pay the compulsory part are opposed to the child as the sole heir in one person. The child has the claim against himself. Civil law confusion occurs in this case. This means that both claims coincide and thus expire. Something else should apply according to § 10 III ErbStG in inheritance tax law. Accordingly, claims and liabilities do not expire when they are combined in one person.

Therefore, the child can still assert the right to a compulsory share even upon the death of the person liable for the compulsory share. This is possible if you deduct the compulsory part entitlement in the tax declaration as an estate liability. This solution is supported by the fact that the compulsory share claim can only be deducted if it has been asserted. Therefore, the assertion is the relevant tax time. Confusion should not apply according to § 10 III ErbStG in inheritance tax law. However, this only applies as long as the compulsory part entitlement has not yet expired. The reason for this is that the limitation period is intended to serve legal certainty and therefore to prevent the late assertion of the compulsory part. The entitlement to a compulsory share shall expire within three years.