Federal Fiscal Court follows tax authorities with regard to the inheritance tax consequences of the so-called “Jastrow clause”

The so-called “Berlin will” is the most popular form of will in Germany. It is often combined with the so-called “Jastrow clause” to deter the disinherited children from claiming their compulsory portion and to protect the liquidity of the surviving spouse. At its annual press conference, the Federal Fiscal Court presented the ruling of its Second Senate of 11.10.2023 (II R 34/20) on the inheritance tax consequences of this popular combination. In this ruling, the Second Senate of the Federal Fiscal Court decided that the combination of a “Berlin will” and a “Jastrow clause” is unfavorable in terms of double taxation of the estate of the first spouse to die, but is not legally objectionable.

In his article, POELLATH lawyer Dr. Alexander Tegge sheds light on the background to the combination of the “Berlin will” and the “Jastrow clause”, the reasons for the judgment of the Second Senate and alternative arrangements to the “Jastrow clause”.