Hidden pitfalls in inheritance planning can derail your final wishes
Inheritance planning can lead to unexpected complications if not handled carefully. Many people assume their wishes will be followed automatically, but legal rules often override informal intentions. From unclear wording in DIY wills to misunderstandings about spousal inheritance, mistakes can create costly disputes and unintended outcomes.
A common misconception is that a surviving spouse automatically inherits everything when a childless couple passes away. In reality, if first- or second-degree relatives survive, they may still claim part of the estate under statutory succession. This can leave the remaining partner with less than expected.
Married couples often use joint wills to secure each other's future, but these become legally binding after the first death. Amending them later is difficult, sometimes impossible, which can trap the surviving spouse in outdated arrangements. Another option, the Berlin will, allows the surviving spouse to inherit everything first, providing financial security while also offering tax benefits through a 'super legacy'.
Legal terms like 'preliminary heir' and 'final heir' have strict definitions that may not match a testator's intentions. Misusing these can lead to disputes over who controls the estate and for how long. Similarly, an heir takes on all responsibilities—including debts and funeral arrangements—while a legatee only receives a specific gift without influence over the rest.
Attempting to exclude a compulsory heir—such as a child or parent—by gifting assets before death can backfire. Courts may add those gifts back into the estate when calculating the compulsory share, which is half of what the relative would have inherited by law. This share is guaranteed under constitutional law, making it hard to bypass.
DIY wills often contain vague wording, leading to judicial interpretation and delays. An opening clause can help by allowing flexibility for future adjustments, but many testators overlook this. Tax benefits are also frequently missed, leaving estates with unnecessary liabilities.
For those with international ties, the EU Succession Regulation (Rome V) has applied since 2015. It lets testators choose the law of their nationality for succession, rather than defaulting to their last habitual residence. However, claiming tax refunds under double taxation agreements requires separate action, adding another layer of complexity.
Proper inheritance planning requires more than good intentions. Legal terms, tax rules, and compulsory shares all shape how an estate is divided. Without precise drafting, even well-meaning arrangements can lead to disputes, financial losses, or outcomes the deceased never wanted.
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