By a 1202 agreement with his brothers Count Palatine Henry V and King Otto IV, William had received the Welfs' allodial properties in Saxony around Lüneburg.

However, his uncle Henry V hesitated between a desire to aggrandize his own children (daughters) and a sense of what was due to the male representative of his name and family, and Otto at first reaped little advantage from these enlarged prospects.

At last, in 1223, Henry V executed a deed by which he appointed his nephew his successor in all that remained of the allodial domains of the duchies of Saxony and Bavaria, and also in the private fiefs which he held as an individual in other parts of the empire.

These states, however, constituted so small a portion of the former wealth of his illustrious house, that it should have been thought there was scarcely a pretext for either envy or alarm in the breast of his enemy, yet when the Emperor, Frederick II, was made acquainted with the intentions of the Count Palatine, he began to intrigue with his daughters.

To be prepared against any future attempt of the same kind, Otto judged it prudent at this time to enter into a treaty with his maternal uncle King Valdemar II of Denmark, by which they respectively bound themselves to support each other against all enemies whatsoever.

They were therefore compelled to sound a retreat; and luckily for the captive prince, the emperor had become involved in matters of higher importance, and was under the necessity of withdrawing his attention from the conquest of Brunswick.

The duke of Saxony, who claimed a joint right in his detention, refused at first to comply with the dying request of his friend, but when allowed to take possession of the Castle of Hardsacre and other states, as a security for the payment of his ransom, he was permitted to leave his prison.

He renewed and confirmed the various charters granted by his ancestors to the city, and greatly enlarged its privileges; while his uncle, the king of Denmark, bestowed as a boon upon the citizens the liberty of trading in his dominions, without paying customs or any other dues.

King William had intimated to the princes of Germany his desire to meet them in a general diet at Frankfurt against the Feast of St. John the Baptist, 1252; he was preparing to leave Brunswick with his father-in-law for the purpose of being present at this assembly when Otto was suddenly taken unwell and expired on 9 June.