Why did Charles V let his brother become Emperor rather than his Son?

Haha, well, that's a hell of a question. Whilst I'm not sure anyone could definitively say, I'll do my best to explain his choice.

Charles V's reign, unlike the vast majority of monarchs in his period, did not end with his death. He chose instead to resign in 1555.

His decision to split his territory was largely motivated by his own health at the end of his reign - to quote Richard Bonney, in 1553 Charles V was

'prematurely aged and for much of the year he was reduced to a state of mental collapse verging on breakdown.'

Basically, his rule over what's now known as the Hapsburg Empire had a hugely negative effect on his health, largely because the workload of managing a global empire of that size was simply too much for one man to do. As such, Charles did not think it wise to allow the situation to continue.

In addition to this, it is worth pointing out Ferdinand was technically perfectly within his rights to claim the H.R.E, as the Empire was technically an elective rule and thus he was an eligible successor.

And finally, Philip II inherited the Duchy of Burgundy (which largely consisted of we now know as the Low Countries), various holdings in Italy (notably the Kingdom of Naples), Spain (consisting of the unified Kingdoms of Portugal, Castile and Aragon) AND all of the holdings of Spain and Portugal in the New World. Charles V had even previously attempted to get Phillip II into power in England by marrying him to Queen Mary I, however despite their marriage at Winchester in 1554 this didn't work as intended as Mary died in 1558. He was hardly being short changed.

In addition to all this, the H.R.E was still dealing with the reformation and rampant Protestantism - Ferdinand was a figure known and respected within the Empire, who had been actively involved in dealing with the reformation and rebellions it caused there. As such he was much better suited to take over than a young, staunchly Catholic Spanish king.

In brief - running the Hapsburg Empire put Charles V in an early grave (he died aged 58). He did not want the same thing to happen to his son. Also Ferdinand was far better suited to be H.R.E than Philip II, and may well have been able to become Emperor even if Charles did not want him to.

Source: Studying Medieval/Early Modern History at Degree level.

Would recommend R. Bonney, The European Dynastic States 1494-1660 (Oxford, 1991) for a more detailed explanation.