Last August, the Swiss Federal Council submitted a proposal to parliament for an initial partial revision to Swiss inheritance law. The new law is expected to come into effect in 2020. The primary objective of the revision is to adapt Switzerland’s inheritance law to new social forms of cohabitation. Moreover, this will allow greater flexibility for those making a will in future. Below we will highlight the most important changes and their implications for estate planning.
At present, the children, parents and spouse or civil partner of a deceased person are entitled to compulsory portions of the deceased’s estate. Under the draft new inheritance law, protection of the parents’ compulsory portion will be abolished.
Furthermore, the compulsory portion for children will be reduced from ¾ to ½ of the statutory claim to inheritance to allow greater freedom of testamentary disposition.
Statutory claims to inheritance will not be affected.
In the process of estate planning, it is always advisable to consider marital property arrangements to maximise the benefits to the surviving spouse. Property assignment is one way of optimising these benefits that is recognised under the statutory marital property regime for property acquired during marriage. This allows spouses to assign the full amount of their property acquired during marriage (as opposed to only half by law) to each other under marital property regimes. Until now, legal opinion was divided on how to deal with the allocation of property acquired during marriage in respect of the children of both spouses. The prevailing view was that this type of legal marital preference over children of both spouses is possible without limitation, even though the resultant transfer of assets may constitute a breach of the compulsory portion. In terms of children who are not of both spouses, the existing law makes clear that their claims to compulsory portions cannot be impaired by such optimisation arrangements under matrimonial law.
One new feature is that children will have equal rights in this regard, irrespective of whether they are of both spouses or not. In any case, property assignment will be taken into account when calculating the compulsory portions.
However, one important difference remains unchanged: while children who are not of both spouses can claim a breach of their compulsory portions via abatement proceedings, this right does not apply to children of both spouses. The latter can only claim their compulsory portions if the surviving spouse remarries.
Four new articles of law are planned to take account of the new form of non-marital cohabitation. These articles aim to create a statutory dependency claim on the estate, for which the heirs are jointly liable. This claim is intended to allow the surviving cohabitant partner to cover their minimum standard of living under social welfare law.
The preconditions are that the person lived with the deceased as a cohabiting partner for at least five years and, as a result of their death, would require dependency payments to avoid financial distress.
The dependency claim expires if it is not registered with the relevant authorities in writing within three months of the deceased’s death.
The majority of the population is probably not aware that bank savings and savings under insurance plans relating to pillar 3a are subject to different treatment under inheritance law, an aspect which also seems impractical. For this reason, the draft envisages equal treatment of both types of savings under inheritance law. These assets do not form part of the estate, but are added to the total for calculating compulsory portions.
Changes always lead to opportunities! On the one hand, they offer the chance to make preparations for a situation that is as yet unplanned. On the other hand, it is advisable to examine any existing estate arrangements to determine whether they are still consistent with current goals and how they will be affected by the new law.
Our specialists will be happy to help you if you have any questions.
Written by:
Nathalie Schlösser | Master of Law / Legal Consultant
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