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Cohabiting partners: properly protect your financial security

Sep 9, 2021.

Swiss law governs many areas, but life as cohabiting partners is not one of them. If you are unmarried, you have to define certain rules on your own – and protect yourself in case of emergencies. The most important aspects of living together can be set out in a cohabitation agreement, and a living will and lasting power of attorney will help you in the event of exceptional circumstances. Discover key tips in this interview with our pension expert Guido Studier.

When two people are cohabiting partners, what should they set down in writing at an early stage?

When you are falling in love, you do not want to think about the worst that could happen – be it a separation or a health emergency. Even so, I do advise asking yourself a couple of important questions at an early stage:

  • Who pays for things that you need to use in daily life together?
  • Who is liable for contracts that you have signed with third parties?
  • In case you separate: to whom do the things that you bought together during the relationship belong?
  • Who can continue living at home and how soon must the other person move out?
  • In case of death: what will the surviving partner inherit?
  • Is the partner’s retirement provision protected?
  • Do you want to release doctors from physician confidentiality in case of emergency so your partner will stay informed?

 

Those things that happen within the relationship can be governed by a cohabitation agreement, while this list of essential questions can be answered by a living will and lasting power of attorney.

 

Why are a living will and lasting power of attorney so important for cohabiting partners?

They determine what happens to you if you are no longer capable of making decisions, such as after an accident. Specifically, your partner does not automatically become responsible for you – but rather the state does, in the form of the KESB (children and adult protection authority). That is why you should definitely set down in a lasting power of attorney who may decide in your name, which care centre you should go to or whether the mortgage on your home should be extended. A living will ensures that an emergency will be dealt with according to your wishes without requiring your partner to make medical or legal decisions.

 

Let’s start with the better-known document. What exactly does the living will cover?

You can record in a living will which medical measures you want if something happens to you and which you do not. For example, you can decide whether or not you consent to resuscitation or artificial respiration if the medical circumstances should call for it. Without a living will, doctors will decide together with your closest relatives what action to take. Your cohabiting partner is usually not included in this process. This is why you should empower them to be part of this in a living will. You can download sample forms at FMH, the SRK and Caritas.

 

And why do I also need lasting power of attorney?

Lasting power of attorney is used if you are no longer capable of making decisions yourself. It sets out who can make decisions for you as your representative. That can be your partner or even someone else who you trust. Lasting power of attorney must be written in your own hand or publicly notarised. It consists of three parts.

  • First, the personal power of attorney determines where you want to live in the event that you need care, and who will be responsible for caring for you.
  • Second, the assets pension defines how your savings will be managed and, for self-employed persons, how the business will continue to function.
  • And the third part governs legal proceedings with authorities and other public or private offices.

 

Where can I record what my partner will inherit when I die?

How inheritance is divided is clearly regulated by law. For cohabiting partners, the surviving person gets nothing if neither a will nor an inheritance contract exist. In that case, either parents or children inherit the deceased person’s assets. This is why you should definitely deal with this issue. With a will, you can give children the predetermined statutory share and then the freely available share to your partner. If they have children together with you, they will receive a maximum of 25% of the assets. If there are no children and your parents are still alive, your partner gets 50%. And if only one parent is alive, the surviving partner can inherit 75%.

 

Some aspects of inheritance law will be changing in 2023. What will be different?

Cohabiting couples are finally getting more rights, meaning an inheritance contract or a will can favour the surviving person more. Because the statutory share for parents will be abolished, the surviving person can receive – if there are joint children – up to 75% and up to 100% if there are no children. The statutory share is currently primarily problematic if an unmarried couple owns a home and parents insist on their inheritance rights.

 

How is the surviving cohabiting partner protected financially in the event of death?

The surviving partner is not entitled to a widow’s or widower’s pension from the state. Nevertheless, depending on the circumstances, you can receive money from Pillar 2. Find out more about the rules from your pension fund. Private pensions stipulate that if you have lived for five years in a row as cohabiting partners, you can inherit savings from Pillar 3a. You decide who will benefit from Pillar 3b in the event of death, provided that you comply with the statutory shares and the insurance has a surrender value.

 

 

Generali tip: When you are cohabiting partners, it makes sense to take out certain insurance policies together (such as with household contents) or to include the other person in an existing contract (legal protection or liability). That will save you money that you can then invest in retirement provision, in line with the mindset: every little bit helps.

About the author

Guido studied business economics and is a VBV-certified insurance specialist (Federal Diploma). He has been in the insurance industry for 25 years and trains insurance experts in the Generali Academy. Guido has an Executive Master of Finance ZHAW and is also an EHB-certified teacher of economics and society (Federal Diploma) and a member of #TeamPensions.

 

Guido G. Studier, Training Expert at Generali


 

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