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Dividing your estate: how to protect your family

When you think about how you want to protect your family, you should also consider your estate. Depending on the circumstances, you must see to it yourself that your partner is entitled to an inheritance in the event of your death. Should you disagree with the process under inheritance law, you must take a few precautions. Everything you need to know about statutory shares and how you can change the division of your estate.

Who gets what if someone dies? This is governed by the Swiss Civil Code. If you don’t do anything, your estate will be divided in accordance with inheritance law. If you want your estate to be divided differently, you should prepare a will, inheritance contract or marriage contract at an early stage.

 

Good to know: After your death, your descendants will inherit not only your assets, but also your debt. If you are in debt, you should tell your heirs so that they can disclaim the inheritance.

How to make changes under the inheritance law

In accordance with Swiss inheritance law, your descendants are the primary heirs. If you do not have children, your close blood relatives come next, usually parents and siblings. Your legal heirs also include your spouse and your partner, in case of a registered relationship.

 

Good to know: If you are living in an unregistered partnership, your partner is not a legal heir. Provided you do not arrange otherwise, he or she will not receive any of your estate. 

 

How much each heir receives depends on how many heirs have a claim to your estate. Two examples:

  • If a married father dies, his wife receives half of the estate under inheritance law. The other half is divided evenly among his children. If a child has predeceased the father, this part of the estate goes to his/her descendants.
  • If an unmarried mother dies, her entire estate goes to her children. If she has a partner, he inherits nothing pursuant to the law.

 

HOW TO RECORD YOUR WISHES

If you would like your estate to be divided differently, you can modify these legal provisions. This requires a will or inheritance contract. However, certain relatives are entitled to statutory shares that you cannot alter, including your own children, your spouse and your parents. These statutory shares are smaller than the normal share provided for by inheritance law. Whatever is left after deducting the statutory shares from the estate is referred to as the freely disposable quota. This is the portion you can control yourself:

 

 

How the legal portion, statutory share and disposable quota are divided by law:

 

Children only 1/1 3/4 1/4
Children and spouse 1/2 and 1/2 3/8 and 1/4 3/8
Spouse only 1/1 1/2 1/2
Spouse and parents 3/4 and 1/4 3/8 and 1/8 1/2
Spouse and siblings 3/4 and 1/4 3/8 and 0 5/8

Good to know: The Federal Council plans to reduce the statutory shares for children and spouses. It plans to eliminate the statutory share for parents entirely.

 

 

Division of your estate: what your spouse is entitled to

 

When a spouse dies, matrimonial property is divided first. That means that the couple’s material assets are divided between both spouses in accordance with the rules of the matrimonial property regime. In Switzerland, most couples do not conclude a marriage contract. In this case, the principle of “joint ownership of acquired property” applies (see box).

 

For example: if the wife dies, the husband receives his personal property and half of the jointly acquired property. The other half of the jointly acquired property and the personal property of the deceased together form the estate for the descendants or other blood relatives. The surviving spouse is also entitled to a share of this estate.

 

 

Difference between personal property and jointly acquired property

 

In a marriage, a differentiation is made between personal property and property acquired jointly by both spouses.

 

Personal property includes:

  • Personal items
  • Assets brought into the marriage by one of the spouses
  • Gifts, inheritances and inheritance advances received by one of the spouses during the marriage.

Jointly acquired property includes:

  • Savings from income, pensions, compensation for incapacity to work or investment income.
  • Income from personal property (bank, rental income from real estate, etc.)

How a marriage contract can reduce the statutory shares

If you are married and have children, the statutory share for all children amounts to three-eighths of the estate. A marriage contract allows you to reduce this statutory share and increase your spouse’s share. This contract allows you to stipulate that your spouse will inherit all jointly acquired property in the event of your death. Because many couples accrue their assets during the marriage, there is not much left over for other heirs.

 

Good to know: If spouses have children from previous marriages, things become more complicated. You cannot reduce their statutory shares with a marriage contract. Talk to a legal expert in order to find a fair solution.

 

 

 

Inheritance in a partnership without or without a contract

 

Swiss inheritance law does not recognise unmarried couples. If one partner dies, the surviving partner is not considered a legal heir. You must have a will in order to address this situation. In a will, you can stipulate that your partner should receive one-quarter of your estate and that your children should receive the statutory share.

 

Good to know: If one partner dies, children from previous relationships are also entitled to their share of the three-quarters of the estate. And if a cohabiting partner lives separately but is still married, the spouse to whom he or she is still married also receives their statutory share.

 

If you want your partner to be able to decide which jointly owned items they wish to keep before the estate is divided, you can stipulate this in a will. The division rule may state the following: “My partner, Eva M., has the right to take ownership of all furniture in our shared house, offset against her legal portion of the estate.”

 

Good to know: You have even more latitude if you prepare an inheritance contract. For example, in this contract your children may choose to forfeit part or all of their statutory share in favour of their father. An inheritance contract must be notarised and officially certified. Your children may only sign it if they have reached the age of majority.

 

 

Other ways to provide for your partner

Inheritance law does not govern the situation for unmarried couples. This is why cohabiting partners often look for other ways to protect one another or avoid inheritance tax in case of death.

  • Some pension funds pay benefits to cohabiting partners in the event of death. Ask your pension fund about the provisions and whether you need to take certain precautions. For example, many pension funds require you to submit a beneficiary declaration.
  • If you are unmarried and your partner must care for your joint children after your death, he or she will receive your pillar 3a assets. Make sure that your provider is notified in the event of your death so that your partner receives all of the assets.  
  • If you have young children, your partner will only be able to work part-time or not at all after your death. In this case, the funds in pillar 2 and the inheritance stipulated in your will may not be enough. You can close this financial gap by concluding personal death benefits insurance early on. The advantage is that the agreed lump-sum death benefit does not count towards the inheritance and is paid out to the surviving partner in full.

 

Good to know: In the case of combined life insurance with which you also save for retirement, the surrender value counts towards the statutory shares. If you have pillar 3b risk insurance, you can choose your own lump-sum death benefit. However, pillar 3a legally mandates which heirs are beneficiaries.

 

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