Swiss inheritance law to be modernised
The increase in life expectancy and the decrease in gender inequality have shaped peoples’ living arrangements and family relationships. The traditional nuclear family, with a married couple at its core, has increasingly been replaced by cohabitation and single-parent or patchwork families.
In spite of this, Swiss inheritance law has changed little since its inception in 1912. The rules that determine how an estate may be divided are still based on the concept of the family which prevailed at the time.
Therefore, if a person dies without a will, the estate is divided depending on the family’s structure.
If the deceased is married and has children, the spouse inherits one half of the estate and the children the other half. If the deceased is single or widowed, their children inherit the entire estate.
If they are married but have no children, their spouse inherits the entire estate or three-quarters if the deceased's parents are still alive. If the deceased has no spouse or children, the parents inherit.
If, on the other hand, the deceased had a cohabitation, the latter has no entitlement to a share of the estate, regardless of how long they and the deceased lived together.
In a will, an individual may deviate from the rules governing how an estate may be divided to favour one of their heirs or to bequeath part of assets to other family members, persons not related to them or institutions. However, the law limits the scope for doing so. Certain heirs must receive a share of the inheritance that may not be reduced.
This compulsory fraction of the inheritance right is known as the forced heirship. Once allocated, the remainder of the estate – the disposable share – may be distributed without restriction.
As the law stands, the protected heirs are the deceased’s descendants, their spouse and their parents if there are no descendants. The forced heirship for descendants is three-quarters of the estate, half for the deceased’s spouse and half for their parents.
For example, a married person with children can freely dispose of three eighths of their estate because the forced heirship for their spouse is one quarter and that for their children is three eighths. A single person or a widower with children may dispose of one quarter of their estate, with three quarters going to their children.
A married person without children may dispose of half of their estate, with the other half going to their spouse and parents if they are still alive.
Aware that these rules no longer reflect the wishes of many people, last December the Swiss Parliament defined new rules.
The forced heirship for descendants will be reduced from three quarters of the estate to half, and the forced heirship for the father and mother will be abolished. The spouse's forced heirship will continue to be one half.
The new rules will give individuals greater freedom in terms of determining how to divide their estate. For example, they may choose to bequeath a larger share to a cohabitation or their children, or a person taking over a family business. Thus, a married person with children will be free to distribute half of their estate, as opposed to the current three-eighths.
However, these amendments to the law will not lead to any changes to the tax treatment of inheritance, which will remain a matter for the cantons.
Even though they may receive a larger share of an estate, heirs who are not related to the deceased will have to pay a high rate of inheritance tax in most cantons.
The new rules, which are due to take effect on 1 January 2023, will apply to all inheritance cases opened after that date, even if a will providing for a specific division of the estate was drawn up beforehand.
As the new law gives individuals greater freedom when it comes to determining how to divide their estate, existing testamentary provisions should be reviewed to ensure that they still reflect the intentions of the person who formulated them and that they are not likely to cause difficulties in the light of the new rules.