In my recent article “7 things you need to know about Swiss inheritance law”, I promised I would cover the subject of the amendments to the Swiss federal law on inheritance.
Please note that because of the complexity of Swiss federal inheritance law, this article is not exhaustive regarding the amendments and consulting a lawyer or a notary is strongly recommended.
What will change in Swiss inheritance law in 2023
As of 1st January, 2023, the amendments of Swiss inheritance law will become effective.
According to the Swiss federal international private law rules concerning inheritance, as a foreigner, unless there is a specific convention concerning inheritance between your home country and Switzerland, you have the choice of making your will governed by the laws of your home country or the laws of Switzerland.
The authorities of the country of your last domicile, at the time of your demise, will in principle be competent for the execution of your will.
The Swiss Federal Assembly voted in favour of a larger liberty of decision over one’s assets.
In principle, these changes will normally apply to your inheritance if you are a Swiss citizen living abroad who has chosen Swiss law for your inheritance or a foreigner living in Switzerland and you have not chosen the law of your nationality.
If you have already prepared a will, we advise you to consult your notary or lawyer to make any necessary amendments to your will, if needed.
It will be the date of your demise which will determine whether the current inheritance law or the new inheritance law applies to your will.
To avoid disputes between legal heirs and heirs as to whether the testator had knowledge of the changes in the inheritance law, it is recommended to update one’s will after 2023, to clear all doubts.
Definition of Legal heirs
The compulsory reserve is the part of your inheritance that must be provided imperatively to your legal heirs i.e. your wife/husband/registered partner (referred to in this article as “Partner”), and/or your child or children (referred to in this article as “Descendants”). Your parents are your legal heirs only if you have no children. Your siblings are never your legal heirs.
From 1st January 2023, your parents will no longer have legal entitlement to a compulsory reserve.
Greater freedom of disposition by will
From 1st January, 2023, under Swiss inheritance law, you shall have a greater liberty of choice over the disposal of your assets in your will.
Today, in your will, if you have a Partner and Descendants, the compulsory reserve is of 5/8th of your assets and you can dispose freely of 3/8th of your assets.
From 1st January, 2023, the compulsory reserve of all your heirs will only be of half of your estate.
Practically, it means that your Partner will be entitled to a reserve of at least 37.5 percent of your assets if he/she inherits alone, and to one quarter if you have Descendants.
Alternatively, your Descendants will be entitled to at least one half of your assets if they inherit alone, and to one quarter if your Partner is still alive.
Attributing the “right of usufruct” to your surviving Partner
Usufruct is the right to use and benefit from a property, the ownership of which belongs to another person. The person who enjoys the usufruct is called the usufructuary.
The usufruct can be granted to the Partner on all the inheritance of the common Descendants. This usufruct is taken into account in the calculation of the compulsory reserve to which the Partner is legally entitled. This does not change under the new law.
The only thing which does change is the proportion of the compulsory reserve to which the Partner is entitled, as explained in the previous paragraph.
Currently, the right of usufruct on the common Descendants’ inheritance ends if the surviving Partner remarries. Under the new law, this is also the case if the Partner enters into a registered partnership.
Filing for divorce will possibly exclude your spouse from your inheritance
The new law provides that, unless the contrary is specifically mentioned, the dispositions of your will are going to cease to apply to your Partner if you filed for an amicable divorce or lived separated for at least two years on the date of your demise.
The same applies by analogy to the dissolution of a partnership.
Action in recovery of the inheritance due (“Action en reduction”)
If you are entitled by law to a compulsory reserve and do not receive the corresponding amount at the time of the distribution of the inheritance, you may file a lawsuit to recover the amount of your compulsory reserve.
Currently, the law does not provide in which order of priority the amounts distributed can be reclaimed.
The new law provides that the legal heirs who have been “deprived” of their compulsory reserve can exercise their “action en reduction” by following a certain order of priority, e.g. by claiming back from people who received gifts just before the death of the deceased.
This article was prepared by Renuka Cavadini of Page & Partners.
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