Until now, one thing inheritance law is clear on is that family ties are unshakable – regardless of how “connected” next of kin are in their lifetime. The law provides for the majority of the decedent’s estate to pass to family members. This should continue in the future, but with more freedom.
Greater freedom to act
With more leeway called for, current revisions to inheritance law are designed to give testators more freedom to define the beneficiaries of their estate. This marks an important milestone for the revision of inheritance law.
The Federal Council submitted the dispatch and draft law to Parliament on 29 August 2018. It is now up to Parliament to take the process forwards. In any case, we are one step closer to a modernized inheritance law with lower compulsory inheritance shares, as first demanded in Gutzwiller’s motion in 2010.
The Federal Council deems the following changes to be necessary:
- The compulsory share for descendants is to be reduced by a quarter (1/2 instead of 3/4 of the legal estate).
- The compulsory share for parents is to be abolished (the compulsory share for spouses and registered partners remains unchanged, however).
- In cases of hardship, de facto life partners should have a maintenance claim at subsistence level.
- If a divorce was ongoing at the time of death, the (still) spouse loses its claim to the compulsory share. This applies mutatis mutandis for registered partnerships in the process of being dissolved.
- The new law addresses previously open questions about the calculation of the estate.
- Testators have more freedom to define the beneficiaries of their estate.
- The compulsory inheritance share provided by law for spouses and registered partners remains unchanged.
- De facto life partners have a claim to maintenance in certain circumstances following the death of their partner, e.g. if during cohabitation they ran the household, or cared for children or other family members in place of gainful employment. This is a new instrument intended to safeguard a subsistence level and avoid the need to draw welfare benefits, but not to offer financial gains beyond this.
- Once divorce proceedings have been initiated, spouses lose their claim to a compulsory inheritance share, provided the spouses filed jointly for divorce or have lived separately for at least two years. The same applies during the process to dissolve a registered partnership. This should prevent delaying tactics in open proceedings.
- Tied private pension schemes (Pillar 3a) are not included in the estate, but may be drawn upon if compulsory shares are not honored. Excluded from the estate are preferential arrangements in a marriage agreement under matrimonial property regimes for surviving spouses/registered partners; they may be drawn upon if compulsory shares are not honored. These amendments address the previously open questions on how to calculate the estate.
- The usufruct provision (Swiss Civil Code 473), often availed of by testators to allow a surviving spouse to use assets due to be inherited by their joint offspring, will also be adapted in line with new legal provisions on compulsory shares. Besides usufruct, testators can now leave half of their estate to their spouse, for example.
The inheritance law currently in force dates back to 1912. It needs to be updated to reflect major changes in family life, including the emergence of patchwork families and de facto life partnerships. Testators are also now often older when they die, and the social security of heirs is higher than in the past. Overall, then, inheritance law needs to be modernized and more flexible, which would also benefit succession planning in family businesses.