Wills and Estate Planning

Wills and estate planning in Switzerland are governed by the Swiss Civil Code, which underwent a significant revision that came into effect on January 1, 2023. This revision brought about important changes, primarily offering individuals greater flexibility in deciding how their estate will be distributed.

Here’s a comprehensive guide to wills and estate planning in Switzerland:

I. Key Principles of Swiss Inheritance Law

Swiss inheritance law is based on forced heirship rules (compulsory portions), meaning that certain close relatives are entitled to a guaranteed share of the deceased’s estate, regardless of the provisions of a will. However, the 2023 revision has reduced these compulsory portions, increasing the “freely disposable portion.”

A. Legal Order of Succession (Intestacy) If a person dies without a valid will or inheritance contract, their estate is distributed according to the legal order of succession, based on kinship:

1. Descendants (children, grandchildren): Inherit 100% of the estate if there’s no surviving spouse/registered partner. If there’s a spouse/registered partner, they share the estate (50% to spouse, 50% to descendants).
2. Parents and their Descendants (siblings, nieces, nephews): Inherit if there are no descendants of the deceased. If there’s a surviving spouse/registered partner, the spouse gets 75% and this group gets 25%.
3. Grandparents and their Descendants (uncles, aunts, cousins): Inherit if there are no heirs from the first or second parental lines. If there’s a surviving spouse/registered partner, the spouse gets 100%, excluding this group.
4. Surviving Spouse or Registered Partner: Always inherits. Their share depends on which other kinship groups are alive (as noted above).
5. Cohabiting Partners (unmarried): Have no legal claim to inheritance under Swiss law. If you wish to leave assets to an unmarried partner, you must do so via a will or inheritance contract, but their share will be subject to compulsory portions of legal heirs and potentially high inheritance taxes.
6. No Heirs: If there are no legal heirs (relatives or surviving spouse/registered partner), the entire estate goes to the canton (state) and, depending on the canton, the municipality of the deceased’s last residence.

B. Compulsory Portions (Forced Heirship) – Post-2023 Revision The 2023 revision significantly changed the compulsory portions:

• Descendants (children and their issue): The compulsory portion is now 50% of their statutory inheritance (previously 75%).
• Surviving Spouse or Registered Partner: The compulsory portion remains 50% of their statutory inheritance.
• Parents: The compulsory portion for parents has been abolished. This means if you have a spouse and/or descendants, you can now disinherit your parents entirely, or if you have no spouse or descendants, you can disinherit them to allow greater freedom of disposition.
• Freely Disposable Portion: As a result of these changes, a larger portion of your estate can now be freely disposed of by will.
  • For example, if you have a spouse and descendants, the freely disposable portion is now 50% of your entire estate (previously 37.5%).
  • If you have a spouse but no descendants, your spouse’s compulsory portion is 50% of their statutory inheritance (which is 75% of the total estate in this scenario, so 37.5% of the total estate). This leaves 62.5% of your estate as freely disposable.
  • If you have descendants but no spouse, their compulsory portion is 50% of their statutory inheritance (which is 100% of the total estate in this scenario, so 50% of the total estate). This leaves 50% of your estate as freely disposable.
  • If you have no spouse or descendants, you can dispose of 100% of your estate freely.

II. Types of Wills in Switzerland

To deviate from the statutory order of succession and utilize your freely disposable portion, you need to make a will or an inheritance contract. Swiss law recognizes three main types of wills:

1. Holographic Will (Handwritten Will):
   • Requirements: Must be entirely handwritten by the testator (the person making the will) from beginning to end. It cannot be typed. It must be dated (day, month, year) and personally signed by the testator.
   • Advantages: Simple, inexpensive, and private.
   • Disadvantages: High risk of invalidity if formal requirements are not strictly met. Content can be ambiguous or legally flawed if not drafted by a legal professional.
   • Storage: Should be stored in a safe place, ideally with a notary, a bank, or the cantonal court/authority responsible for wills.
2. Public Will (Notarial Will):
   • Requirements: Drawn up by a public official (typically a notary) in the presence of two independent witnesses. The notary drafts the document according to the testator’s instructions, and it is then signed by the testator and witnesses.
   • Advantages: Legally sound and less likely to be challenged due to formal errors, as a professional prepares it. Offers greater legal certainty.
   • Disadvantages: More expensive due to notary fees. Less private than a holographic will.
   • Registration: The will is usually placed in the Swiss Register of Testaments.
3. Oral Will (Emergency Will):
   • Requirements: Only permissible in exceptional emergency circumstances where there is an immediate threat of death (e.g., severe illness, war, natural disaster) and no time to create a written will. The testator must declare their last wishes orally to two independent witnesses. The witnesses must immediately record the instructions in writing, date it, explain the emergency circumstances, and sign it. This written document must then be submitted to a court as soon as possible.
   • Validity: This type of will is valid only for a limited period after the emergency circumstances cease.

III. Inheritance Contracts (Pacts of Succession)

An inheritance contract is a binding agreement between the testator and one or more heirs or third parties regarding the distribution of the estate.

• Requirements: Must be executed in the same formal way as a public will (i.e., drawn up by a notary in the presence of two witnesses).
• Binding Nature: Unlike a will, which can be unilaterally revoked or amended, an inheritance contract can only be amended or cancelled with the consent of all parties to the contract.
• Purpose: Often used for complex family situations, business succession, or to ensure specific heirs renounce their compulsory portions (e.g., in exchange for a lifetime gift).
• Ban on Gifts: A significant change in 2023 is that gifts made after an inheritance contract has been concluded may be contested by contracting parties if not explicitly provided for in the contract, except for occasional gifts.

IV. Estate Planning Considerations

1. International Aspects (for Foreigners in Switzerland):
   • Applicable Law: Under Swiss Private International Law (PILA), the law of the deceased’s last domicile generally governs succession. This means if you are domiciled in Switzerland, Swiss inheritance law will typically apply to your worldwide estate.
   • Choice of Law: As of January 1, 2025, significant changes to PILA come into effect, giving greater flexibility. Foreign nationals with last domicile in Switzerland can now choose to subject their estate to the law of their country of citizenship by making a declaration in their will or inheritance contract. This is a major development for expats.
   • Jurisdiction: Similarly, you may be able to choose the exclusive jurisdiction of your country of origin to rule on succession matters, excluding Swiss jurisdiction.
   • Multiple Wills: If you have assets in different countries, you might consider having multiple wills (e.g., a Swiss will and a will in your home country). It is crucial to ensure they do not revoke each other and are consistent. Professional advice is essential to avoid conflicts of law and jurisdiction.
2. Pension Funds (Pillar 2 and Pillar 3a):
   • Pillar 2 (Occupational Pension): The beneficiaries of Pillar 2 funds are usually determined by the pension fund regulations and typically do not form part of the deceased’s general estate subject to inheritance law. However, they may be taken into account when calculating compulsory portions.
   • Pillar 3a (Tied Private Pension): Assets in Pillar 3a (bank or insurance solutions) are generally paid out directly to the named beneficiaries and do not form part of the estate subject to inheritance law. However, their value may still be considered when calculating compulsory portions.
   • Pillar 3b (Flexible Private Pension): These assets may or may not be part of the estate depending on the specific insurance contract and beneficiary designation.
3. Matrimonial Property Regime:
   • How marital assets are divided upon death affects the size of the estate available for distribution. Swiss law presumes a regime of “participation in acquests” unless a marriage contract specifies otherwise (e.g., “separation of property” or “community of property”). The matrimonial property regime is settled before inheritance law applies.
4. Guardianship and Power of Attorney (Living Will):
   • Power of Attorney (Vorsorgeauftrag / Mandat pour cause d’inaptitude): Allows you to delegate decision-making authority for financial, legal, and personal care matters to a trusted person in case you become incapacitated. This is separate from a will, which deals with assets after death. It must be in writing.
   • Living Will (Patiententestament / Directives anticipées du patient): Expresses your wishes regarding medical treatment in case you cannot communicate them yourself.
5. Review and Update:
   • It is crucial to review your will and estate plan regularly, especially after major life events (marriage, divorce, birth of children, death of a beneficiary, change in assets, or changes in law like the 2023/2025 revisions).
   • If you had a will prepared before January 1, 2023, you should absolutely review it to ensure it still reflects your wishes under the new, more flexible rules.

V. Inheritance Tax in Switzerland

Swiss inheritance tax is levied at the cantonal and sometimes communal level, not federally. This means rates and exemptions vary significantly depending on:

• The Canton: Where the deceased had their last domicile (for movable assets) or where real estate is located (for immovable assets).
• Relationship to the Deceased: Direct descendants and spouses are often fully or largely exempt from inheritance tax in many cantons (e.g., Bern, Zurich do not tax spouses, children, or grandchildren). However, taxes can be very high for unrelated beneficiaries (e.g., unmarried partners, friends).
• Value of the Inheritance: Tax rates are often progressive.

Important Note for Foreigners: Double taxation treaties on inheritance tax exist with some countries (e.g., USA), which can help alleviate tax burdens where both Switzerland and another country claim the right to tax the estate.

Conclusion

Wills and estate planning in Switzerland are complex due to the country’s unique civil law traditions (forced heirship), federal structure (cantonal variations), and recent significant legal reforms. For anyone with assets in Switzerland, especially foreigners, it is highly advisable to seek professional legal advice from a Swiss lawyer or notary specializing in inheritance and international private law. This ensures that your wishes are legally sound, minimize potential disputes, and are optimized from a tax perspective, taking into account your specific personal and financial circumstances.