A revision to the law of succession: increased self-determination regarding your estate
The anticipated revision to the Swiss law of succession promises increased self-determination regarding your estate. The current law of succession came into force around 100 years ago and is no longer fit for purpose. We explore the legislative changes planned by the federal government.
A revision to the law of succession: A new succession law for Switzerland
As the Swiss law of succession is no longer suited to current family and living situations, the federal government is planning to revise it. The intention is to take modern forms of cohabitation into account in the future, including patchwork families and de facto life partners. The revision will also focus on giving testators more freedom when planning their estates. The changes are in two stages; one stage will lower compulsory portions, the other will deal with technical points such as simplifying succession management for family-run businesses.
Message I: Reducing the compulsory portions for inheritance increases self-determination
Currently, a large proportion of what you leave behind necessarily goes to your family when you die because the law sometimes dictates high compulsory portions. In the first message to the Federal Assembly, the Federal Council advised reducing the compulsory portion inherited by children. Children currently receive three-quarters of the legal inheritance entitlement, but the recommendation is for this entitlement to halve. The parents of the deceased will lose their inheritance entitlements altogether. However, the compulsory portion of the inheritance for spouses and registered partners will remain at half of the statutory share of inheritance.
Couples who are neither married nor living in a registered partnership – also known as de facto life partners – have no claim to inheritance under the current law and this will not change. De facto life partners must continue to actively manage the devolution of their estate to ensure that their partner is a beneficiary. The new inheritance law is only intended to create a legal support claim in cases of hardship. However, the Federal Council advises that this should only apply if the de facto life partner is in financial hardship after the death of their partner. Overall, the new succession law would lead to a higher freely disposable portion and thus more freedom for testators. As a result, testators would be able to leave more of their estate to a specific beneficiary, such as de facto life partners or children from previous marriages.
Existing wills and inheritance contracts remain valid, which may lead to sensitive issues in individual cases; particularly where certain phrases in the estate planning suggest that the testator would have mandated differently as a result of the revision to the law. The revision being discussed offers the opportunity to reconsider – and, with majority approval – adapt existing estate planning.
Message II: Simplified succession management thanks to new law of succession in Switzerland
The current law of succession means that family-run companies often have to be broken up when the owner dies. Successors often have to pay high sums as a result of dividing the inheritance protected by compulsory portion law, which can endanger the future of the company.
In a second message, the Federal Council wanted to incorporate various technical points that would lead to clarifications regarding estate planning and the division of inheritance for family-run businesses.
A revision to the law of succession: The current situation and what happens next
In the first step of the revision process, the Federal Council submitted Message I to parliament in August 2018. The Council of States discussed the issue in the 2019 autumn session. The National Council is expected to address Message I in the upcoming spring session. In a next step, the Federal Council opened a consultation process on simplifying corporate succession from April to August 2019 (media release). Message II is expected to provide a proposal regarding corporate succession and various technical points in 2020. The changes to the legislation are not expected to come into force before 2021.