Relocating to Switzerland: What does it mean for inheritance?
New arrivals who would like to spend their retirement in Switzerland should prepare well in regard to their estate, since inheritance can be complicated after a relocation – especially in cases where assets or real estate are located in the country of origin or other foreign countries. Find out what you need to bear in mind so you can make watertight arrangements for your inheritance while you are still alive.
Inheritance taxes to be expected in Switzerland
Inheritance and gift taxes in Switzerland are under the jurisdiction of the cantons. As such, the amount of assets collected by the tax authorities after death depends primarily on the canton of residence. However, the degree of relationship between the testator and their heirs also has a major influence on the tax burden. Nonrelatives can pay as much as 49.5% in tax. Spouses and registered partners, by contrast, are exempt from inheritance taxes in every canton, and a majority of cantons grant this exemption to direct descendants such as children and grandchildren as well. The cantons of Schwyz and Obwalden have abolished gift and inheritance taxes entirely.
Which country's inheritance law applies after relocation to Switzerland?
Every country regulates international jurisdictions and the applicable law for the devolution of an estate independently. The Swiss Private International Law Act (PILA), for example, assigns jurisdiction to the authorities at the last place of residence of the deceased and declares that the law of Switzerland applies in principle.
This means that, if the last place of residence is in Switzerland, Swiss inheritance law applies to the estate accordingly. Foreign nationals, however, have the option of making the disposal of their estate subject to the law of their country of origin. In order to do so, they must specify that the estate will be subject to the law of their country of origin in a last will, testament, or inheritance contract.
This option is currently only available for individuals who do not also hold Swiss citizenship, but this restriction is expected to be lifted under the planned revision of the PILA. That said, cases involving an estate to be opened in Switzerland that is to be processed in accordance with foreign inheritance law can be complicated. Private international law of the other country must also be taken into consideration in this context. In cases of cross-border inheritances pertaining to EU Member States (with the exception of Ireland and Denmark), it may be necessary to consult the European Succession Regulation, which harmonized the private international law of these countries and introduced uniform rules regarding jurisdiction and applicable law.
What do married testators need to keep in mind?
Under the Swiss PILA, if the spouses have not concluded a marriage contract, Swiss marital property law applies automatically upon relocation to Switzerland – and even retroactively to the time of the marriage. In this event, the statutory marital property regime of sharing of acquired property will apply for the full duration of the marriage. This means that property acquired during the marriage will be divided equally upon dissolution of the marital property regime. The estate consists of the deceased's share of this property in combination with their own property.
If the marital assets and estate are to be divided differently, this must be set out in writing in a marriage contract, last will, or inheritance contract. If these documents are drawn up before relocating to Switzerland but are still to apply, it is essential to check that they will continue to be valid at the new place of residence and to ensure that they can be enforced in the event of death.
Plan inheritance carefully after relocating to Switzerland
In the event that any personal assets, such as bank deposits, securities, movable property, or real estate still remain in a foreign country, the provisions of inheritance law in each country in which such assets are located must be taken into consideration. If the inheritance authorities of at least one other country besides Switzerland believe they hold jurisdiction, a conflict of jurisdiction will result.
In the event of disputes between heirs, this can lead to so-called forum running, in which heirs attempt to bring the inheritance before the domestic or foreign court that is more favorable for them as quickly as possible. This is due to the fact that once a suit has been brought before a court with jurisdiction, other courts will usually refuse to take up the case at a later date. In order to prevent any complications for the estate, it is advisable to have plans reviewed by specialists while they are being prepared.
Take care of your estate as early as possible
Passing on your assets is often a matter of immense personal importance. As such, it is all the more important to ensure that the right people inherit. To do so, however, it is important to carry out sound estate planning as early as possible. Ensuring that your succession arrangements are as legally watertight as possible means that, in most cases, you can minimize or eliminate the risk of conflicts when your estate is divided.
The experts at Credit Suisse will provide you with support at every stage of the process to find the optimal solution for your individual situation. This will ensure that your legacy is preserved and you can enjoy your retirement without worry.