What are the differences between marriage and cohabitation?
Claims to pensions and an inheritance from spouses are governed by comprehensive legal regulations. Yet, there is no legal foundation for people living together without a marriage certificate. Cohabiting couples can reach agreement on many things, but not everything, so that they have nearly the same status as married couples.
Marriage is comprehensively governed in the Swiss Civil Code as part of family law. Even though cohabitation is quite common, there is no legal basis for couples who live together but are not married. For that reason, courts usually refer to the provisions of simple partnerships and law of mandates. However, there is one problem: The provisions are not intended to regulate how two people live together. For that reason, it's a good idea for cohabiting couples to conclude a cohabiting partner contract.
Differences in the First Pillar of State Pensions
Married couples benefit from one another's contributions when it comes to AHV retirement pensions. Thanks to contribution splitting, the partner who earns less receives a higher pension. However, married couples receive no more than one and a half times the maximum single person's pension.
If one person dies, the other one receives a surviving spouse's pension. Even divorced individuals are entitled to an AHV pension under certain conditions.
- Women receive a widow's pension if, upon the death of their spouse, they have at least one child or are over the age of 45 and were married for at least five years.
- Men receive a widower's pension, provided they have children younger than 18.
Federal Old Age and Survivors' Insurance does not provide benefits for cohabiting couples. If one cohabiting partner is employed and the other is not, the partner who does not work does not benefit from the contributions of the one who does. Furthermore, unlike married couples, they are not able to receive up to one and a half times the maximum retirement pension for a single person. In the event of one person's death, the surviving partner also cannot claim any benefits.
Differences in the Second Pillar of Employee Benefits (Pension Fund)
When one person dies, the surviving spouse receives either a widow's or a widower's pension under the following conditions:
- The surviving spouse has dependent children.
- The surviving spouse is over the age of 45, and the couple was married for at least five years.
Even divorced couples are entitled to pensions from the pension fund under certain conditions. Once the couple is divorced, their retirement savings are divided up.
Cohabiting partners accumulate their employee benefits independently of one another. Upon the death of one partner, the pension foundation can pay benefits to the survivor, but it is not required to. The respective pension foundation's pension fund regulations are the deciding factor. If the couple separates, then their accrued assets are not divided up as is the case with married couples.
Differences in Vested Benefits
Those who temporarily or permanently do not join a pension fund can manage their accrued assets in a vested benefits account. When a married person with a vested benefits account dies, the money goes to the spouse first. Other possible beneficiaries include orphaned children, foster children, and former spouses. Cohabiting partners may receive a limited share of the inheritance.
Differences in the Third Pillar of Private Pensions
In the event of divorce, the spouse can insist on splitting the Pillar 3a assets, provided the couple has not agreed on separation of property and the money does not consist of savings accumulated or inheritances received before they got married.
When one spouse dies, the funds in the tied pension provision go to the beneficiaries prescribed by law. They are as follows:
- Spouse or registered partner
- a) Direct descendants of and natural persons who received considerable support from the deceased
b) Individuals who had a continuous domestic partnership with the deceased for the five years prior to his or her death
c) The person required to provide for one or more children had together by the couple
- Other heirs
When a person dies, cohabiting partners and children of the deceased are second in line in the order of beneficiaries. Any spouses or registered partners are first to receive their inheritance. As stated under section 2, though, the account holder can specify the beneficiaries and their share of the inheritance in detail. Please ask your insurance provider or bank for the necessary forms.
Whenever cohabiting partners go their separate ways, the money stays with the owner in its entirety.
Assets from Pillar 3b are treated like other assets from the standpoint of marital and inheritance law. The remaining assets, except for insurance policies, are divided up among the individuals entitled to an inheritance in accordance with inheritance law and, in the case of married individuals, according to marital property law. Individuals with flexible pension provision insurance policies are free to choose their beneficiaries. In such cases, the policy's terms and conditions determine who can be named as a beneficiary.
Differences in Estate Planning
Marital property law takes precedence when one spouse of a married couple dies. Unless the couple has a marriage contract, the principle of sharing acquired property applies. The marital assets consist of each spouse's own property and the acquired property. The surviving spouse receives his or her own property, plus half of the acquired property, with the remainder becoming part of the estate. The surviving individual is entitled to receive an inheritance from the estate. In other words, spouses benefit twice when the marital assets are distributed.
Surviving cohabiting partners are deemed to be "no relation" and therefore not legal heirs. If they are to be named as beneficiaries, that must be done in a testament or inheritance contract. However, it may not always be possible to bequeath the entire estate to them on account of heirs entitled to a compulsory portion of the estate. That is the only way to avoid disputes with the legal heirs (such as children of the deceased person).
Differences in Taxes
The earnings and assets of married couples are counted together for purposes of income and wealth taxes. That leads to a higher tax burden for married couples with two incomes, especially when it comes to federal taxes.
Cohabiting couples are taxed individually.
Married couples are at an advantage in dealing with inheritances and gifts. That is because they are tax-exempt in every canton. Inheritances and gifts to cohabiting partners are always subject to inheritance and gift taxes. Individual cantons provide for privileged taxation.