75% of Swiss residents have never made a will! On 1 January 2023, the newest changes to succession law came into force. They were designed to provide greater flexibility in the distribution of assets; the main provision provides for an increase in the disposable portion of an inheritance. That is why it is more important than ever to plan for that future transfer of assets properly. Here is an overview of succession law and the changes to it:
Legal heirs are entitled to a portion of the inheritance, with or without a will. For example, Isabelle and Gérard are married with two children. Neither of them has ever made a will and unfortunately, Gérard passes away suddenly. Isabelle therefore inherits 50% of the estate and the other 50% goes to their two children. However, with the entry into force of the new inheritance law, if a will has been made, the obligatory portion of the inheritance that goes to legal heirs is less than before.
So in the event of a will, the children's compulsory share would now be 25%, compared with 37.5% previously. In addition, the surviving spouse can no longer claim a legal share1 if, at the time of his or her spouse's death, divorce proceedings had been initiated or were pending, or if the spouses had lived apart for at least two years.
It is worth noting that certain provisions of the Swiss Civil Code relating to inheritance date back to 1907. Today's family structures and partnership patterns have clearly diverged from the dominant family model of a century ago. In addition to increased life expectancy, the number of blended families and individuals living in cohabitation are on the rise. However, the recent amendments to inheritance law do not reflect these societal changes; those cohabitating still have no legal right to an inheritance or to an annuity if no testamentary provision or inheritance agreement is made. That is why in this case, it is important for the couple to plan on their own, for example by using the options offered through the LPP (2nd pillar), the 3rd pillar or life insurance policies. It is also important to research applicable inheritance tax, which can vary from one canton to another. In fact, several cantons tax those cohabitating as non-parents (50% in the canton of Vaud, and 54.6% in Geneva when above CHF 100,000).
But regardless of the situation, it's vital to take time to consider your loved ones when making provisions for the future. This will make it easier for them to take the necessary measures during a difficult period. Because of the changes in succession law, now is the ideal time to start planning, on your own or with the help of professionals. Considering that the sum of all inheritances amounts to around CHF 90 billion every year (the GDP of Luxembourg!), it is definitely worth devoting some time to this topic!
1 It should be noted that if an individual wishes to exclude their spouse from the estate, he or she must specify such a provision in the will. Otherwise, the spouse will remain a legal heir.
