Real estate is often a particularly valuable component of an estate. At the same time, they are emotionally charged and may represent a livelihood for some heirs, but for others a burden – handed over by the testator. Accordingly, disputes can quickly arise when it comes to inheritance law in Switzerland.
This makes it all the more important to deal with the inheritance regulations relating to real estate and assets at an early stage. Testators should talk to their future legal heirs and set out a good solution in the will or inheritance contract. It is important to put yourself in the testator’s shoes early enough and think about the will, the assets and the inheritance contract.
In this article, you can read about the most common disputes in real estate inheritance and how these can best be resolved or even avoided from the outset – thanks to the testator. The following applies: the more precisely the testator has recorded his or her will, the easier it is to avoid conflicts.
Who inherits how much?
The most common dispute in the event of an inheritance is who inherits how much. There are often several legal heirs who all promise themselves a share of the estate. If there is no will or contract of inheritance, the statutory order of succession is observed. Succession is organized as a so-called parentel system and specifies which persons are entitled to inherit in which order.
In Switzerland, as in many other European countries, the parenteles are ordered according to the degree of kinship. Relatives of the second or third order only inherit if there are no relatives from the preceding parentel. With the third order, the legal right of inheritance of the relatives ends.
Inheritance law Switzerland – Who is entitled to inherit?
Incidentally, testators have the right to give their inheritance to the person they choose. These do not necessarily have to be relatives. However, it is important to record the preferences precisely. If the entitled heirs do not explicitly waive their inheritance, they are entitled to their compulsory portion under Swiss inheritance law despite any disinheritance.
How can advance withdrawals be structured fairly?
The so-called statutory advance withdrawal of inheritance is frequently used in Switzerland. This is a gift or the “lifetime gratuitous transfer of an asset”. If parents make such a financial contribution to their children, there is an obligation to compensate heirs of the same status in the event of death – unless this has been expressly waived.
Nevertheless, the gift must not violate the compulsory portion of the other heirs. Accordingly, it is important to consider the equalization obligation when donating the property. Otherwise, there may be unpleasant surprises, such as the heir living in the property having to sell it in order to pay the other heirs their compulsory portion.
When dividing an estate, the market value of the property at the time of death always applies. If the property has increased in value between the gift and death, the surviving beneficiary must compensate for this increase in value financially.
As an alternative to an advance inheritance, it is also possible to sell the property to one of the children at market value or opt for a mixed gift. In this way, the property remains in the family and the details are clarified before the death. The parents have the option of reserving a usufructuary right or a right of residence.
Tip: If you transfer your property to your children, there are complex tax aspects to consider. It is best to seek advice from an expert.
What to do if there is a property and several interested surviving dependants?
Whenever there are several heirs, they automatically become part of a community of heirs. This is a “compulsory community” that owns the estate as a community. This means that surviving dependants cannot dispose of parts of the inheritance on their own. They are jointly liable and must also decide jointly and unanimously.
In the case of real estate, conflicts often arise because some surviving dependants want to keep the property or live in it themselves, while others vote to sell it. First of all, it is important to know that the community of heirs also inherits the obligations, i.e. must continue to service the real estate loan, for example. Heirs are also liable for the shortcomings of other surviving dependants, namely with their private assets.
If the other surviving dependants agree that one of the heirs should buy the property, it makes sense to have the property value assessed by an expert. This allows the purchase price to be determined. The purchasing survivor then pays the other heirs their respective share as the house price.
By the way: Real estate inheritance is also subject to property gains tax. Calculate this now with our calculator:
Calculate nowIf there is a stalemate regarding the handling of the estate, the best solution is an action for distribution of the estate. This allows heirs to claim their respective share and then withdraw from the community of heirs. However, these are expensive, lengthy lawsuits, which is why they should be a last resort. Try professional mediation first.
As part of the division of an estate, the property is sometimes auctioned off by order of the court. This auction can take place internally among the surviving dependants or externally on the market. In an internal auction, there is a risk that one heir will artificially inflate the price in order to “get one over” on the other surviving heir. Auctioning on the market is therefore the better choice, but does not guarantee a good price. Ideally, the inherited property should therefore be sold by a real estate agent.
Tip: Communities of heirs can remain together for years or decades. They are always composed anew, as deceased members are replaced by their surviving dependents. As a result, they are becoming ever larger and more heterogeneous, but also more volatile. It therefore makes sense to dissolve the community of heirs at a good time – even if there are no problems.
What is the compulsory share all about?
The compulsory portion protects heirs such as spouses, children and parents. This means that even if you are not mentioned in the will, you will receive a share of the estate. The compulsory portion protection of spouses, children and parents can only be withdrawn in serious cases. If, for example, the heir has committed a serious crime against the testator or a person close to them, they can be deprived of their right to a compulsory portion under inheritance law. A possible ineligibility for a compulsory portion must therefore be specifically stated and proven by the testator.
According to the Swiss Civil Code, the compulsory portion is as follows
- For descendants such as children, grandchildren and great-grandchildren, three quarters of the statutory inheritance share in each case
- Half of the statutory inheritance share for spouses and registered partners
- Half of the statutory inheritance share for each parent
Parents are only entitled to their compulsory portion if the testator has no children.
Incidentally, the compulsory portion is structured slightly differently in Germany, for example. There, the heirs are entitled to half of their statutory inheritance share. In Switzerland, this regulation is therefore more favorable for the children, grandchildren and great-grandchildren of the deceased.
A difficult situation with the compulsory portion is that the surviving partner cannot hold the property alone, as he or she must pay the other heirs their compulsory portion from the estate. A will is one way of setting out appropriate solutions. In addition, the other heirs can waive their compulsory portion.
According to inheritance law, the amount of the surviving partner’s inheritance share also depends on which other legal heirs there are and what their relationship to the deceased was like.
The following regulations apply here according to Swiss inheritance law and inheritance:
- In addition to heirs of the 1st parentel, the surviving spouse receives half of the inheritance
- In addition to heirs of the 2nd parentel, the surviving spouse receives three quarters of the inheritance
- If there are no descendants of the parental parent, the surviving spouse receives the entire inheritance
Note: In Germany, it is possible to make the surviving spouse the sole heir in a Berlin will. Only if the surviving person – in this case the spouse – also dies do the other beneficiaries inherit. This can also be reinforced by a penalty clause. Swiss inheritance law, on the other hand, only recognizes individual wills and inheritance contracts, which is why joint wills by spouses or registered partners are unfortunately not valid.
How can it be guaranteed that the surviving partner can continue to live in the property?
It often happens that the property has been rented out, for example to one’s own children, and that the tenants do not want to move out after the death of a spouse. At the same time, this property is often the only way for the surviving spouse to continue living at a reasonable price.
It makes sense to agree a usufruct at an early stage. Early estate planning makes it possible to eliminate precisely this risk. Therefore, talk to your children or other people who use the property in question. This also applies to advance withdrawals.
The right to usufruct is only valid if there is a publicly notarized agreement. It must also be entered in the land register. The entry can be made instead of a gift. This means that the beneficiary may enjoy the benefits of the property, but does not become the property owner.
In other cases, it makes sense to transfer the property to the children before the death. This means that the surviving spouse is not forced to sell the house to pay for care and nursing home costs. As he no longer has any ownership rights to the property, everything financial has already been settled before the death.
Real estate inheritance is a complex matter that can often lead to inheritance disputes about the property, real estate transfer tax or the compulsory portion. We would be happy to advise you on inheritance law in Switzerland and the best way to deal with an inherited property – contact us here to arrange a consultation!
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