Inheriting a property involves important decisions and requires comprehensive knowledge and careful planning. The complexity of inheritance law, combined with tax challenges and a lack of knowledge, can make this process difficult. From the legal framework to the tax consequences – we offer you an insight into the complex world of real estate inheritance.
Legal aspects and succession
Swiss inheritance law sets out the principles of succession as well as the rights of heirs and the distribution of the estate. It provides a legal framework, as only a minority of people think about what should happen to their possessions after their death. Accordingly, many rely on the applicable laws without knowing them or understanding their consequences.
If no will or inheritance contract has been drawn up, the estate is distributed in accordance with the applicable law, which is not necessarily compatible with the testator’s personal wishes. Statutory succession ignores modern family constellations and only considers blood relatives and spouses as heirs, while cohabiting partners and stepchildren in particular are left empty-handed. It is also important to understand the statutory distribution by means of compulsory portions, which can only be partially changed in a will.
Without a will, spouses and descendants are each entitled to 50% of the estate. With a will, these compulsory portions can each be reduced to up to 25 %, with the remaining 50 % being freely distributable.
As with the sale of a property, its market value also plays an important role for inheritance and gift taxes. These taxes are levied by the cantons and vary depending on the place of residence or location of the property. In most cantons, the tax on inheritances depends on the value and the degree of kinship. Generally speaking, spouses are completely exempt from these taxes and direct descendants only pay taxes in a few cantons.
As cantons generally do not differentiate between inheritances and gifts when it comes to taxes, the more distantly the heirs are related to the deceased, the higher the inheritance tax will be. In order to minimize the tax burden on the heirs, there are a number of options available to you, from advance inheritance payments to gifts with reservation of usufruct. A detailed consultation is essential to be prepared for the future and to ensure that your wishes are taken into account.
Strategies for the transfer of real estate
When handing over real estate to future heirs, a careful strategy is essential to overcome legal, financial and emotional challenges. Communicate clearly with potential heirs and create transparency about your wishes and expectations. The transfer of property during one’s lifetime can take various forms, with each option having its own advantages and disadvantages and should be weighed up in the light of individual family and financial circumstances.
Sale below market value
The transfer of a property below market value, with the agreement that the difference will be taken into account later in the inheritance. This option is particularly attractive if there are only a few potential heirs, as there may be an equalization obligation if there are several. However, this compensation obligation can be circumvented with an additional assignment agreement.
Gift / advance withdrawal of inheritance
When a property is donated, it is transferred to the heirs free of charge. A corresponding agreement can stipulate that the gifted value is not to be offset against the inheritance share upon death, so that there is no obligation to compensate other heirs. However, care must be taken to ensure that mandatory portions are not violated or exceeded.
Gift with right of residence / usufruct
If the testator wishes to give a property to his heirs as a gift but still wishes to live in it himself, a lifelong usufruct can be agreed in addition to the gift. This means that ownership of the property has already been transferred to the heirs, but ownership remains with the deceased until death.
Strategies for the transfer of real estate
Inheriting real estate is a complex undertaking that requires both in-depth knowledge and forward planning in order to achieve a fair and smooth transfer of the property. Owners have the option of making arrangements for the transfer of real estate during their lifetime through advance withdrawals or gifts. This and clear communication can help to avoid conflicts between heirs and optimize the tax burden. Given the complexity and potential impact of your decisions, it is advisable to turn to experts for competent advice.
All data are without guarantee. The information on these Internet pages has been carefully researched. Nevertheless, no liability can be assumed for the accuracy of the information provided.