Inheritance Plan with Residential Property: It's Better to Plan Early than to Argue Later

3.9.2020
  1. Plan your inheritance at an early stage
  2. Inheritance plan: This is what the law regulates
  3. Inheritance plan: You take care of this yourself
  4. Inheritance contract, marriage contract or testament?
  5. What belongs in the inheritance contract?
  6. Inheritance plan in a concubinage
  7. The inheritance community
  8. Who inherits the house without a contract of inheritance or a testament?
  9. The five-point plan for your inheritance plan
  10. Who inherits if you have no descendants?
  11. Who inherits if no inheritors can be found?

In a study, the ZHAW Zurich University of Applied Sciences, the Federal Office of Housing BWO and the Swiss Homeowners Association investigated whether parents want to bequeath their residential property to their children. 71 percent want to do so on average, even three out of four if they associate many memories with the house or flat. However, the willingness decreases with the number of children: 77 percent of parents with only one child want to bequeath their home ownership, but only 60 percent of homeowners with three or more children. Probably because they fear that a division of the inheritance could lead to quarrels among the siblings.

Plan your inheritance at an early stage

If you have more than one child and a partner, you should plan your inheritance much earlier than much later. Inheritance division with residential property is difficult. On the one hand, because you can only bequeath a single-family house to one inheritor, for example. On the other hand, because heirs often cannot agree on the value of a property. So talk to your partner and the children and find out what they want. According to a ZHAW study, only one third of children want to inherit their parents' residential property. Among other reasons, because they already own a house or a flat, the property is not located where they work, or they could not pay off the other heirs.

Inheritance plan: This is what the law regulates

Inheritance law prescribes compulsory shares for close relatives. For example, if you want to benefit your wife or husband to the maximum with a marriage contract, inheritance contract or will, you may not violate the compulsory portions of your children. Your daughter or son is entitled to three quarters of the legally defined inheritance share. It is often difficult to determine and calculate the inheritance because the value depends on the parents' good status and the origin of the funds before and during their marriage. Good advice is not expensive, but valuable. That is why you should talk to a lawyer or notary to make sure that your last will and testament does not disadvantage anyone, meets all the requirements and is legally valid.

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Inheritance plan: You take care of this yourself

Inheritance law gives you great leeway. As long as you do not violate anyone's compulsory portion, you can regulate your estate as you wish with an inheritance contract, marriage contract or will. For example, you can grant your wife or husband the usufructuary right to the house you live in together. This way she or he can continue to live in the house after your death and does not have to pay the other heirs their share under inheritance law. You can clearly regulate who inherits what and avoid disputes between the heirs. Because you can do a lot of things right and wrong individually, you should definitely seek advice from a lawyer or notary before drawing up a contract of inheritance, a marriage contract or a will.

Inheritance Plan with Home Ownership
Think about your inheritance early on and save your descendants a lot of discussions.

Inheritance contract, marriage contract or testament?

  • With an inheritance contract, you can regulate the estate the way you want. Without having to comply with statutory compulsory portions and other provisions. That is why everyone must agree to it and publicly certify the inheritance contract.
  • With a marriage contract, you can give your wife or husband maximum benefits and grant her or him, for example, the right to use the residential property. This written contract between spouses must be notarised.
  • With a testament, you can regulate your inheritance individually, but you must abide by all compulsory share claims. You can write the will yourself by hand, date and sign it or have it publicly certified by a notary in front of two witnesses.

What belongs in the inheritance contract?

The most flexible way to settle your estate is with an inheritance contract. Among other things, you can specify who inherits if you die before your partner, your partner dies before you or you and your partner die at the same time. In addition, you can make third parties beneficiaries or define special conditions that your heirs must fulfil. A simple example of an inheritance contract if you and your partner want to benefit each other to the maximum:

  1. This inheritance contract cancels all previous dispositions by reason of death.
  2. The living wife or husband receives the compulsory portion and the entire freely disposable quota in property.
  3. The living wife, the surviving husband, takes over the property Beispielstrasse 21 in Musterhausen in sole ownership, including all mortgages, against her or his claims under the law of property and inheritance.
  4. After the death of both spouses, the remaining assets shall be divided equally between the descendants of the wife and the husband. The surviving wife or husband may change the provisions on succession on his or her side during his or her lifetime by means of a testamentary disposition.

Houzy Advice

Good to know

If one party wishes to amend or dissolve the inheritance contract, all parties must agree. In the case of a pure inheritance contract, all inheritors protected by the compulsory portion must also agree.

Inheritance plan in a concubinage

Because inheritance law does not regulate cohabitation, civil partners without a marriage certificate have no legal inheritance entitlement. How long the couple has lived together is irrelevant. Couples who want the other person to inherit anyway need a will or, even better, an inheritance contract. With the contract, for example, the adult children can grant the surviving partner the right to use the jointly inhabited house and at the same time waive their share of the inheritance.

The inheritance community

The inheritors form an inheritance community. Your partner and your children own the inheritance jointly and make decisions together. For example, about selling the house or renting the flat, renovations and refurbishments or extending the mortgage. This sometimes leads to disputes. If you appoint an executor, you save the heirs trouble.

Inheritance Plan with Inheritance Community
It is best to talk to a lawyer or notary about your wishes and how to plan the estate sensibly.

Who inherits the house without a contract of inheritance or a testament?

The inheritance community. The inheritors may, for example, sell the house or flat and divide the proceeds of the sale according to the inheritance quota. The living partner may claim the property for himself or herself and have it credited to his or her share of the inheritance. However, he or she must buy the house or flat out of the inheritance and compensate all inheritors financially. If he or she cannot afford this, he or she can demand the right of use or the right of residence. Foresighted testators take this into account in their inheritance plan.

The five-point plan for your inheritance plan

HEV Switzerland has developed a five-point plan to ensure that you as a homeowner do not forget anything in your estate planning:

1. Record the current situation. This means the family background, the matrimonial property regime, any estate plans such as a marriage contract, inheritance contract or will, as well as a list of all assets, gifts and inheritance preferences.

2. Determine the inheritance. For married couples, this means a property law dispute, i.e. the division of the assets brought into the marriage or acquired during the marriage between the wife and the husband.

  • The share in the acquired property applies unless the couple has agreed otherwise. The wife and husband separate their assets and remain the owners of all assets they brought into the marriage and inherited or received as gifts during the marriage. In contrast, the assets they have jointly generated during the marriage are divided 50:50 in the event of inheritance.
  • The community of property requires a marriage contract. In community of property, a distinction is made between the wife's and husband's personal property and the total property of the couple. The joint property includes income and assets that are not included in the personal property either by law or by the marriage contract. It belongs to both and is divided 50:50 in the event of inheritance.
  • The separation of property also requires a marriage contract. The spouses are and remain the owners of their property and do not acquire any joint property. If the wife dies, her property is divided; if the husband dies, his property is divided. The goods of the other are not touched.

3. Determine the inheritors. The easiest way is to act out what happens if you die without an inheritance contract or will. Who inherits, who is protected by compulsory shares, how high are the compulsory shares? Inheritance law divides blood relatives into three so-called tribes:

  • First stem = descendants of the deceased and all those who are descended from them
  • Second stem = parents of the testator and all who are descended from them
  • Third stem = grandparents of the testator and all who are descended from them

Houzy Advice

Good to know

Living wives or husbands and living registered partners have equal rights before the law and are entitled to inheritance like blood relatives.

4. Initiate the measures. Make an appointment with a lawyer or notary and discuss your options. You can ...

  • ... draw up a will and favour individual inheritors without violating the compulsory portions of the other heirs,
  • ... draw up a marriage contract and grant your spouse maximum benefits or the right to use the jointly occupied house, or
  • ... draw up a contract of inheritance and distribute your inheritance without regard to compulsory portion claims and other provisions.

5. Appoint an executor. An executor makes sense if the distribution of the estate could become complex. He or she administers the inheritance, pays the debts, settles all legacies and distributes the inheritance in accordance with your last will or the legal requirements. Any natural or legal person can take on the task, but it makes sense not to appoint an executor because of the risk of conflicts of interest. The executor is appointed in the will or in a unilateral testamentary disposition in the contract of inheritance. The appointment can be revoked or changed at any time.

Inheritance Plan in the Family
When the inheritance is settled, you have more time for important things, for example your family.

Who inherits if you have no descendants?

Your partner. If you are single and have no children, you will inherit according to the tribal order (see "Determining inheritors"). First your parents and all those descended from them inherit (2nd stem), then your grandparents and all those descended from them (3rd stem).

Who inherits if no inheritors can be found?

As a rule, the authorities issue a call for heirs, for example in the official gazette or in newspapers, possibly also abroad. If no one comes forward within a year, the estate goes to the canton or commune where the deceased last lived. At the moment, an initiative is pending in the Council of States that wants to halve this notification period to 6 months. Inheritors have 10 years to assert their claim for restitution if they have missed the deadline.

Do you have further questions about inheritance or other topics relating to your own home? In the Houzy Community Forum you can easily exchange ideas with other homeowners and experts:

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