- 1 Basic principles of inheritance in Switzerland
- 2 Recognition of foreign decisions
- 3 Swiss private international law
- 4 Swiss forced heirship entitlements
- 5 Intestacy
- 6 Formal procedures for making a wil
- 7 To what extent are foreign wills recognised?
- 8 Estate administration in Switzerland
- 9 Distribution of the estate
- 10 Settlement of the decedent’s debt
- 11 Steps that executors must take
- 12 Inheritance and lifetime gifts tax
- 13 Using a certificate of inheritance to succeed assets
- 14 Conclusion
Basic principles of inheritance in Switzerland
The Swiss inheritance system is based on the principle of unity of succession. In other hands, the estate probated at the decedent’s domicile covers his assets worldwide. This means that Swiss authorities do not legally need to interfere with an estate probated abroad, even if there are Swiss assets involved, except in exceptional cases. Therefore, if a Japanese national was domiciled in Japan when they passed away, and owned Swiss assets, Japanese law would apply.
Recognition of foreign decisions
Following Article 96 of the International Private Law Act, foreign decisions, measures and documents concerning an estate probated abroad will be recognized in Switzerland, in particular if they were rendered in the domicile country of the decedent.
This would apply to a grant of probate issued by a Japanese court. Consequently, a Japanese executor validly appointed under Japanese law will be able to act in Switzerland and deal with Swiss assets included in the estate. It is therefore not necessary for a judicial procedure to verify the powers of the executor in Switzerland.
Swiss private international law
Swiss private international law dictates that the law of the state in which the decedent was last domiciled is applicable to the estate of the foreigner decedent.
In the case of a Japanese national domiciled in Japan, the transfer of Swiss assets will be governed by Japanese private international law. Therefore Japanese law will be applied for movable assets, and Swiss law will be applied for immovable assets located in Switzerland. Swiss forced heirship rules will therefore be applied to Swiss immovable assets. According to these rules, the testator must leave a certain proportion of his estate to his children or spouse, or to other relatives that the law dictates. However, it is possible for the testator to avoid the application of these rules by stating in his will that he wishes for his national law (i.e. Japanese law) to govern his estate. This is possible under Swiss private international law for either (1) foreign nationals residing in Switzerland or (2) for Swiss nationals domiciled abroad. Although it is arguable that this should also be a possibility for foreign nationals domiciled abroad, Swiss court has not yet ruled on the validity of this.
Swiss forced heirship entitlements
Under Swiss succession law, upon death, individuals may pass on their property by will or by inheritance agreement.
Will: a unilateral agreement that may at any time be revoked by the testator.
Inheritance agreement: Arrangement between the testator and one or more parties which can only be modified upon written consent by all parties.
Swiss inheritance law guarantees testamentary freedom. However, this principle is limited, due to the fact that legal heirs are entitled to an intangible part of the estate. The forced heirship rights are:
● Three-quarters of the succession right in the case of a direct descendant;
● Half of the succession right in the case of a parent; and
● Half of the succession right in the case of a surviving spouse or registered partner.
These forced heirship rules have the possibility of being reduced, as legislative form is pending.
Legal heirs can claim their forced heirship amount by way of a specific judicial action; however they also have the opportunity to waive their forced heirship through an inheritance agreement.
In the case that a decedent leaves no will or inheritance agreement, assets pass onto his or her legal heirs.
The Swiss intestate regime bases itself on a parental system and the decedent’s nearest legal heirs are their direct descendants in equal portion. However, if the decedent leave no issue, the legal heirs are his parents. In the absence of any representative of the deceased parents or surviving spouse, the legal heirs are the deceased’s grandparents.
A spouse is considered as a legal heir and will be entitled to:
● Half of the estate – the other half is divided between the deceased’s issue;
● Three-quarters of the estate – the other quarter is given to the deceased’s parents or their issue; or
● The entire succession in the case that no mother, father or any issue of the deceased is alive.
If the deceased has no legal heir, the estate is attributed to their domiciled canton.
Formal procedures for making a wil
There are three types of wills:
1. A will by public deed – made by a public official in the presence of two witnesses;
2. A holographic will – this must be written entirely in the testator’s own hand; or
3. An oral will – the testator’s declaration of his or her last wishes to two witnesses who communicate the will to an authority.
It must be noted that an oral will is only possible when the testator is unable to draw up a will in another form – typically, in the case of a life-threatening emergency.
An inheritance agreement has to be made by a public official with two witnesses present.
Both inheritance agreements and wills can be registered at the Swiss Register of Wills in Bern and will not be public. Upon the death of the testator, these documents will be opened by the appropriate cantonal authority, and a copy of the document will be sent to the relevant parties.
To what extent are foreign wills recognised?
The Hague Convention on the Conflict of Laws Relating to the Form of Testamentary Dispositions 1961 governs the validity of foreign wills.
It provides that a will is valid as to its form if it meets the requirements of the domestic law of:
● The place the will was written in;
● The testator’s country of citizenship, either at the time that the document was drawn up, or at the time of the testator’s passing;
● The testator’s place of domicile, either at the time that the document was drawn up, or at the time of the testator’s passing; or
● The place in which the real estate is situated, with regards to immovable properties.
Paying attention to these rules, it is therefore important for Japanese nationals to create a will in both Japan and Switzerland, ensuring that they follow the rules of both jurisdictions.
Estate administration in Switzerland
The two types of administrator: executor and official administrator.
The testator may designate one or more individuals to be executors of his or her estate, and they are automatically notified upon the death of the testator, and can decline the mandate within 14 days of being notified.
In some cases, the authority may nominate an official administrator.
The heirs automatically become joint owners of the estate until it is formally divided between them. Until then, the estate falls under the administration of the executor. The executor must:
● Create an inventory of the deceased’s assets and liabilities;
● Pay creditors;
● Manage the estate’s assets;
● Pay out legacies; and
● Prepare the division of the estate in accordance with the deceased’s will.
Distribution of the estate
Unless the will says otherwise, the estate can be freely distributed among the heirs. The testator may, however, create certain rules for the division and formation of lots.
Settlement of the decedent’s debt
The debts are settled by the executor from the estate’s assets.
In Switzerland, however, the heirs who have accepted to inherit the estate are personally liable for the debts of the decedent. The liability also extends to the heirs’ personal assets.
Inheritance laws are due by the heirs persoa\nally, and tax varies depending on the canton. Most cantonal inheritance tax laws provide that all heirs are jointly liable for payment of the inheritance taxes due.
Steps that executors must take
In order to gain access to Swiss bank accounts, executors have to submit a series of documents to the bank, which prove the death of the deceased and the powers of the executor by virtue of law. (i.e. a grant of probate, death certificate etc.). These documents must also comply with some formal requirements to validate their authenticity.
When Swiss banks receive these documents, they will supply information about the assets that they hold and comply with the executor’s instructions, such as transferring the accounts to the new beneficiaries or repatriating the assets. Issues may arise if assets are held in the name of third parties and the decedent is the beneficial owner, or if the decent issued powers that may be valid post-mortem to other parties. These issues will be handled in accordance with Swiss law.
According to Swiss law, to have full effect of the transfer of property must be recorded at the Land Registry of the place where the property is located. Therefore, the foreign executor must send a request to the Land Registry regarding Swiss property, together with documents similar to those for movable assets. The legal status of the foreign executor, however, will be adapted to fit Swiss law. The Land Registry will record the beneficiaries of the will as the owners of the property, and not the executor, who may likely be recorded as such initially, for information purposes.
Preparation of will
Swiss private international law states that foreign executors are able to operate in Switzerland to gain control of the decedent’s assets and transfer them to the heirs articulated in the will. It is therefore advisable to include Swiss assets of a client domiciled outside Switzerland in the will prepared in the country of domicile, and to have the executor directly handle these assets. In cases where the estate includes property in Switzerland, legal advice should be sought to avoid any difficulties with the Swiss Land Registry, and to properly acknowledge the Swiss Federal Statute on Acquisition of Property by Non-resident Aliens.
With our network of lawyers in Switzerland, we are fully equipped to assist you in making appropriate preparations that will consider both Japanese and Swiss rules. Please contact our office for more information.
Inheritance and lifetime gifts tax
These are levied at cantonal and municipal levels. The tax rates and rules therefore vary depending on cantonal tax law.
All cantons levy inheritance tax if the deceased has been a resident of the respective canton. This is also the same for gift tax. However, spouses are exempt from inheritance and gift tax in all cantons. This is the same for direct offspring in most cantons.
However, neither gift tax nor inheritance tax is levied if the decedent was not a Swiss resident. Therefore, the heirs of a Japanese decedent domiciled in Japan will not have to pay inheritance or gift tax on the decedent’s estate. However, if the estate includes real estate, and by extension, meaning that if the Japanese decedent was a resident of a Swiss canton, then the inheritance tax and gift tax of the particular canton will apply to the decedent’s worldwide assets.
For further information on specific tax rates for each canton, please contact our office.
Using a certificate of inheritance to succeed assets
What is a certificate of inheritance?
The certificate of inheritance provides confirmation of the persons entitled to inherit and is needed in order to dispose of assets of the decedent’s estate according to the will or law. Financial institutions will demand a certificate of inheritance before money can be withdrawn from the deceased’s accounts. This certificate is also required when the deceased’s real estate is transferred or sold.
How much does a certificate of inheritance cost?
The fee for issuing a certificate varies from several hundred to several thousand francs. It does not include the additional costs of obtaining certificates from register offices. It is possible to reduce the cost by ordering the minimum amount of originals of the certificate of inheritance.
How long does it take for the certificate to be issued?
Even in cases where the heirs are clearly established, it can take 6-12 weeks before a certificate of inheritance can be issued.
Who can request a certificate of inheritance?
● If there is no will or inheritance agreement: the statutory heirs have the right to c\request a certificate.
● With a will or inheritance agreement, a certificate cannot be requested until official confirmation has been granted by the competent authority. The official confirmation will show who is entitled to request the certificate of inheritance.
In order to obtain a certificate of inheritance, one must:
● Provide a copy of the death certificate (available from the civil register office);
● Prove that you are entitled to inherit (extract from the civil register);
● Prove that you have not disclaimed your inheritance (declaration of acceptance from all statutory and named heirs or proof that the time limit for a disclaimer has expired).
The administration of worldwide assets can be challenging and complex. A Japanese national with assets in Switzerland must plan carefully and navigate the complexities of Japanese and Swiss private international law, in order to ensure a smooth succession of assets to their heirs in the future. Our office can provide the necessary support to Japanese nationals with assets overseas. Our network of law offices internationally, through membership of Eurolegal, enables us to provide high quality legal advice that considers all relevant jurisdictions. Please get in touch with our office for further information.