Wills for Brits in Switzerland (or with assets here)
Should I make a Will?
Generally, yes. Wills allow you to plan for the future of your family and ensure your succession objectives are achieved – if you do not make a Will, the assets in your estate will be distributed in accordance with default rules which may not reflect your wishes. Preparing a Will, will not only prevent this, but will also eliminate any potential language ambiguities and will often make it cheaper (and quicker) for your executors/heirs to deal with the administration of your estate.
You may already have a Will which is prepared in accordance with, for example, English law in form and substance. The question is whether this is still appropriate following a move to Switzerland. For example, it may fail, in whole or in part, because it conflicts with the laws of Switzerland and/or another country where you have assets. There may also be an unexpected inheritance tax exposure if, for instance, a tax credit or a spouse exemption is found not to be available.
Are there other forms of testamentary documents aside from a Will in Switzerland?
Yes. Although a Will is the most common form of testamentary document, Swiss residents also sometimes have the option to enter into an Inheritance Contract with their family members. Inheritance Contracts are different in their nature from a Will (for example, they cannot be unilaterally revoked), but in certain circumstances they can be the most appropriate forum for spouses (and families) to achieve their succession wishes, in particular, if one wants to bypass forced heirship rules imposed in a succession governed by Swiss law.
Although not a testamentary document as such, consideration can also be given by married couples to the applicable Matrimonial Property Regime and putting documentation in place to alter this, which is sometimes also an appropriate way to address certain succession wishes.
Which succession law(s) will apply? Why does it matter?
If you are British, but living in Switzerland, the succession laws of both countries may compete for your estate with potentially unwanted consequences. Unlike the UK, Switzerland has forced heirship succession rules under which spouses and children are automatically entitled to a fixed portion (the ‘reserved share’) of your assets. Although the percentage of this compulsory portion was reduced as from 1 January 2023, spouses and children still have a mandatory entitlement. Also, unlike the UK, Switzerland has rules dealing with the distribution of assets which form part of the applicable Matrimonial Property Regime, which bite before the application of Swiss succession law. Married couples living in Switzerland need to bear this in mind.
Foreign nationals residing in Switzerland can usually override the application of Swiss succession law by making a choice of law in their Will or other testamentary document. Swiss citizens do not have a similar choice of law. Currently, Swiss dual nationals also do not have this choice, however revision to the Swiss Private International Law Act (PILA) (which was approved in December 2023) means that, when enacted, Swiss dual nationals will now have the opportunity to choose one of their national laws as the applicable law to the succession of their estate. Importantly, however, any such election for a foreign law cannot derogate from Swiss forced heirship rules protecting the surviving spouse and descendants - a political compromise by the Swiss Parliament following many months of disagreement.
The revisions to the PILA are due to come into force at the start of 2025.
Therefore, if you a British national resident in Switzerland, then Swiss law entitles you to elect for your home succession law to apply, potentially giving you complete testamentary freedom and to minimise potential conflicts. A dual British/Swiss national would not have this complete freedom, but it may still be advisable to choose your non-Swiss national law to take advantage of ‘non-Swiss’ planning tools (trusts being a key example). For Brits who also spend time regularly in, or have assets located in, an EU Member State bound by the EU Succession Regulation (e.g. France, Italy, Spain), it is particularly important to ensure than any choice of law election for Swiss law purposes is consistent with the rules of the EU Succession Regulation.
Conversely, if a foreign national dies in England and leaves assets in Switzerland, English succession law may lead to Swiss succession law being applied to the succession, creating practical difficulties as well as complications for UK inheritance tax planning. Tailored advise in this instance is strongly recommended.
The interrelationship between the various succession rules means that in more cases than not, specific Will drafting is required in order to extract the maximum benefit.
What about tax?
Succession and inheritance tax, although intimately connected, are not the same thing and unfortunately in most jurisdictions are not aligned (the UK and Switzerland being prime examples). Succession is who inherits, and inheritance tax is paid as a result of the passing of assets. Even if a jurisdiction is not competent to rule on the succession of an estate, it does not necessarily follow that they will not seek to apply inheritance tax to the same assets.
For example, for a deceased Brit who owns Swiss real estate, a Swiss canton may be deemed competent to rule the succession of the property and to apply Swiss inheritance tax to the same. The UK at the same time may seek to subject the property to UK inheritance tax as the deceased was domiciled in the UK for UK tax purposes at the time of death. This is where the UK/Swiss tax treaty on inheritance tax plays a vital role in mitigating exposure to double taxation which would otherwise be a very undesirable outcome. Both the UK and Switzerland have entered into relatively few tax treaties concerning inheritance tax and so the certainty it provides is very beneficial for international Swiss/UK estates – without it, relief may be given under UK and/or Swiss domestic law, but this is far less certain.
Of course, it would be remise not to note that changes are coming to the UK tax system, possibly from as soon as April 2025. It has been announced that the ‘trigger’ for exposure to UK inheritance tax will be changed to be based on residence rather than domicile. How this will work in practice, particularly in relation to the tax treaties, will need to be seen; advise should be sought once there is clarity in the UK on the scope and breadth of the new rules.
What if I am unmarried but cohabiting with my partner in Switzerland?
The rights of cohabitees are not specifically protected by Swiss law and, as such, they would need to be expressly named in a Will to ensure they are provided for.
What if we have minor children living in Switzerland?
In most instances, in the event of the death of both parents a guardian must be appointed. Preference tends to be given to a suitable close relative of the child; however this is sometimes difficult for expats who may not have their wider family with them. Naming guardians in a Will, although not strictly binding, usually speeds up the process and greatly assists the cantonal authority in making its determination. Guardianship nominations in testamentary documents are typically adhered to unless there is good reason not to.
Will the Swiss bank rely only upon a death certificate to release assets? Even with a joint account?
No, Swiss banks and financial institutions will not just rely on a death certificate – they will need to identify your heirs and determine their rights of inheritance before releasing the assets. As a tangible moveable asset, a bank account can be dealt with in your Will and so typically this determination of rights of inheritance is a straightforward exercise which can be resolved by the granting of the Certificate of Heirship in Switzerland (similar in many ways to a Grant of Probate in the UK).
In order to gain access to these assets, the executors/heirs often need to submit to the bank a series of documents proving the death of the deceased and the powers conferred on them by virtue of law (and often the documents need to comply with formal requirements confirming their authenticity and validity).
A note of caution however in relation to joint accounts, as the succession of these is not as straightforward as typically thought. A distinction must be made between (a) the contractual relationship with the bank and (b) the succession law(s) which will apply to the account on the death of the account holder. If nothing specific is signed at a contractual level with the bank on the opening of the account, the deceased account holder will be replaced in the contract by his or her heirs. If, however, there is an ‘exclusion of heirs’ contract, the surviving account holder will be the sole continuing account holder from a contractual perspective. If in the latter scenario the heirs believe the account should instead form part of the estate, they can challenge the position in the Swiss courts. Typically, banks freeze accounts in these circumstances until heirship is properly determined.
What about any Swiss real estate?
Where the estate includes real estate in Switzerland, specialist advice should be sought to avoid difficulties in dealing with the relevant Swiss Land Registry, and to take into account the provisions of the Swiss Federal Statute on Acquisition of Property by Non-Resident Aliens (Lex Koller).
As a general principle, Swiss law restricts the acquisition of real estate by non-Swiss nationals – although Swiss resident EU/EFTA nationals, or non-EU-EFTA nationals with a permanent resident permit (C Permit), are not typically subject to limitations. A Lex Koller permit is required for the acquisition of a holiday home by non-Swiss residents, although in certain ‘touristic’ cantons this is a far easier hurdle to cross. Real estate inherited by family members will not usually be subject to Lex Koller permit requirements or restrictions, but each case should be verified on an independent basis.
Our expertise in Geneva and Zurich
It is important to remember that there is no ‘one size fits all’ when it comes to succession planning. Confirming your succession wishes and understanding both the potential legal impact as well as your potential tax exposure is always the first step, and so tailored advice is recommended. At Charles Russell Speechlys we have Swiss and UK succession and tax experts based in both our Geneva and Zurich offices: we are uniquely placed to provide individuals and families with seamless cross-border advice both for planning and in administration of estates.
For further information please contact Sophie Hart, Michael Wells-Greco, Grégoire Uldry and Alexia Egger-Castillo.
