Wealth Structuring Developments In Switzerland
min readSwitzerland is one of the world's leading and most competitive financial centres, as well as a leading jurisdiction for the custody and management of private wealth. Commonly used vehicles for wealth and estate structuring are international trusts, foundations, testamentary dispositions, marriage agreements, lifetime gifts and personal holding structures. However, careful considerations need to be given when setting up these structures and vesting funds in them, both in terms of tax consequences and in understanding their strengths and weaknesses. This article provides an updated overview of the key developments in Swiss wealth structuring law since 2022, reflecting the significant legislative changes that have since taken effect.
Succession Planning
Forced heirship
Swiss law provides forced heirship rules that protect the statutory heirs. The testator is therefore not entitled to dispose of all his/her assets freely by drafting testamentary dispositions as wills or inheritance contracts.
The revision of the Swiss inheritance law entered into force on 1 January 2023. The central change was an increase in the testator's freedom of disposal by reducing the forced heirship of the descendants from three-quarters to one half of their statutory inheritance share and abolishing the statutory entitlement of the parents entirely. The compulsory portion of the surviving spouse or registered partner remains unchanged at one half of their statutory inheritance share.
In practice, the experience with the new provisions has been positive. The broader testamentary freedom enables clients to plan more freely and helps them better implement their wishes. However, older cases where the planning was completed prior to the revision had to be revisited, and last wills and inheritance contracts had/have to be checked and amended on the basis of the new legislation to prevent any gaps or mismatch with the revised provisions. The new provisions apply to all deaths after 1 January 2023 and consequently also apply to wills or inheritance contracts concluded earlier.
Where the testator has exceeded his/her testamentary freedom, the heirs who do not receive the full value of their statutory entitlement may take legal action to have the disposition abated to the permitted amount, hence the importance of settling one's estate correctly and in advance either through a will or an inheritance agreement.
Under the revised law, the surviving spouse can no longer assert any claims under any wills or inheritance contracts once divorce or dissolution proceedings have been initiated, unless expressly ordered or agreed otherwise. A simple will is now sufficient to completely exclude the divorcing spouse from the inheritance once proceedings have been initiated. However, the surviving spouse will remain a legal heir until the divorce or dissolution order becomes effective. This means that in the absence of a will excluding the surviving spouse, he/she will retain the right to his/her share of the estate in the event of death before the divorce or dissolution order comes into force. It is therefore essential to make new testamentary provisions when initiating divorce proceedings.
The revision also introduced a general prohibition of gifts after the conclusion of a contract of succession, representing a paradigm shift from the previous law under which the testator could in principle continue to make gifts unless the inheritance contract provided for an explicit prohibition [1].
Furthermore, the law now expressly states that pillar 3a benefits are not part of the estate but are governed by pension law, meaning beneficiaries are entitled to their own claim against the bank or insurance company without the consent of the community of heirs. However, such benefits remain part of the compulsory portion calculation and can be abated[2].
Revision of international inheritance law
Starting from 1 January 2025, new provisions came into force regarding international inheritance matters. The Swiss Parliament adopted a revision of Chapter 6 (Succession Law) of the Federal Act on Private International Law (PILA), which entered into force on 1 January 2025. The revised provisions partially harmonise Swiss law with European law, in particular the EU Succession Regulation, by allowing Swiss nationals with multiple nationalities to elect a foreign national law to govern their succession — subject to compliance with Swiss forced heirship provisions. The new rules also reduce the risk of conflicting jurisdictions between Swiss and foreign authorities and enhance planning flexibility for individuals with assets in multiple countries.
Transfer of businesses by succession
In parallel to the inheritance law revision which came into force on 1 January 2023, the Federal Council had proposed additional measures to further support entrepreneurs by enabling a smoother process during inheritance proceedings, including allowing an heir to obtain the full allocation of a business in the division and the possibility to obtain a deferral of payment from the other heirs to avoid liquidity problems.
However, the Parliament declined the proposal made by the Federal Council regarding the succession of SMEs, meaning there will be no such revision for the foreseeable future. For the time being, the succession of companies therefore remains subject to the general inheritance rules and requires careful planning.
Marital property
During his lifetime, the deceased has the freedom to make donations and reduce his future estate as he sees fit, but always within the limits of the statutory rights of his/her heirs. The compulsory division is calculated considering certain donations made by the deceased. He can thus pass on his property to his/her heirs and/or third parties within these limits or provide for certain property to go to a certain person at the time of his/her death. Donations exceeding his/her testamentary freedom may be contested by the heirs if they do not receive their statutory entitlement to their share.
As mentioned above, under the revised inheritance law, a general prohibition of gifts applies after the conclusion of a contract of succession, unless the inheritance contract provides otherwise. This represents a significant change from the prior law and must be carefully considered in estate planning.
Trusts, Foundations and Similar Entities
Trusts
There is no Swiss domestic trust law, meaning that it is not possible to establish a trust in Switzerland. Foreign law trusts continue to be recognised in Switzerland since the entry into force of the Hague Trust Convention in 2007 and are used for estate planning purposes, although the benefits that they bring in purely domestic situations are limited.
The proposal to introduce a Swiss trust law has been definitively rejected by the Swiss Parliament. Following the public consultation in early 2022, the proposed regulation of the taxation of trusts faced significant criticism and was unable to gain a political majority.
There remain no specific Swiss tax provisions on the taxation of foreign trusts. The taxation of a trust depends on its qualification based on a circular published by the Swiss tax conference consisting of the heads of the cantonal tax authorities, which distinguishes revocable and irrevocable trusts. As such, trusts are not taxable under Swiss tax law; in principle, only the beneficiaries and the settlor are subject to Swiss taxation if they are Swiss residents.
The Swiss trust industry is nevertheless experiencing significant consolidation, driven by the introduction of FINMA's Trust Company Licence and increased AML procedures and requirements, which make it harder for smaller trust companies to justify the increase of administrative and compliance costs. There have been substantial acquisitions of trust companies and family offices in recent months, and this tendency is expected to continue.
Swiss charitable foundations
In Switzerland, foundations and associations are commonly used for wealth charitable planning and long-term projects. Swiss law provides for specific legal provisions regarding foundations. A foundation is an autonomous and separate legal entity, which can have any kind of clearly defined purpose(s) provided that it is lawful, and not impossible nor immoral. As such, foundations are not required to pursue charitable purposes.
The purpose of a foundation as intended by the founder can only be amended under extraordinary circumstances or if the founder has retained the right to do so.
The Swiss charity sector is highly regarded internationally in particular due to its sound regulation and supervision. It is a very interesting tool for individuals willing to engage in charitable activities, both in Switzerland and abroad.
Charitable giving is mainly encouraged in Switzerland through a very favourable tax system. They are separate legal entities and therefore in principle subject to corporate tax. However, under specific conditions, legal entities that are pursuing public service or public interest purposes are exempt from the federal income and wealth tax provided that the capital and income are exclusively directed to such purposes. Gifts made by an individual to Swiss non-profit organisations are also generally exempted from taxes. Furthermore, those gifts are deductible from taxable income up to 20 per cent of the taxpayer’s net income. Donations to foreign-based charities may be partially or fully exempt in some cantons.
Family foundations
Swiss law provides for a specific legal provision regarding private foundations known as family foundations. A family foundation is characterised as a foundation established for the benefit of beneficiaries who are members of the founder's family. Under current law, there is an exhaustive list of purposes for which a family foundation may be set up, including education, welfare and health. Foundations granting a beneficial interest (e.g. to allow a beneficiary a higher standard of living) are considered null and void. Private foundations governed by the laws of another jurisdiction are frequently used in Switzerland and recognised provided that they meet the Swiss requirements.
However, a significant reform of family foundation law is now underway. In December 2022, a parliamentary motion (the "Burkart Motion") was filed proposing the lifting of the prohibition on family maintenance foundations and the possibility of passing on family assets in a measured manner through family foundations. On 12 December 2023, the Swiss Parliament voted in favour of this motion, and the resolution was completed with the approval of both chambers in February 2024. The Federal Council has now been tasked with drafting the appropriate legislation to implement the proposed strengthening of the family foundation.
The reform would lift the ban on maintenance foundations under Article 335 of the Swiss Civil Code, which currently renders the family foundation practically ineffective for wealth and estate planning. It is being discussed whether time limits for family foundations should be considered and whether the founder should be allowed to revoke and amend the foundation purposes. Since a family foundation is already considered a tax subject in the Swiss tax system, the need for adjustments to tax legislation would be manageable compared to the rejected trust proposal.
This development is seen as a direct alternative to the failed Swiss trust law proposal and could provide a robust and flexible domestic instrument for family wealth and estate planning, potentially reducing the outflow of assets to foreign jurisdictions.
Inheritance tax referendum
A notable development in the Swiss tax landscape was the popular initiative proposing a 50% inheritance and gift tax on estates and gifts exceeding CHF 50 million, with the proceeds to be used for climate change measures. The initiative caused significant concern in the wealth management sector, as it could have incentivised wealthy individuals to leave Switzerland or avoid relocating there. However, on 30 November 2025, the initiative was decisively rejected by the Swiss population. At the federal level, inheritances and gifts therefore remain exempt from tax, although cantons continue to levy their own inheritance and gift taxes.
Transparency register and AML reform
On 26 September 2025, the Swiss Parliament adopted the Federal Act on the Transparency of Legal Entities and the Identification of Beneficial Owners (the "Legal Entities Transparency Act" or "LETA"). The new law establishes a central federal Transparency Register in which Swiss legal entities and certain foreign entities with a Swiss nexus will be required to register information on their ultimate beneficial owners. The entry into force is expected around mid-2026.
The register will not be accessible to the public but will be strictly limited to designated Swiss authorities, including criminal prosecution authorities, tax authorities responsible for international administrative assistance, and the Money Laundering Reporting Office Switzerland (MROS). Swiss financial intermediaries subject to AMLA will also have access for KYC and due-diligence purposes. Notably, foundations and associations have been excluded from LETA's UBO identification and registration regime.
In parallel, the Swiss AML framework is undergoing significant reform, with proposed amendments to the Anti-Money Laundering Act that would extend its application to lawyers, notaries, and accountants involved in specific structuring activities such as the formation or administration of legal entities, real estate transactions, and trust or fiduciary services.
Conclusion
Switzerland continues to offer significant advantages and possibilities for wealth structuring and planning. The inheritance law revision that entered into force in 2023 has successfully increased testamentary freedom, and the new international inheritance law provisions from 2025 provide greater certainty for cross-border planning. While the Swiss trust law proposal was definitively rejected, the strengthening of the family foundation as an alternative domestic planning instrument represents a promising development. The decisive rejection of the inheritance tax initiative in November 2025 confirms Switzerland's commitment to an attractive tax environment for private wealth. Combined with its political stability, sound regulation, and evolving but predictable regulatory landscape, Switzerland remains a jurisdiction of choice for private clients seeking reliable and sophisticated wealth structuring solutions.
