WELCOME to our common evening event and presentations about

Death and Inheritance in Switzerland Dr. Roland Bruhin Attorney at law and Notary, M.B.L. Certified Specialist SBA Inheritance Law Zug, 8th November 2016

Incapacity to act

What happens if you are no longer capable of judgement?

Death and Inheritance in Switzerland

2

Summary

1. The KESB

2. The Advance Care Directive

3. The Patient Decree

4. Legal Situation without Advance Care Directive / Patient Decree

Death and Inheritance in Switzerland

3

What is KESB?

KESB = Kindes- und Erwachsenenschutz Behörde = Child and adult protection authority

Death and Inheritance in Switzerland

4

VORSORGEAUFTRAG The Advance Care Directive

Art. 360 Swiss Civil Code 1

A person with capacity to act may instruct a natural person or legal entity to take responsibility for his or her personal care or the management of his or her assets or to act as his or her legal agent in the event that he or she is no longer capable of judgement.

Death and Inheritance in Switzerland

5

The Advance Care Directive

Execution • Prerequisites: Full legal age and capable of judgement • Holographic form → handwritten from beginning to end including date and signature or • Notarized by a notary public • Possibility of entry in the Civil Register

Death and Inheritance in Switzerland

6

The Advance Care Directive

Coming into effect • Loss of power of judgement with respect to the affairs stipulated in the Advance Care Directive • Validation of the Advance Care Directive by the KESB

Death and Inheritance in Switzerland

7

PATIENTENVERFÜGUNG The Patient Decree

Art. 370 Swiss Civil Code 1

A person who is capable of judgement may specify in a patient decree which medical procedures he or she agrees or does not agree to in the event that he or she is no longer capable of judgement.

Death and Inheritance in Switzerland

8

The Patient Decree

Execution • Prerequisites: Capable of judgement, full legal age not required • Written form, dated and signed • Possibility of entry on health insurance card

Death and Inheritance in Switzerland

9

The Patient Decree

Coming into effect • Loss of power of judgement • Attending doctor’s duty to ascertain existence of Patient Decree on patient’s health insurance card

• Provisions of the Patient Decree are binding for the attending doctor

Death and Inheritance in Switzerland

10

Legal Situation without Advance Care Directive

Art. 374 Swiss Civil Code • Right of spouse to act as representative regarding legal acts required for usual support and usual management of assets

• Right of spouse to open and deal with mail, if necessary • Consent of Adult Protection Authority required for acts exceeding the ordinary asset management

• If person is unmarried/divorced or spouse not suitable to act as representative → Adult Protection Authority will take measures respectively establish a deputyship

Death and Inheritance in Switzerland

11

Legal Situation without Patient Decree Art. 378 Swiss Civil Code Hierarchy of persons entitled to represent the patient and to grant or refuse consent to planned medical procedures: 1. Deputy appointed by Adult Protection Authority 2. Spouse who cohabits with patient or regularly provides support 3. Any person who cohabits with patient and reguarly provides support

4. Descendants who regularly provide support 5. Parents who regularly provide support

6. Siblings who regularly provide support Death and Inheritance in Switzerland

12

Last Will / Contract of succession

Death most often comes unexpected. What, if there is neither a last will nor a contract of succession?

Death and Inheritance in Switzerland

13

Example

Marissa (Dutch citizen)

Paul (UScitizen)

Jim

Death and Inheritance in Switzerland

14

What was the situation?

• Paul was not married but happily allied with Marissa, both of them living and working in Switzerland based on seperate staying permits • The two of them have had a common son called Jim • Paul died in Switzerland and left neither a last will nor a contract of succession • There were assets of the deceased in Switzerland, the Netherlands and in the USA • For some bank accounts and insurances Paul had appointed Marissa as a beneficiary

Death and Inheritance in Switzerland

15

What happened?

• The Child and Adult Protection Authority (KESB) has established a deputyship for Jim and appointed a lawyer as the deputy • Marissa no longer was allowed to dispose of assets of the deceased or of Jim • It was not clear which assets, if any, belong to the estate • It was not clear which law was applicable, and if there is, if any, a statutory entitlement

• It was not clear whether Paul intended to appoint Marissa as a beneficiary for the estate From a pure Swiss point of view son Jim was the only heir • The deputy had to initiate a probate proceedings in the USA Death and Inheritance in Switzerland

16

What could have been avoided?

• Paul could have disposed of his assets in a last will or in a contract of succession to determine who the heirs are and, to what extent • He could have determined which law will be applicable • He could have appointed an executor

Death and Inheritance in Switzerland

17

Death and Inheritance in Switzerland How to make dispositions MLaw Christophe Raimondi, LL.M. Attorney at law and Notary Zug, 8th November 2016

Summary

In a nutshell How to make dispositions under Swiss law • Last Will (Testament)

• Contract of Succession Amendment and revocation

Death and Inheritance in Switzerland

19

In a nutshell

Testamentary Dispositions

Last Will (Testament)

Contract of Succession

unilateral act

agreement

Death and Inheritance in Switzerland

20

Last Will (Testament)

Pros

A will may be established (i) by public deed or (ii) in holographic form… Public Deed Prepared by a Notary

Holographic Will Entire document handwritten, dated and signed by testator

• Higher legal certainty, lower risk of being challenged (validity + content)

• Nobody else required, might be kept fully secret during a lifetime • Does not entail any costs

• Better recognition by foreign authorities Cons

• More time-consuming • Costs in Zug approx. CHF 1‘500 – 2‘000

• Higher risk of being challenged (ambiguous wording)

Death and Inheritance in Switzerland

21

Contract of Succession

Contract between two or more persons in which at least one person commits him-/herself in his/her lifetime either by - (a) renunciation of inheritance (with or without valuable consideration), or - (b) provision of benefits between living persons, i.e. via a nomination as heir (extensive) or the passing on of a legacy (limited) (same formal requirements as a last will by public deed – contact your Notary)

Cons

Pros

• Possibility to clarify issues directly, in advance and exhaustively with the co-/heirs • Possibility to agree on a consideration for the renunciation or the provision of benefits between living persons • Requires the involvement of co-/heirs

• More time-consuming than a Last Will, costs in Zug approx. CHF 2’000 – 3’000

Death and Inheritance in Switzerland

22

Amendment and revocation [1/2] Last Will The testator may amend/revoke his Last Will anytime/in full or in part… How? • Directly on the public deed/document

• By destruction of the public deed/document • Through a new Testamentary Disposition (by public deed or as holographic will)

 Mind the form - at least holographic will!  Keep new disposition clear and unquestionable

Death and Inheritance in Switzerland

23

Amendment and revocation [2/2] Contract of Succession A Contract of Succession may be amended (new contract – public deed) or revoked (written agreement – no public deed) at any time by agreement between the parties… Exceptions (unilateral termination or termination by operation of law)

• Heir’s/legatee’s conduct toward the testator constitutes a ground for disinheritance • In case of provision of benefits between living persons, failure to perform or to furnish security for them • Where the heir/legatee does not survive the testator (unless other provision in the contract) • In case of divorce (unless other provision in the contract)

Death and Inheritance in Switzerland

24

Death and Inheritance in Switzerland Estate Planning Possibilities Dr. Stefan Klass Attorney at law and Notary Certified Specialist SBA Inheritance Law Zug, 8th November 2016

Death and Inheritance in Switzerland

Overview

1. Matrimonial property regime 2. Essentials of estate planning dispositions 3. Cross border issues

Death and Inheritance in Switzerland

26

Matrimonial Property Regime 1

Death of a married person • Dissolution of the matrimonial property regime as first step • Each spouse gets its quota according to the agreed matrimonial property regime • Quota of the deceased spouse forms its estate which is then distributed according to the rules of the inheritance law

Death and Inheritance in Switzerland

27

Matrimonial Property Regime 2

Cross border issues • Applicable regime in international situations to be determined on a case-by-case basis • Choice of the applicable law possible even with retroactive effect

Death and Inheritance in Switzerland

28

Matrimonial Property Regime 3

Matrimonial property regimes according to Swiss law 1. Separation of Property 2. Participation in accrued Gains 3. Community of Property

Matrimonial agreement of spouses

Death and Inheritance in Switzerland

29

Matrimonial Property Regime 4

Participation in accrued Gains • Individual property of each spouse • property at marriage • gifts and inherited property • personal belongings • Gains accrued during marriage

Death and Inheritance in Switzerland

30

Matrimonial Property Regime 5

Planning Opportunities • Accrued gains may be split other than 50:50 IF there are only common descendants • The entire value of the accrued gains may be granted to the surviving spouse

Death and Inheritance in Switzerland

31

Essentials of Estate Planning Dispositions 1 Wills and contracts of succession • Allow individual solutions • Choice of home law • Executor

Death and Inheritance in Switzerland

32

Essentials of Estate Planning Dispositions 2 Freedom of Testation • Freedom of testation as guiding principle • Limitations by statutory entitlement (“Pflichtteil”) rules • May be waived by protected heirs • Choice of home law without statutory entitlements

is recognized under Swiss law

Death and Inheritance in Switzerland

33

Essentials of Estate Planning Dispositions 3 Statutory entitlement • Step 1: calculation of entitlement of relatives or the surviving spouse as if no estate planning disposition had been drawn up • Step 2:calculation of statutory entitlement which is 75% for descendants 50% for parents 50% for surviving spouse • Rest of estate may be granted to third persons • Calculation in CHF, all items of the estate valued at fair market prices Death and Inheritance in Switzerland

34

Essentials of Estate Planning Dispositions 4 Example • Husband dies, leaves mother, wife and 2 children • Step 1: 0% for mother 50% for surviving spouse 50% for the 2 children • Step 2, calculation of statutory entitlements: 25% for surviving spouse (50% of 50%) 37.5% for the 2 children (75% of 50%) 37.5% available for grants to third persons Death and Inheritance in Switzerland

35

Essentials of Estate Planning Dispositions 5 Outlook: • Reduction of statutory entitlements of spouse and descendants possible in upcoming amendment of Swiss inheritance law

Death and Inheritance in Switzerland

36

Cross Border Issues 1

Principles of jurisdiction • One single estate including all assets worldwide • Splitting of estates possible regarding foreign real estate • Courts and administrative authorities of last domicile in Switzerland have jurisdiction over probate proceedings and inheritance disputes

Death and Inheritance in Switzerland

37

Cross Border Issues 2

Governing law • Competent Swiss Courts and administrative authorities apply their own procedural rules • Swiss wills and contracts of succession are subject to Swiss law • Foreign nationals (not in case of dual citizenship) may choose to apply their home law for their entire estate

Death and Inheritance in Switzerland

38

Cross Border Issues 3

Existing wills drawn up under foreign law • Remain valid if validly drawn up under foreign law • But: valid choice of home law? • But: dealing with assets in Switzerland?

Death and Inheritance in Switzerland

39

Cross Border Issues 4

EU Succession Regulation • Applies to successions after August 17, 2015 • Not applicable in the UK, in Ireland and Denmark • Likely conflict of jurisdictions if assets in the EU combined with EU citizenship, also for UK, Irish and Danish nationals

Death and Inheritance in Switzerland

40