Estate planning: assume responsibility, shape the future

What does “estate” mean and what does it include?

A person’s estate includes the entire assets and liabilities that pass over to the heirs or community of heirs at the time of death. This includes, among other things, material and immaterial items such as real estate, bank deposits, valuable articles, participations in companies, copyrights as well as possible debts. The estate forms the foundation for the division among heirs and is subject to legal and testamentary regulations.

Estate planning ensures that an individual’s last wishes are respected and their assets are passed on according to their wishes. It enables clear asset distribution, helps avoid conflicts between heirs and provides tax optimization opportunities. It also protects family members, such as partners or minors, by way of individual regulations and secures the orderly handover of a company. Debts can also be taken into consideration to protect heirs from financial burdens. Planning in good time provides clarity, avoids uncertainty and preserves lifetime achievements for the next generation.

How is the estate calculated?

The estate is calculated from an overview of all assets and liabilities. The following steps show a very simplified process:

1. Compilation of assets: real estate, bank accounts, securities, digital assets, personal objects
2. Deduction of liabilities: debts, loans, mortgages and open invoices
   
3. The result is the net estate. For complex estates, professional assessment is worthwhile

How and when is the estate regulated?

Estate planning is a big responsibility and should not be postponed. It is best to begin early – at the latest from 50 years of age or in particular life situations, such as starting a family, inheriting real estate or the accumulation of larger assets.
Without clear regulations, a sudden death can lead to uncertainty and conflict among the bereaved. With timely planning, you provide clarity and ensure your wishes will be respected in difficult times.

Planning the estate: what is involved

Estate planning is a comprehensive process which not only regulates the distribution of assets, but also ensures that personal wishes and legal considerations are taken into account. The following elements are particularly important:

• Will or inheritance contract: these documents regulate who receives which proportion of the assets in the context of inheritance law. While a will can be drawn up independently, an inheritance contract must be notarized.
• Advance care directive: this determines who represents the document holder’s wishes if they are rendered incapable of judgement. The advance care directive can be either made independently or publicly notarized.
• Executor: naming a trusted person to oversee the execution of the last will is a good idea, especially if dealing with complex financial circumstances or a large community of heirs.
  

Additionally, estate planning could include other aspects depending on an individual’s life situation or asset structure:

• giving gifts and settlements while still alive to take advantage of tax benefits or ensure heirs are financially secured early.A
• The link will open in a new window patient decree is a supplement to the advance care directive. This document regulates what medical treatment the patient receives if they are very ill or have had an accident and are not able to make such decisions themselves (Art. 370 Swiss Civil Code).
• The digital estate, such as social media accounts, which must be taken into consideration.
• Regulations for real estate or corporate succession, especially when it comes to complex asset structures.
• An overview or list of assets, a detailed compilation of all assets belonging to the estate serving as clarity for the heirs and to assist in processing the estate.

What are the legal foundations?

Estate planning is subject to different legal conditions that vary in relevance depending on the personal situation and asset structure. A deep knowledge of this statutory framework is essential in order to plan the estate optimally and avoid unintended consequences.

• Taxes: spouses and, in most cantons, direct descendants are not subject to inheritance tax. For other heirs – particularly those who are not relatives – significant tax burdens may be incurred.
• Succession: if succession is not determined by the individual, the statutory succession under Swiss inheritance law comes into effect. Following the revision to inheritance law in 2023, testators now have more freedom as the mandatory portions were reduced for descendants and completely abolished for parents.
• Advancement of inheritance: giving gifts while still alive is a way to transfer assets early. This should be carefully considered, however, to avoid any potential financial issues. It is also important to take settlement regulations into account: so that inheritance remains fair for all heirs, any contribution received early will be deducted from the share of the person concerned when the estate is later divided.
• Non-relatives: those wanting to take friends, godchildren or other non-related people into account must explicitly state this in a will or an inheritance contract. Otherwise, these people have no legal entitlement to the estate.
• Cohabiting partners: without appropriate precautionary measures e.g. being named in the will or receiving a gift, cohabiting partners are excluded from the estate.

Planning estate and distributing “fairly”

Carefully considered estate planning not only provides clarity, but also strengthens the trust and bonds within the family. A “fair” distribution is however subjective, which is why there is no standard solution. A combination of legal precision and human sensitivity is the key to success.

• Transparency and communication: early and open communication with the future heirs avoids misunderstandings and disappointments. This is especially the case for families with a more complex structure, such as a patchwork family. It may also help to have a neutral third-party person moderate family discussions.
• Tax optimization: giving gifts while alive or transferring assets with consideration of tax-free allowances can be a suitable solution to optimize taxes if necessary. Find out more about the cantonal differences in inheritance and gift tax.
• Clear regulations: precise and comprehensible regulations in the will or inheritance contract that leave no room for interpretation help avoid future disputes.
• Fair distribution: fair does not always have to mean equal. Sometimes it makes more sense to take into account the individual needs or life circumstances of the heirs – this could be children’s education for example, or someone wanting to own their own home.
• Clearly regulate advancement of inheritance: gifts or inheritance advances should be documented and taken into account for estate planning to avoid future conflict.
• Factor in emotional value: not only financial assets are important; personal mementos or family heirlooms can also have great significance for the bereaved.
• Update regularly: review your estate planning regularly and adjust it to new life situations, legal changes or personal wishes.

Professional handling and estate management

Estate management is an important part of estate planning and ensures the estate will be handled according to the wishes of the deceased. A simple will is not always sufficient to clearly regulate all assets and avoid potential conflicts between heirs. In these cases, it can be helpful to involve an external specialist to professionally oversee the process as a neutral party.

Executor

Executors are specific people – either a personal acquaintance or a professional – who are responsible for ensuring that the estate is handled according to the testator’s wishes. The executor’s rights and obligations are defined by the testator within the limits of inheritance law. Among other things, this includes:

• Organization of legacies: delivery of assets, such as money or objects, determined in the will or inheritance contract to intended recipients. These receive the legacy directly, without necessarily becoming part of the community of heirs.
• Management of assets: ordering and distribution of real estate, bank accounts or securities.
• Communication with heirs: acting as an intermediary between parties and clearing up queries.
• Settling debts: settlement and payment of outstanding liabilities from the estate.
• Adherence to tax regulations: ensuring that tax-related obligations are met.

Notarial certification: secure and binding

For certain documents, such as inheritance contracts or advance care directives, notarial certification is required. This ensures documents meet all legal requirements and are binding for all participants. Notaries serve as a neutral party, able to attest to the authenticity and wishes of the testator.

When does external support make sense?

Settlement of an estate does not always require external specialists, but their support can be useful in certain circumstances:

• Complex financial circumstances: if property in different countries, shareholdings or wide-ranging financial portfolios belong to the estate, professional expertise from lawyers, fiduciaries or tax advisors should be sought.
• Family conflicts: differences of opinion between heirs or complicated family structures, such as those in a patchwork family, can be overcome with the help of a neutral party.
• To guarantee neutrality and professionalism: in emotional and difficult moments, it is often helpful to engage the services of an independent specialist who will act objectively and professionally.

Further considerations for estate management

• Power of attorney while alive: with a banking power of attorney or general power of attorney, a person you trust can be empowered to take on important banking transactions while you are still alive. A power of attorney for an account can be granted following the death of a person. However, access to the account is usually restricted to protect any heirs.
• Advice centers: financial service providers, fiduciaries or specialist lawyers provide support for estate management, from planning through to processing.

How much does estate management cost?

Estate management costs vary depending on the complexity of the estate and the necessary specialist advice. Typical cost factors include:

• Executors: the executors’ remuneration depends on the time spent, the complexity, the scope and length of the task and the scale of responsibility assumed.
  
• Notarial certification: depending on the region and scope, between several hundred and a few thousand francs. Enquire about concrete prices ahead of time.
  
• Consulting services: costs for lawyers, fiduciaries and tax advisors. Exact costs should be sought individually as they depend strongly on the asset structure, amount of work required and regional fee schedules.

Summary

Careful estate planning is more than just legal protection – it is an expression of responsibility and care. Early and clear regulations provide clarity, avoid conflicts and preserve the testator’s personal wishes and values. The right professional support ensures everything will be legally compliant when it comes to estate planning.