From freedom of bestowing to a ban on gifts and donations
Currently, you are free to make gifts, but in the future, under the revised inheritance law, there will be a fundamental ban on gifts and donations. This restricts you. Don’t become a puppet on a string: provide for clear reservation clauses (modification and gift reservations)!
In an inheritance contract, you make binding arrangements regarding your estate. For example, you undertake to leave an inheritance or a legacy to someone.
Initial situation
Currently, you can freely dispose of your assets (with the reservation of gifts) during your lifetime in the case of a gratuitous, purely beneficiary contract of inheritance and bequest. After your death, there is a risk of contestation in the case of gifts made abusively, gifts made with obvious intent to harm, and dispositions upon death, if they conflict with obligations under the inheritance contract in accordance with Art. 494, para. 3 of the Swiss Civil Code. This strict, controversial case law will lose validity.
Revised (new) inheritance law
The revised inheritance law provides for a change of course. The previous principle of freedom to make gifts or donations during a lifetime under the current law will be abandoned. As of January 1, 2023, there will be a general prohibition on gifts during a lifetime, except for customary occasional gifts and reservations. The beneficiary of an inheritance contract will now be better protected.
According to Art. 494, para. 3 revised Swiss Civil Code, dispositions upon death and gifts inter vivos, except for customary occasional gifts, are subject to rescission insofar as they:
- are incompatible with the obligations under the inheritance contract, namely if they reduce the inheritance contract benefits (positive condition); and (cumulative)
- have not been stipulated in the inheritance contract (negative condition).
This should already be considered in estate planning.
Reservations
A ban on gifts and donations restricts you. Do not allow yourself to be forced into a corset or become a puppet on a string. Defend yourself: agree on clear reservations.
What is incompatible must be stipulated in the inheritance contract. Without an express reservation of the right to make lifetime gifts and/or to make dispositions upon death, you risk a challenge on the grounds that the inheritance contract is incompatible and thus disturbing the peace of the family.
With gift reservation, you have the right to make gifts during your lifetime. With explicit reservation of change to make bequests, a challenge will not be possible.
Only time will tell whether the all-round, fundamental ban on gifts will remain in place or whether different criteria will be applied.
Check-up for existing contracts of inheritance
Act and check existing inheritance contracts to see whether they are compatible with the new inheritance law. There is no transitional legislation. If all parties are alive, the contract can be cancelled if necessary, with the written consent of all parties. Subsequently, the same parties agree on a new inheritance contract (to be publicly notarized) with explicit reservations. Otherwise, the testator’s will must be documented.