No deferred payment

Under current law, compulsory portion claims are due immediately. Thus, the company successor must settle the claims of the other heirs promptly. This often leads to liquidity bottlenecks. If an heir as potential successor does not have enough money and cannot finance with borrowed funds, he cannot take over the company.

Planned, but rejected bill

A bill to facilitate company succession stipulated a deferral regulation. Provided this is economically necessary. The heir taking over should not run into serious difficulties. He or she could be granted a temporary deferment of payment.

A payment deferral is provided for in the law of property. Immediate payment of a claim may hamper a spouse. Hence, a respite may be granted upon request.

To meet obligations to co-heirs arising from the division of the estate, an heir taking over should be granted a deferral of payment. The company successor can generate profits. This enables him to gradually pay off the claims of the co-heirs. The financing is therefore in place. This favors the successor and violates the principle of equal treatment of heirs. However, a family business continues to exist.

The heir taking over must prove that he cannot otherwise procure the necessary funds
to compensate the other heirs. A court would have to decide whether to grant deferred payment after a comprehensive weighing of interests. This is a discretionary decision. A judge may stipulate conditions: A binding repayment plan, or the achievement of milestones. Interest must be paid on the deferred amounts.

On March 12, 2024, the Council of States defeated this bill. Thus, there is no safety net for unregulated or not-regulated estates with family businesses.

The lesson is clear

Without financing or deferred payment, an heir is often unable to take over a company.

If an entrepreneur dies without having settled his business succession, there is currently no legal safety net.