Is it necessary to amend your existing will or inheritance contract?
The current inheritance law no longer does justice to social developments, which has prompted the legislator to revise the inheritance law. The new inheritance law will come into force on 1 January 2023, whereby a transitional period has been waived. It applies without exception to all estates of decedents dying after 31 December 2022, regardless of the date of the will or inheritance contract.
The most important changes at a glance:
- Reduction of the compulsory portions
- Increased inheritance quota in the case of most favoured spouse under inheritance law
- (De facto) prohibition of gifts in inheritance contracts
- Legal situation in the event of death during divorce proceedings
Reduction of the compulsory portions
The compulsory portion is that part of the legal share of the inheritance over which the testator may not freely dispose. The legislator provided for this minimum share in the estate to protect certain relatives.
With the revised inheritance law, the compulsory share of the descendants is reduced from currently ¾ to newly ½ of the statutory share of the inheritance, while the compulsory share of the parents of the deceased is abolished altogether. The compulsory share of the surviving spouse, however, remains unchanged (½). By reducing the compulsory shares of the descendants and parents, the testator now gains increased power of disposal over his estate and thus has more room for manoeuvre in his estate planning.
Increased inheritance quota in the case of most-favoured spouse under inheritance law
The reduction of the compulsory portions is accompanied by an adjustment of the available quota for the beneficiary of the surviving spouse through usufruct. Under the current law, the testator may grant the surviving spouse a usufruct of the entire share of the inheritance to be allocated to the joint children. According to the legal regulation, the usufruct replaces the legal right of inheritance to which the spouse is entitled in addition to these descendants (cf. Art. 473 para. 2 CC). Under the current regulation, the testator can give a maximum of ¼ of the estate to the surviving spouse as property due to the higher compulsory share of the descendants. With the revision, the available quota is increased to half.
Need for action:
If an existing will or contract of inheritance places the testator's descendants or parents on the compulsory portion (if applicable, stating the previous quotas), an interpretation problem may arise as to whether the testator wishes to retain the old quotas or apply the new regulations even after the new law has come into force. This interpretation problem can be avoided by an explicit clarification by means of a supplement to the testamentary disposition.
(Factual) prohibition of gifts in inheritance contracts
Another particularly important change in inheritance law concerns existing and future inheritance contracts. Until now, the testator was in principle free to dispose of his or her assets by means of gifts during his or her lifetime, even after concluding an inheritance contract. Under the new inheritance law, the testator may in principle no longer make gifts during his lifetime after concluding an inheritance contract if he does not make a reservation. A person benefiting from a contract of inheritance can now contest all gifts made during life to any person beyond occasional gifts, if this results in
- the inheritance contractual beneficiary is diminished and
- the lifetime gifts were not reserved in the contract of inheritance
Need for action:
The new statutory provision leads to a de facto prohibition of gifts. In order to avoid this, the contracting parties should attach the gift reservation as an amendment to an existing inheritance contract or when concluding a new inheritance contract in order to retain the previous scope of action with regard to gifts during life after conclusion of the inheritance contract. It should be clearly stated which lifetime gifts are to be permissible upon death despite the inheritance contract. Furthermore, in the absence of a statutory provision, it is advisable to specify which gifts are recognised as occasional gifts.
Legal situation in the event of death during divorce proceedings
Under current law, one spouse receives at least the compulsory portion upon the death of the other, even if divorce proceedings are in progress. This entitlement exists under current law until the divorce decree becomes final.
Under the new law, the following applies from now on: if the deceased dies during divorce proceedings, the surviving spouse loses his or her entitlement to the compulsory portion if (a) the divorce proceedings were initiated at a joint request or (b) the divorce proceedings were initiated unilaterally by one spouse after at least two years of separation. If there is no corresponding inheritance regulation by the deceased, the surviving spouse still retains his or her legal entitlement to inheritance until there is a final divorce decree.
Need for action:
In the absence of an explicit inheritance provision in a testamentary disposition, the statutory right of inheritance applies as hitherto, even during ongoing divorce proceedings until a judgement is rendered. If the surviving spouse is not to receive anything, a testamentary disposition is necessary which also withdraws the inheritance share.
No innovations in matters of cohabitation
Even after the inheritance law revision comes into force on 1 January 2023, cohabiting partners will have neither a statutory right of inheritance nor a right to a compulsory portion. These benefits must still be granted by means of a disposition of property upon death. However, due to the testator's increased power of disposition under the new law, he or she has the option of benefiting the unmarried civil partner more generously than before by means of a disposition of death.