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Old 13.06.2008, 20:43
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Estate Planning / Will - Swiss Law

What are the laws pertaining to Inheritance/Estate/Will for people living in Switzerland? Any good websites?
If its already discussed in this forum, could you please point me to the right thread?

thanks.
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Old 13.06.2008, 20:52
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Re: Estate Planning / Will - Swiss Law

If you hold a Swiss passport then the Swiss inheritance laws apply but, if you are not Swiss, then you can make a will under the laws of your home country.
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Old 13.06.2008, 20:59
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Re: Estate Planning / Will - Swiss Law

Thanks!

What normally happens in the absence of a will? (for non Swiss passport holders)

What exactly is the Swiss inheritance Law? Any detailed websites in English?
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Old 13.06.2008, 21:09
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Re: Estate Planning / Will - Swiss Law

Sorry Blonaybear, not strictly true. Interhitance Law of your last domicile will apply. There is a great website with all the Swiss laws but not all are translated to English...

http://www.eda.admin.ch/eda/de/home/...aw/desucc.html

Thats in german... not sure if its much use to you but..
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Old 13.06.2008, 21:14
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Re: Estate Planning / Will - Swiss Law

In the absence of a will your estate goes to your next of kin. If you are unmarried or do not have a registered partnership or children then that means it is 50/50 to each surviving parent.

If you have a wife/husband and children, the children actually inherit in equal amounts and the wife/husband receives 50%.

If there are no children but a spouse and surviving parents, then the spouse receives 75% and 12.5 % goes to each parent..

Does that help?

NB wife/husband also equal to registered partner (for homosexual rights...)
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Old 13.06.2008, 21:28
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Re: Estate Planning / Will - Swiss Law

Thanks everybody!

What are the associated taxes when the estate goes to spouse or to children?
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Old 13.06.2008, 21:34
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Re: Estate Planning / Will - Swiss Law

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Thanks everybody!

What are the associated taxes when the estate goes to spouse or to children?
It depends on the canton. Have you tried Google for information ?
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Old 13.06.2008, 21:36
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Re: Estate Planning / Will - Swiss Law

Here's a summary to get you started.
http://geneva.angloinfo.com/countrie...land/wills.asp
The main takeaway over and above Lynn's summary is, as I understand it, even if you make a will governed by Swiss law, you still cannot leave 100% of your estate to your surviving spouse as you can in England, with the balance to the kids on the death of the last surviving spouse. In other words any children would also get a some share on the death of the first spouse. Their rights are protected. Therefore if you are foreign citizen and and don't like the Swiss forced inheritance rights then my advice would be make a will asap and subject it to the laws of your home country.
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Old 13.06.2008, 21:36
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Re: Estate Planning / Will - Swiss Law

Maybe this one:
Compulsory inheritance the percentages?

Others:
Wills in Switzerland: avoiding Pflichtteil (Obligatory apportionment)

How to get a Will drawn up in Switzerland?
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Old 13.06.2008, 21:45
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Re: Estate Planning / Will - Swiss Law

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It depends on the canton. Have you tried Google for information ?
Right. But the answer is a lot lower than say the UK. In my canton it's single digits compared to the 40% inheritance tax rate in the UK. The other thing is if you are a foreign citizen, even if you make a will under Swiss law and die in CH, it doesn't mean that you won't be subject to inheritance tax in your home country. The UK inheritance tax net is notoriously difficult to escape (though not impossible if you are prepared to make some sacrifices) even if you move abroad and don't pay UK income tax. UK inheritance tax is based on domicile. You can be resident in CH and still domiciled in the UK for inheritance tax purposes. That means you could be subject to inheritance in both countries but if a tax treaty exists with your home country you will be able to claim double tax relief and will therefore pay no more than whichever country has the highest rate.
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Old 13.06.2008, 21:47
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Re: Estate Planning / Will - Swiss Law

I believe (and I could be wrong) that a spouse does not pay inheritance tax...
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Old 13.06.2008, 22:00
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Re: Estate Planning / Will - Swiss Law

It is possible to get around the Swiss inheritance law if your children are agreeable. In French it’s called a Pacte successoral.

The document is made by a notary and signed by the children after the notary has satisfied themselves that they understand what they are signing.

They waive their rights under Swiss law and, in its place, agree that the wishes of the parents apply. In my case the full estate passes to the surviving spouse and on their death it goes to the children.

In you are near the Montreux area I can put you in touch with a good English speaking lawyer who can arrange this.

I don’t know if it can be done if the children are not adults.
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Old 13.06.2008, 22:28
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Re: Estate Planning / Will - Swiss Law

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The UK inheritance tax net is notoriously difficult to escape (though not impossible if you are prepared to make some sacrifices) even if you move abroad and don't pay UK income tax. UK inheritance tax is based on domicile. You can be resident in CH and still domiciled in the UK for inheritance tax purposes. That means you could be subject to inheritance in both countries but if a tax treaty exists with your home country you will be able to claim double tax relief and will therefore pay no more than whichever country has the highest rate.
We don't have UK passports and we were resident non domiciled in the UK for 4 years. After that we became domiciled for 1 tax year and then left for Switzerland. Do you have any more info on domicile in relation to inheritance taxes? I just know that if you don't have a will in the UK then only the first X amount goes to your spouse and the rest is up for grabs for your family (parents and siblings).
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Old 14.06.2008, 10:10
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Re: Estate Planning / Will - Swiss Law

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We don't have UK passports and we were resident non domiciled in the UK for 4 years. After that we became domiciled for 1 tax year and then left for Switzerland. Do you have any more info on domicile in relation to inheritance taxes? I just know that if you don't have a will in the UK then only the first X amount goes to your spouse and the rest is up for grabs for your family (parents and siblings).
I only really understand domicile from a UK perspective but here’s what I think the position is, based on my own research. Also you need to be careful how you use the term "domicile". As you'll see below domicile for UK inheritance purposes has a very specific meaning and doesn't mean "resident for UK income tax purposes".

UK inheritance tax only applies to those folks with a UK domicile at the point of transfer of assets (ie usually their death but may be at the time of certain lifetime gifts). UK law says people acquire a “domicile of origin” at birth which is the domicile of their father. So for a UK citizen born to a UK citizen father whose permanent home is in the UK, their domicile of origin is the UK. Once you have a domicile of origin, change of domicile for IHT purposes is not dictated by your citizenship or where you currently reside but by the concept of where you have your permanent home. In other words you may be living in France, you may pay taxes in France, yu may even have adopted French citizenship, but if it’s your intention to return to the UK at some point in the future to live indefinitely then you are deemed to have the UK as your permanent home and are still UK domiciled for UK inheritance taxes even though actually resident in France and even if you never actually return to he UK since it was never your intention to settle permanently in France. Equally foreign citizens who move to the UK can be treated as adopting a UK “domicile of choice” if it is their intention to live there indefinitely, even if you don’t take out UK citizenship. But just living there for a few years is not enough in itself, even if you are resident for UK income tax purposes, if you never intended to settle there permanently. So most foreign nationals who live in the UK for several years and then move on shouldn’t have anything to worry about as regards UK inheritance taxes, even if they were resident for UK income taxes during that period.

Under UK law a domicile of origin or a domicile of choice can only be lost by acquiring a new domicile of choice by going to live in another country with the intention of living there indefinitely. The burden of proof is on the individual to prove he had the intention of living abroad indefinitely. The issue is intent not fact. So if you move abroad but intend to retire back to the UK you will remain UK domiciled even if you live abroad for 50 years and die before you manage to return. So just having the intention to return keeps you in the UK IHT net, as would other “indicators” like maintaining a UK property whilst abroad, keeping a UK bank account, making regular visits, educating your children there, even having your body repatriated for burial. That’s what I meant by it’s possible for a UK citizen to lose their UK domicile for IHT purposes but it’s not easy and you have to make sacrifices. For most UK nationals, in order to lose your UK domicile you would have to live abroad for a number of years and demonstrate you never intended to go back by effectively cutting all links with the country - no home, no bank account (thought sterling offshore accounts are fine), restricted visits, no expressed intention of going back in letters etc, no burial in the UK.

In Switzerland, as in many other countries, there is no concept of domicile as in the UK. In Switzerland, if CH is your permanent home then you will be subject to Swiss inheritance taxes just by virtue of being resident when you die, regardless of your citzenship, domicile of origin/choice under your home country rules, intention of returning to your home country etc etc.

So as you can see it’s quite possible for a UK citizen who dies whilst a resident of CH to be hit by UK inheritance taxes and Swiss inheritance taxes since the UK applies a domicile test which has nothing to do with residence and CH apples a residence test which has nothing to do with domicile. Luckily there is a double tax treaty which means you can laim tax releif so your total bill will never be more than what it would have been oin the UK ie 40%.

In all of this it’s worth remembering that in the UK there are no inheritance taxes on the inheritance that pass between spouses. Also in the UK, taxes are not levied unless and to the extent that your assets exceed the tax free threshold which is a combined GBP 600,000 for married couples (increasing to GBP 700,000 by 2010).

In most parts of CH it's possible to arrange your affairs so there's no Inheritance tax on transfers between spouses. I say most parts because it's cantons which levy the taxes and rules vary. For example when I looked at this stuff Jura taxed transfers between spouses. I don't know if that's still the case. Rates of IHT also vary in CH between cantons but many have graduated bands which vary according to the beneficiary's relationship with the deceased.

If you are a foreign national living here then you need to check your home country rules to understand your individual tax position as regards inheritance taxes and whether there is a double tax treaty with CH to avoid a double hit. You also need to check the rules of your individual canton. If you are lucky enough to have enough assets where inheritance taxes are a consideration, it’s worth getting expert tax and estate planning advice.
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Old 14.06.2008, 12:04
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Re: Estate Planning / Will - Swiss Law

Nev gives a very good explanation of what is a very complicated subject. One of the problems is that the concept of domicile is based on case law and, therefore, when a new judgement is handed down the rules can change. This is an example.

I did ask a UK lawyer how the authorities there would know if any tax was due and received the reply It would be a duty of your executors to file UK IHT returns on your death if UK IHT is thought to be due. They may choose to take counsel's advice if this is uncertain”. So what happens if your executors simply decide not to inform the UK authorities ?

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Old 14.06.2008, 14:48
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Re: Estate Planning / Will - Swiss Law

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Nev gives a very good explanation of what is a very complicated subject. One of the problems is that the concept of domicile is based on case law and, therefore, when a new judgement is handed down the rules can change. This is an example.

I did ask a UK lawyer how the authorities there would know if any tax was due and received the reply It would be a duty of your executors to file UK IHT returns on your death if UK IHT is thought to be due. They may choose to take counsel's advice if this is uncertain”. So what happens if your executors simply decide not to inform the UK authorities ?

The executors would be subject to severe penalties which they could not recover from the deceased's estate and even prosecution. Take it from me, being an executor is a thankless task!
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Old 14.06.2008, 15:59
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Re: Estate Planning / Will - Swiss Law

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The executors would be subject to severe penalties which they could not recover from the deceased's estate and even prosecution. Take it from me, being an executor is a thankless task!
I take your point but I was thinking of a position where all the assets of the estate, and the executors, where abroad and beyond the jurisdiction of the UK authorities.
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Old 14.06.2008, 17:18
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Re: Estate Planning / Will - Swiss Law

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I take your point but I was thinking of a position where all the assets of the estate, and the executors, where abroad and beyond the jurisdiction of the UK authorities.
The UK taxman has a notoriously long arm. If you are UK domiciled your estate is subject to UK IHT on world wide assets. The fact that they are abroad doesn't mean it's beyond the UK's jurisdiction or the taxman's ability to pursue the tax. I haven't looked but my guess is the UK/Switzerland double tax treaty makes provision for the exchange of information in the event of tax evasion and for cooperation in enforcing the tax liability. What percentage of cases which fail to get reported actually get pursued I have no idea. But presumably you filed a return with the Revenue when you left the UK to avoid UK income tax liability so you are on file as being expat.
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Old 14.06.2008, 17:28
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Re: Estate Planning / Will - Swiss Law

But would Swiss authorities really give out information about something which isn't a criminal offense in CH, which I believe tax evasion isn't?



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The UK taxman has a notoriously long arm. If you are UK domiciled your estate is subject to UK IHT on world wide assets. The fact that they are abroad doesn't mean it's beyond the UK's jurisdiction or the taxman's ability to pursue the tax. I haven't looked but my guess is the UK/Switzerland double tax treaty makes provision for the exchange of information in the event of tax evasion and for cooperation in enforcing the tax liability. What percentage of cases which fail to get reported actually get pursued I have no idea. But presumably you filed a return with the Revenue when you left the UK to avoid UK income tax liability so you are on file as being expat.
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Old 14.06.2008, 21:09
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Re: Estate Planning / Will - Swiss Law

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The executors would be subject to severe penalties which they could not recover from the deceased's estate and even prosecution. Take it from me, being an executor is a thankless task!
You are so right. Being an executor & trustee to a family member has left us with a £5500 bill for nothing but total aggro. I have refused to take on this task again, I would recommend to anybody to never do it.
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