Estate analysis

Proper estate analysis is one of the most important financial decisions we make in our lives. At smzh, we understand that careful estate planning is essential to secure your family’s future and preserve your wealth. Our experience shows that many people underestimate the complexity of this task.

In this comprehensive guide, we explain step by step how to professionally analyze your estate. We cover all key aspects – from creating a will and understanding statutory succession to tax considerations. Throughout, we place special emphasis on clearly explaining the legal and financial context.

What is included in an estate?

When analyzing an estate, it is crucial to understand that it encompasses all of a decedent’s assets and liabilities. At smzh, we help you gain a clear overview of all relevant assets.

Assets

The active estate includes various components, which we summarize as follows:

• Cash and bank balances
• Shares and securities
• Building savings contracts
• Receivables from third parties

Liabilities

The passive estate includes all obligations that must be considered in estate planning:

• Mortgages and loans
• Loan liabilities and interest
• Costs of information and valuation
• Funeral expenses

Real estate

Properties and real estate often represent the most valuable part of an estate. For married decedents, it must first be determined which assets belong to the surviving spouse. We recommend making arrangements early, as properties frequently need to be sold to meet the claims of all heirs and statutory beneficiaries.

Valuables

Other important components of the estate include:

It is important to note that assets in the second pillar (occupational pension plans) are not subject to inheritance law and are not included in the estate. Funds in pillar 3a and life insurance policies are also treated under special rules, with the pension foundation or insurance company paying the proceeds directly to the designated beneficiaries.

For married couples, a marital property settlement is also required, similar to a divorce. The selected matrimonial property regime is crucial for dividing the marital assets.

Legal foundations of inheritance law

At smzh, we know that understanding the legal foundations is essential for effective estate planning. Let's look at the most important legal aspects you need to be aware of.

Statutory succession

Statutory succession applies in the absence of any provisions by will. Based on our experience, this is more common in Switzerland than many people think. The law divides heirs into different categories:

• First-order heirs: descendants (children, grandchildren)
• Second-order heirs: parents and their descendants
• Third-order heirs: grandparents and their descendants

Statutory portion

The statutory portion protects certain relatives from being completely disinherited. According to current law, the statutory portion is as follows:

What's important to know is that the revision of the inheritance law of 2023 abolished the compulsory portion of parents. This provides greater flexibility in estate planning.

Wills

We recommend that our clients carefully look into the possibility to write a will. Doing so enables them to:

• Define heirs
• Define their legacies
• Name an executor 

When drafting a will, you need to keep in mind that the available portion – the share of your estate that you can distribute according to your own wishes – amounts to a maximum of half of your estate if you have statutory heirs .

Disinheritance is only possible in serious cases, for instance in the event of:

• Serious crimes against the testator
• Serious breach of duties relating to family law

Our experience shows that carefully considered estate planning including all related parties is most sensible. An inheritance contract may be a good option in this regard, as it can only be changed when all contractual parties are in agreement. To create a legally sound inheritance contract, you will need a notary as well as two witnesses.

Establishing an estate directory

As experienced financial advisors, we know that a carefully drafted estate directory is the foundation of a sucessful transfer of assets. A complete and well-organized directory documents all estate items and liabilities at the time of inheritance.

We recommend a systematic approach to creating an estate directory. It must include the following core elements:

Valuing real estate and valuables

When valuing real estate, we recommend getting a professional appraisal. This is particularly important, as the value has a significant impact on inheritance tax. Our experience shows that a careful appraisal can help prevent later disputes.

For the purpose of valuation, we take into account:

• Current market prices in the region
• Structural condition and renovation needs
• Location and infrastructure
• Potential value increases
• Debt and liabilities

It is as important to fully document all liabilities as it is important to document all assets. We support you in capturing all relevant liabilities:

1. Existing credits and mortgages
• Current loan amounts
• Interest obligations
• Current installments
2. Current liabilities
• Utility contracts
• Insurance premiums
• Memberships
3. Estate costs
• Funeral costs
• Management fees
• Court fees

Especially important: In cases involving compulsory portion claims, the estate inventory must also include the notional estate, in other words, gifts made within ten years preceding the inheritance event. These are considered on a graduated basis: gifts from the past year are included at 100%, while gifts made in earlier years are included at decreasing percentages.

For legally sound documentation, we recommend working with a specialized inheritance law attorney, especially in the following situations:

• There is a community of heirs
• Compulsory portion claims are being asserted
• The estate may be over-indebted
• Real estate is part of the estate

Our experience shows that a precise estate inventory not only meets legal requirements but also serves as a solid foundation for a fair distribution of assets. We will support you in preparing this inventory based on our extensive experience and in-depth expertise in estate planning.

Analysis of the family situation

A careful analysis of the family situation is a central aspect of our estate planning advisory services. At smzh, we understand that every family is unique and requires individual solutions.

Spouses and children

In our years of experience, we have found that ensuring the security of spouses and children is of utmost priority. The surviving spouse and the descendants each inherit half of the estate. We recommend the following distribution options::

Important for our clients to note: With a marriage and inheritance contract, you can ensure that your spouse inherits a maximum to avoid financial tight spots.

Other relatives

In estate planning, we also take into account the position of other relatives. Swiss inheritance law allocates heirs to three lines of succession:

• First line: Descendants of the deceased (children, grandchildren, etc.)
• Second line: Parents and siblings only inherit if there are no children or children's children
• Third line: If there are no heirs in the first or second lines, the deceased's grandparents and their descendants (aunts, uncles, etc.) inherit

Important to note: As soon as there is even just one heir of a higher line of succession, relatives of a lower line are excluded from legal inheritance.

Unmarried cohabiting partners

Unmarried partnerships tend to face particular challenges. These are the most important facts to consider:

1. No statutory inheritance law: The surviving partner has no statutory right to the estate.
2. Necessary provision: We strongly recommend making contractual arrangements, as unmarried partnerships provide no social protection.
3. Last will necessary: If the cohabiting partner is to have a right to the estate, it is indispensable to write a last will.

Particular tax aspects: Cohabiting partners are in tax bracket III of inheritance tax. The tax allowance amounts to only CHF 20,000, with the entry tax rate at 30%.

To optimally protect cohabiting partners, we recommend:

• Writing a last will
• Concluding a comprehensive power of attorney
• Defining care of the deceased
• Providing clear guidance for the funeral

When defining an estate settlement in unmarried cohabiting partnerships, particular attention must be paid to the formal requirements. A will must be fully handwritten, dated, and signed by hand.

Our experience shows that combining a power of attorney and an advance care directive is of utmost importance if one partner is no longer able to manage his or her affairs on his or her own. We further recommend that unmarried cohabiting partners acquire real estate together in a civil law partnership if both contribute to financing.

Tax aspects of estate planning

Particular attention must be paid to the tax aspects of estate planning, as they can significantly impact the inherited assets. At smzh, we help you understand the applicable tax regulations and use them in the most favorable way possible.

Inheritance and gift tax

Inheritance tax in Switzerland is a tax levied on the acquisition of assets as a result of death or through gratuitous transfers between living persons, payable by the heir or the recipient of the gift. The tax rate varies significantly and can range from 7% to 50%, depending on the tax bracket and the degree of relationship.

We have summarized the most important tax brackets for you:

Tax allowances

Tax allowances play a central role in estate planning. Our experience shows that skillfully utilizing allowances can deliver significant tax advantages.

The following aspects are particularly important:

• Owner-occupied real estate enjoys special tax exemptions

• Business assets may benefit from tax privileges if they help preserve jobs

• Certain types of assets are exempt from inheritance tax or qualify for specific concessions

Tax optimization

We recommend that our clients pursue proactive tax planning. The following strategies have proven especially effective:

1. Lifetime transfers
• Taking advantage of the 10-year rule for gifts
• Staggering asset transfers over time
• Utilizing exemptions for each recipient
2. Real estate transfers
• Transfer with reservation of usufruct
• Making use of tax exemptions for owner-occupied property
• Considering value deductions for rented residential properties
3. Business succession
• Making use of relief rules for business assets
• Optimizing the structure of the transfer
• Securing jobs to minimize taxes

Practical tip: For gift tax, attention must be paid to the so-called 10-year rule. This allows assets to be transferred in several installments with tax advantages.

For optimal tax structuring, we take into account:

• The individual family situation
• The existing assets and their structure
• Specific cantonal regulations
• Future developments in asset value

It's especially worth noting that the effective tax rate on asset transfers is currently around 2.5%, which is significantly lower than nominal rates. This demonstrates the considerable optimization potential in estate planning.

When structuring asset transfers, we also pay particular attention to:

1. Timing
• Optimal timing for transfers
• Consideration of personal life circumstances
• Coordination with other taxable events
2. Asset structure
• Allocation across different types of assets
• Considering appreciation potential
• Aspects of liquidity for tax payments
3. Documentation
• Careful record-keeping of all transfers
• Proof of gifts and their timing
• Documentation of valuation principles