Succession and Last Will

Succession and Last Will

Succession in Switzerland – Last Will

According to the general provisions of the Swiss International Private Law Act, Swiss courts or administrative authorities at the decedent’s last domicile shall have jurisdiction over probate proceedings and inheritance disputes. The jurisdiction of a state who claims exclusive jurisdiction over real estate within its territory remains reserved. The estate of a person with his or her last domicile in Switzerland will in principle be subject to Swiss law.

Order of succession in Switzerland

The Swiss Civil Code determines the order of succession. The closest heirs of a decedent are the descendants. As a rule, the children shall inherit in equal parts; adoptive children have the legal status of natural children. Their own issue takes the position of predeceased children.

In case the decedent does not leave any children, the inheritance shall devolve to the issue of the parents. Their descendants in all degrees per stirpes shall substitute a predeceased mother or father. The surviving spouse or registered partner is legal heir as well.

Swiss law states statutory entitlements for legal heirs (so-called forced heirship portion). Hence, the legal heirs are entitled to a certain percentage of the decedent’s inheritance. This percentage depends on whom the legal heirs have to share with in the estate.

Last will

In order to arrange for a succession different from the intestate succession, a last will or inheritance contract may be drawn up. Nevertheless, a last will, just as an inheritance contract, will have to comply with the statutory entitlements of the legal heirs. According to Swiss law, a last will shall be valid as regards its form if it is drawn up in the form of a public deed or in holographic form.

A foreigner may, be it by last will or inheritance contract, subject his or her estate to the laws of his or her home country (professio iuris). Such disposition shall, however, become null and void if, at the time of death, the decedent was no longer a national of that state or if in the meantime he or she had become a Swiss national.

The Hague Convention on the Conflicts of Laws relating to the Form of Testamentary Dispositions will shall govern the form of a last will. Therefore, a testamentary disposition shall be valid from a formal point of view, if its form complies with the international law:

  1. of the place where the testator has drawn it up;
  2. of a nationality possessed by the testator, either at the time he made the disposition or at the time of his death
  3. of a place in which the testator had his domicile either at the time when he made the disposition, or at the time of his death
  4. of the place in which the testator had his habitual residence either at the time when he made the disposition, or at the time of his death
  5. as far as immovables are concerned, of the place where they are located. https://www.linkedin.com/in/walter-h-boss-b9810610/
succession

Walter H. Boss

Walter Boss

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Advantages of Marital Agreements for Entrepreneurs

Advantages of Marital Agreements for Entrepreneurs

Marital agreements help entrepreneurs to safeguard themselves and their families against any claims from third parties. They can be also useful to protect their company in the event of a divorce, and in the event of their death or incapacity to act.

What are the advantages of marital agreements for entrepreneurs?

Entrepreneurs want to safeguard themselves and their families against any claims from third parties. They also wish to protect their company in the event of a divorce. And, furthermore, they would like to be in control of what happens to their company, not only today, but in the future, in the event of their death or incapacity to act.

Swiss family law offers entrepreneurs a powerful management tool in the form of marital agreements. Each individual case has to be analysed with regard to its specific aims and framework conditions. The objective is a personalised solution that takes account of the individual needs of the entrepreneur.

Swiss matrimonial property law provides for three property regimes:

  • The Marital Property Regime of Participation in Acquired Property, as the statutory type of regulation.
  • The Separation of Property.
  • The Community of Property.

The Separation of Property and the Community of Property can be substantiated via a marital agreement. Marital agreements require notarisation in order to be valid.

Participation in acquired property: During the existing marriage, the assets, debts, income and expenditure of the spouses (apart from those for the joint household andthe fulfilment of the duty of matrimonial support) are kept separately.  In the event of the termination of this regime due to divorce, the assets accrued during the marriage will be shared fifty-fifty between the spouses respectively the heirs.

In the case of companies this can lead to illiquidity and pose a threat to a company’s continued existence. In order to avoid this, a pre-existing company can be transferred to the entrepreneur’s individual property. This means that the entrepreneur’s spouse no longer has any claim to it.

Separation of property: In the event of a divorce, each spouse retains whatever property he/she brought to the marriage. In the event of the death of a spouse, the property succession is exclusively subject to the rules and provisions governing inheritance.

The transferral of companies, property and other assets to the individual property of one spouse is becoming increasingly possible within the community of property (however, this is not effective in the case of divorce). Companies and other assets can also be shifted to the common property of both spouses under the community of property provision and be transferred to the surviving spouse by way of inheritance with effect in rem.

However, the community of property is only to be recommended if neither spouse has any personal liability risks. It has the advantage, which should not be under-estimated, that the surviving spouse receives the company or shares in the company directly as property by way of inheritance and can compensate the co-heirs in another way, according to his/her choice. This then avoids a state of limbo in the property and controlling interests following the death of an entrepreneur.http://www.burki-law.ch/

succession

Nico H. Burki

Burki Rechtsanwälte
How to organise succession for a family business?

How to organise succession for a family business?

How to organise succession for a family business?

Prerequisites

In order to prepare for the succession of the family business, the family members should actively lay the groundwork for the active involvement of the next generation through upbringing and education. By familiarizing the children with the history of the business and talking openly about current developments, parents and elders can reinforce identification with the family business. The children should be actively involved from an early age. This enables the older generation to identify their interest, involvement and commitment.

Preparation phase

At some later point in time the succession planning should become more defined and detailed. The owner of the business should start to establish his objectives. He needs to think about how much control he wants to retain in the future (as shareholder and/or member of the Board of Directors), whether there exist family members capable of and interested in running the business once he steps down, whether he wants to stay on in an advisory capacity etc.

He needs to assess his financial situation, matrimonial and inheritance implications and has to consider tax issues that go along with succession steps. The owner of the business has to communicate and discuss his ideas with the family and start to implement a succession plan (e.g. as part of the family charter or in a separate document).

Implementation phase

Sound basis agreements are the vital building blocks on which seamless and satisfying succession is built on. Drawing up unambiguous agreements is essential (e.g. succession agreement between the owner of the business and his family, organizational regulations for the members of the Board of Directors of the company, shareholder agreement between the shareholders of the company, matrimonial agreement, inheritance agreements or last will).

In a succession arrangement, the principles of the succession plan should be laid down. It should contain provisions regarding:

  1. the family members who may become and remain involved in the running of the business and how the other family members should be compensated.
  2. the time aspect, e.g. staggered transfer of shares to the next generation.
  3. how the transfer of the actual ownership stake should take place, e.g. anticipatory succession, mixed donation or a sale at market price.
  4. how shareholder interests and management responsibilities may be combined.
  5. exit strategies in case the succession plan does not work as intended, e.g. handing back of ownership. Families are well advised to ensure that the ownership of the company does not become too fragmented. Splintering of rights and votes frequently lead to stale mate situations. An effective successor arrangement must be flexible and should include alternatives.

Organizational regulations govern the duties and powers of the Board of Directors, its chairperson as well as of the delegates of the Board of Directors and may contain provisions regarding:

  1. the constitution of the Board of Directors.
  2. the frequency of meetings, the quorum and passing of resolutions.
  3. the inalienable duties and powers of the Board of Directors.
  4. the delegation of the companies management to delegates (e.g. certain family members).
  5. the right to information and reporting duties.
  6. the remuneration of the Board of Directors and its delegates.
  7. signatory rights. https://www.prager-dreifuss.com/en/team/urs-feller-47

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