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The new law of succes­sion — rele­vant for foundations

Since the beginning of 2023, new rules for compulsory portions apply in inheritance law. Testators have more funds at their disposal, which they can dispose of freely. They can, for example, use these funds in their wills to benefit a foundation.

Chari­ta­ble foun­da­ti­ons often receive gratui­tous dona­ti­ons such as gifts and lega­cies, which some­ti­mes repre­sent a very important part of the foundation’s resour­ces. What the chari­ta­ble foun­da­ti­ons have to keep in mind, howe­ver, are the so-called compul­sory porti­ons in the case of inhe­ri­tance: If a person leaves certain cate­go­ries of heirs at his or her death – the so-called heirs entit­led to a compul­sory share – they are entit­led to a mini­mum share of the estate. Only the part that is freely available (“freely available quota”) can a test­a­tor bequeath to a foun­da­tion without any problems. If, on the other hand, he or she gives too much to a foun­da­tion and ther­eby viola­tes the compul­sory portion of heirs, these gifts to the foun­da­tion are contest­a­ble under Swiss inhe­ri­tance law. The heir whose compul­sory share has been viola­ted can claim his or her mini­mum share by means of a so-called action in abate­ment, and the foun­da­tion may have to return a dona­tion it has recei­ved. The purpose of the action in abate­ment is to restore the viola­ted compul­sory portion at the expense of the reci­pi­ents of life­time or testa­men­tary gifts. The estab­lish­ment of a new foun­da­tion may also be contest­a­ble if the respec­tive test­a­tor uses too many funds for this purpose and thus viola­tes the compul­sory porti­ons of others.

New rules for compul­sory shares

Since 1 Janu­ary 2023, new rules apply to these compul­sory porti­ons. With the new regu­la­ti­ons, the portion that test­a­tors can freely dispose of has been increa­sed. This means that test­a­tors have more funds at their dispo­sal with which they can bene­fit foun­da­ti­ons by means of a will, set up new foun­da­ti­ons or, of course, make dona­ti­ons to other persons who are close to their hearts. Under the previous law, the descen­dants, spou­ses or regi­stered part­ners – and under certain circum­stances also the parents – recei­ved compul­sory porti­ons of an inhe­ri­tance. These compul­sory shares amoun­ted to 50 to 75 percent of the legal share of the inhe­ri­tance. Since 1 Janu­ary 2023, howe­ver, the compul­sory porti­ons are now in any case only 50 percent, and the parents’ compul­sory portion has been abolished altog­e­ther. The testator’s free­dom has thus been consider­a­bly increased.

Thus, since 1 Janu­ary 2023, a test­a­tor can always freely dispose of half of the estate as a mini­mum – instead of as a maxi­mum – if there are heirs with compul­sory porti­ons. If there are no child­ren, but survi­ving parents and spou­ses, the test­a­tor can even bequeath more than half – namely 5/8 – of the estate freely. If neither spou­ses nor descen­dants survive, the test­a­tor is comple­tely free to allo­cate his or her estate assets. All these chan­ges apply to every inhe­ri­tance case since 1 Janu­ary 2023.

Desi­gnate dona­ti­ons as precis­ely as possible

If a person dies after 1 Janu­ary 2023 but had alre­ady draf­ted his or her will before 1 Janu­ary 2023 and named a foun­da­tion as the bene­fi­ci­ary ther­ein, the will may not be enti­rely compre­hen­si­ble. This is because it could be unclear how much the dona­tion should actually be: Does the test­a­tor namely refer to the “freely available quota” before or after the change in the law took place? Depen­ding on the result of the inter­pre­ta­tion, the foun­da­tion may receive a signi­fi­cantly larger share of the estate.

Accor­din­gly, it is always advi­sa­ble for test­a­tors to desi­gnate the respec­tive dona­ti­ons in their wills as precis­ely as possi­ble. Moreo­ver, in discus­sions with test­a­tors, execu­tors or, in extreme cases, as defen­dants in inva­li­dity or abate­ment proce­e­dings, foun­da­tion boards and employees of foun­da­ti­ons should be careful that these wills are inter­pre­ted in favour of the foun­da­tion, for exam­ple if the will menti­ons the “biggest possi­ble bene­fit” for the foun­da­tion or, in the case of a bequest, the amount of “the freely available quota” is questionable. In case of doubt, a foun­da­tion recei­ving dona­ti­ons should seek legal advice and thus avoid complications.

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