Estate planning before retirement

Why retirement is the right time

Shortly before retirement you take decisions that are hard to correct later: pension or lump sum, withdrawal of pillar 3a, amortisation of the mortgage, perhaps handing over the business. Each of these decisions changes what goes to whom on death. An estate plan that considers these questions prevents provision and inheritance law from working against each other.

In addition, with age the likelihood increases of one day no longer being able to decide for yourself. An advance care directive and a living will therefore belong in the same plan as the will and the inheritance contract.

Pension fund: pension or lump sum

A pension secures a lifelong income and, where the statutory and regulatory conditions are met, a survivor's pension for the spouse — 60 percent of the retirement pension under the mandatory scheme (Art. 19 and 21 Occupational Pensions Act). With a pension, an individual remaining capital is generally not inherited. But "nothing remains for the children" is not accurate: orphans' pensions of 20 percent run until the age of 18, or 25 during education (Art. 20 and 22), and many fund regulations provide for additional death benefits or further beneficiaries (Art. 20a). What your fund provides is set out in its regulations — we read them with you. With a lump sum the money is yours; it is taxed once at a reduced rate. What is later inherited is whatever remains of it and is attributable to you under matrimonial property law.

Whether a pension, a lump sum or a combination fits depends on health, other assets, family situation and taxes. We examine the effect of both options on the estate before you commit. For pillar 3a and vested benefits we check whether the beneficiary order matches your plan.

Providing for spouses and partners

Married couples have two levers. The marital agreement governs what passes to the surviving spouse from the marital property regime on death, for instance by allocating the entire surplus. The inheritance contract or will governs the estate. Since the 2023 inheritance law revision, the children's compulsory share is only half of their statutory entitlement and parents no longer have a compulsory share. This allows the spouse to be favoured much more strongly than before, up to a usufruct of the entire share of the children the spouses have together (Art. 473 Swiss Civil Code).

Cohabiting couples have nothing by law. No inheritance right, no compulsory share, and in many pension funds no survivor's benefit without registration. Here an arrangement by will or inheritance contract is essential, complemented by the beneficiary registration with the pension fund and pillar 3a.

Home ownership: who stays in the house?

What happens to the house is decided in three steps. Ownership comes first: does the property belong to one person alone or to both as co-owners? For married couples the division of matrimonial property follows, determining which portion falls into the estate at all. Only then does inheritance law apply — and the remaining share belongs to the community of heirs, where every decision requires unanimity. Unmarried partners are not statutory heirs; they receive only what a will or inheritance contract allocates to them within the disposable portion. So that the surviving partner can stay, we allocate the house in the marital agreement or inheritance contract, or secure a usufruct or right of residence. At the same time we check the affordability of the mortgage after retirement and a possible transfer to a child during your lifetime.

Advance care directive and living will

In the advance care directive you determine who manages your affairs if you become incapable of judgement: assets, contracts, authorities, representation in legal matters. Without a directive, a deputyship does not arise automatically. Spouses and registered partners who share a household or regularly provide personal support have a statutory right of representation; it covers ordinary maintenance needs and the ordinary administration of income and assets (Art. 374 Swiss Civil Code). Extraordinary asset management requires the consent of the KESB — and anyone who is not married has no such right at all. Official measures only follow where a person's own arrangements and the support of those close to them are insufficient (Art. 389). The directive must be handwritten or publicly notarised; we notarise it in-house and have the place of deposit recorded with the civil register office. When incapacity occurs, the KESB reviews the directive and brings it into effect.

The living will complements it for medical decisions. Both documents should be aligned with each other and with the will or inheritance contract.

Gifts and advances to the children

Many parents want to help their children during their lifetime, with buying a house, the grandchildren's education or setting up a business. Legally this is a gift or an advance on inheritance — and not every gift is treated the same way.

Two questions have to be kept apart. Equalisation governs the relationship among the heirs: a marriage portion, an advancement, a transfer of assets or a release from debt granted to descendants must be equalised in the division of the estate unless the deceased expressly ordered otherwise (Art. 626 Swiss Civil Code). Anyone who wants to exempt a gift from equalisation has to say so — in a form that can still be proven later. Abatement, by contrast, protects the compulsory shares: advancements that are not equalised count without any time limit (Art. 527 no. 1), ordinary gifts for the five years before death (Art. 527 no. 3); customary occasional gifts are left out. A gift exempted from equalisation can therefore still be abated if it infringes a compulsory share.

We record in writing what is to be set off and what is not, and check separately whether the compulsory shares are preserved — so that there is clarity among siblings later.

Business and succession

Whoever runs a business plans two handovers: the operational and the inheritance-related one. A shareholders' agreement, an inheritance contract with the other heirs and a comprehensible valuation prevent the business from being broken up or blocked in the division of the estate. We coordinate the succession arrangement with your fiduciary or tax adviser.

Taxes

Spouses and descendants pay no inheritance or gift tax in the cantons of St. Gallen, Appenzell Ausserrhoden and Zurich. Cohabiting partners and more distant relatives are taxed considerably higher; some cantons apply reduced rates for long-term life partners. A lump-sum withdrawal from the pension fund is taxed separately from other income at a reduced rate, and staggered withdrawals over several years can lower the burden. We show you the tax consequences of each option and work with your tax adviser where necessary.

Digital estate and documents

E-banking, password managers, subscriptions, cloud storage, social media: without access, relatives face closed doors. We recommend an inventory of accounts and contracts and an organised emergency access, kept with the other estate documents. The will or inheritance contract states who settles the digital estate.