Reichlin Hess Rechtsanwälte, Steuerberater, Notare, Zug, Schweiz

COVID-19 in inheritance law

In these extraordinary COVID-19 times, many people are forced to deal with illness or even death. There is a great need for security and self-determination. Accordingly, precaution seems more important than ever and the question of what happens or should happen to one’s assets in the event of death is omnipresent. Certain legal precautions can be taken to preserve one’s right to self-determination in the event of illness, incapacity of judgement or death, or to safeguard one’s will as comprehensively as possible. The following article provides an overview of the legal possibilities:

Arrangements for incapacity of judgement

The capacity of judgement according to Swiss law means the ability to act rationally. The capacity of judgement must always be assessed in a specific situation. A person may become incapable of judgement due to illness. Accordingly, she/he will no longer be able to manage their own affairs. If a person becomes incapable of judgement, official measures are generally ordered. The following legal instruments exist to prevent this from happening and to prepare for the case of temporary or permanent incapacity of judgement, respectively:

Advance Care Directive (Vorsorgeauftrag)

A person (principal) who is capable of acting (i.e. a person of age and capable of judgement) authorizes a (trusted) third party to represent him/her during his/her lifetime with respect to certain matters in the event of his/her incapacity of judgement.

One or more natural or legal persons are instructed to take care of the personal and/or financial matters of the principal as well as to assume his/her legal representation in case he/she becomes incapable of judgement. The advance care directive shall specify the tasks to be assumed. Instructions may also be issued with regard to the execution of the tasks. Where appropriate, it may make sense to appoint a substitute representative in the event that the representative primarily intended is not suitable, cannot or does not accept the assignment or terminates the mandate.

Since the person appointed may refuse the mandate after the principal becomes incapable of judgement, it is advisable to inform the desired representative or, as the case may be, to obtain his/her consent before writing the advance care directive. At the same time, however, it should be noted that even after acceptance of the mandate, the person appointed is free to terminate the mandate at any time with a two-month notice period. For important reasons, the person appointed may even resign without notice.

The advance care directive must be written by hand – i.e. handwritten, dated and signed from start to finish – or be notarized by a notary. Any advance care directives written and printed out on the computer are invalid!

In order to ensure that in the event of incapacity of judgement, the mandate granted by means of the advance care directive can be performed, the existence (and the whereabouts) of such advance care directive should be known to at least one trusted third party (presumably also the mandated person). An original or a certified copy of the advance care directive should in any case also be handed over to the person(s) mandated. In addition, the existence of an advance care directive and its whereabouts (place of deposit) can – by submission of a written application to the principal’s civil registry office – be entered in the central database called “Infostar”. Due to cantonal differences we recommend to clarify the exact procedure with the relevant civil registry office in advance. The advance care directive itself is not deposited.

If the principal concludes that an advance care directive no longer corresponds to his/her will after it has been set up, either because he/she wishes to entrust another person with his/her advance care, change the content or scope of the advance care directive or cancel it altogether, the existing advance care directive may be amended or revoked. The amendment may be made in the form of a supplement or addendum to the existing new advance care directive or by setting up a new one. If the principal writes a second advance care directive, it replaces the first (previous) one, even if the latter is not explicitly cancelled, unless the latter is undoubtedly a mere addendum to the first one. The advance care directive is revoked either by a (from start to finish) handwritten, dated and signed revocation, by a notarized revocation or by a physical destruction of the document. In case of a physical destruction, it is to be ensured that all copies are destroyed.

Patient Decree (Patientenverfügung)

A person capable of judgement may issue a patient decree – majority is not required. Contrary to the advance care directive, which apart from authorizations with respect to medical matters may also include provisions with respect to various other areas, the patient decree is limited exclusively to the procedure to be followed with respect to medical matters in the event of incapacity of judgement. In the patient decree, a person specifies which medical measures may and may not be taken in the event of his/her incapacity of judgement.

Similarly to the advance care directive, the person setting up the directive is free to instruct a natural person to discuss and decide on medical measures with the attending physician doctor in the event of his/her incapacity of judgement. Here, too, one may appoint a substitute representative if the person appointed is not suitable, or does not accept or terminates the mandate.

The patient decree must be drawn up and signed in writing and include the date. It does not need to be written by hand, it is sufficient if a pre-printed form is completed, dated and signed. To be fully informed about your possibilities, we recommend to discuss the patient decree with your family doctor.

The patient decree can be amended or revoked at any time in written form. In case of revocation, a physical destruction of all copies is possible as well.

Arrangements for the event of death

There exists a wide range of options and arrangements to make use of the right of self-determination with regard to the fate of your estate in the event of your death (to the extent permitted by law). The principle is that – subject to the compulsory portion of the heirs – the testator is free to dispose of his/her estate. The compulsory portions to be taken into account at present amount to 3/4 of the statutory inheritance entitlement for a descendant and 1/2 of the statutory inheritance entitlement for the surviving spouse/registered partner, i.e. 3/8 for the descendants and 1/4 for the surviving spouse/registered partner. If the testator leaves no descendants, the parents also have a right to a compulsory portion amounting to 1/2 of their statutory inheritance entitlement, i.e. 1/8. In this case, the compulsory portion of the surviving spouse/registered partner increases to 3/8. It should be noted that legislative measures are in progress in parliament to reduce the compulsory portion of the descendants from 3/4 to 1/2 and to abolish the compulsory portion of the parents completely. The Swiss Council of States has in the autumn session 2019 already approved such revision. If the National Council also approves the amendment, the law will not enter into force until 2021 at the earliest.

A person may dispose of his/her estate by last will (will, inheritance contract) if he/she has testamentary capacity. This is the case if he/she is capable of judgement and at least 18 years old. The mere capacity of judgement of the other (non disposing) party to an inheritance contract is sufficient provided he/she does not provide any consideration, such as in the case of a gratuitous appointment of an heir or the arrangement of a legacy.

Dispositions of the estate may be made in the following forms:

Last will (Testament):

By means of a will, a testator can make unilateral arrangements for his/her death. A last will is made by the testator alone. It should be ensured that the entire will is written by the testator’s own hand, i.e. it must be handwritten from beginning to end and include the date (year, month and day) and signature. Alternatively, the last will can also be notarised by a notary public with the assistance of two witnesses (who confirm the declaration of the testator and his testamentary capacity). Since in case the will is written in one’s own handthe intention of the deceased is often not clear, the assistance of a notary public or another legally qualified person is recommended, in particular if the circumstances are not straightforward.

If the testator is not able to write, read and/or sign the will himself, for example due to a COVID-19 illness, the following options are available:

The public notary reads the will (Testament) to the testator in the presence of two witnesses. Thereafter, the testator confirms that the will (Testament) corresponds to his last will. In this case, the witnesses must also confirm that the public deed has been read to the testator.

Another special form of setting up a last will is the oral will (Testament). This form is to be chosen if the testator is in an extraordinary situation, such as imminent danger of death, and is therefore not in a position to record his/her last will in another form, since e.g. a notary public cannot be present in time. The oral will is set up by (oral) communication of the last will to two witnesses. The oral will shall be immediately recorded in writing by one of the witnesses, stating the place, year, month and day, and signed by both witnesses. The transcript itself does not necessarily have to be written by hand. The witnesses may write down the oral will in any manner they wish. However, both witnesses must sign it in their own hands. Afterwards, the two witnesses have to file such document, together with a declaration that the testator had full testamentary capacity and about the special circumstances prevailing at that time, with the nearest judicial authority or have the contents of the testator’s will recorded by the judicial authority.

The will can be amended at any time. The forms provided for the establishment apply. The “new” will should also indicate whether it is merely an addition to the “old” will or whether it replaces it completely.

The testator may revoke the will by physically destroying the document or – which is advisable in certain circumstances for reasons of proof – declaring the revocation in one of the forms of establishment. Here too, in case of physicall destruction care must be taken to ensure that all copies are destroyed.

Inheritance contract (Erbvertrag):

If testamentary dispositions are to bind several persons (mutually), the form of the inheritance contract must be chosen. This form is to be used in particular when it comes to agreements between spouses (see the following section) or between spouses and children. In practice, one often sees inheritance renunciations by children in view of the surviving spouse’s preferential treatment. Sometimes an inheritance renunciation is also linked to compensation paid during one’s lifetime. Or co-shareholders agree on (mutual) purchase rights to company shares in the event of death.

An inheritance contract is to be drawn up by the notary public. For this purpose, the parties to the contract must, in principle, appear in person at the notary public’s office at the same time. The party who does not make arrangements under inheritance law, i.e. the party who is merely the beneficiary or whose consideration consists in a legal transaction between living persons, may be represented. Respective power of attorney should be in writing, with a certified signature of the person granting the power of attorney. The inheritance contract further needs to be signed in the presence of two witnesses.

Amending an inheritance contract is more difficult than a will, especially as there are several contract parties. In principle any amendment requires the consent of all parties. Therefore, any amendment to the inheritance contract requires a new contract. The amendment is also subject to the formal requirement of public notarisation.

A unilateral revocation of an inheritance contract is hardly possible. In principle, a revocation of an inheritance contract requires the consent of all contracting parties as well . For this purpose, however, the written form (no notarisation!) is sufficient. According to the law, an inheritance contract can only be unilaterally revoked by the testator if and to the extent that after the conclusion of the inheritance contract a beneficiary party commits a serious misconduct towards the testator constituting grounds for disinheritance (partial termination). In this case, the inheritance contract can be unilaterally revoked in one of the prescribed forms for drawing up testamentary dispositions or a will. Having said that, however, the inheritance contract may also include testamentary clauses which are unilaterally freely revocable (such as the appointment of an executor); we recommend to explicitly designate such clauses as unilaterally revocable.

Marriage and inheritance contract (Ehe- und Erbvertrag):

Married persons can also conclude a combination of marriage and inheritance contract. This option is particularly useful if the spouses wish to deviate from the matrimonial property law provisions as stipulated by law (fifty-fifty split of the assets earned during the marriage). For example, if one wants to favour the spouse in the event of his/her death to the greatest extent possible, we recommend to set up a marriage and inheritance contract (with provisions of both matrimonial property law and inheritance law), especially if there are other legal heirs.

With regard to the possibilities of amending and revocation of such, including formal requirements, please refer to the above explanations on the inheritance contract.

Appointment of executor (Willensvollstrecker):

To ensure that the estate is divided in the testator’s interest, the testator may appoint a suitable person to execute his last will. The executor takes care of all administrative and legal matters relating to the estate.

The executor becomes active only after the death of the testator and must administer, liquidate and divide the estate in accordance with the testator’s instructions.

An executor may be appointed either by will or by inheritance contract (in the form of a testamentary disposition). The executor can be either a natural or a legal person. It is important to note that the testator cannot delegate the appointment of an executor to another person. There is no training for executors prescribed by law. However, we recommend to appoint a person familiar with the law of succession (e.g. a lawyer/notary public) as executor. A substitute executor may be appointed for the case that the originally appointed executor does not accept the mandate, e.g. dies or has already died, or resigns from the mandate.

The appointment of an executor is particularly useful in complex situations, namely when the estate is large, there are many beneficiaries and/or when a lengthy distribution of the estate is expected. It also makes sense to appoint an executor if it is to be feared during one’s lifetime that disputes among the heirs and/or beneficiaries could arise during the distribution of the inheritance.