Please note that matters of matrimonial regime are complex and you should not rely on this article without professional advice on the facts of your case.
The matrimonial regime is often overlooked by British expats residing in Switzerland and yet this is an important element in determining which assets form part of their estate for the purposes of the succession rules and inheritance tax. This note looks at the types of matrimonial regime that exist in Switzerland and the implications for British expats.
Determining the matrimonial regime
The matrimonial regime stipulates which assets belong to whom during the marriage and how these assets are divvied up in the event of death (or divorce as the case may be). The matrimonial regimes are applied either by operation of law or by way of a marriage contract (commonly known as a pre or post nuptial agreement) and depend on the domicile of the spouses at the time of or immediately following the marriage.
It is necessary to determine the matrimonial regime and liquidate the regime first before determining which assets form part of an estate and can pass under a will or intestacy rules in the absence of a will.
If you were married in England without a marriage contract and your first matrimonial home was in England, you will have acquired the default matrimonial regime known as “separation of assets”. Under this regime, each spouse holds assets in their own name with no claim on the asset of the other. However, unbeknown to many, this matrimonial regime is automatically displaced by the Swiss default matrimonial regime when the couple takes up residence in Switzerland (article 55 loi fédérale sur le droit international privé 1987).
The default matrimonial regime in Switzerland is known as the participation aux acquêts. Under this regime any assets acquired before the marriage and inherited assets belonging to the spouse in their sole name remain separate. Other assets such as savings, income, pension and real estate acquired after the marriage belong to the spouses jointly. This means on death (or divorce as the case may be) the jointly owned assets belong to the surviving spouse and it is not possible for these assets to pass under a will or the intestacy rules.
It is possible to override the imposition of the default Swiss matrimonial regime by either making an election for the English matrimonial regime (or the Swiss regime of séparation de biens) to apply to the worldwide estate or have a marriage contract drawn up electing for the communauté de biens. If the couple do not make election or enter into a marriage contract then the Swiss regime of participation aux acquêts will apply automatically.
Under the communauté de biens, the spouses can specify which assets are owned jointly and which are separate. Any assets registered in the spouse’s sole name belong to that spouse and any assets in joint names are owned by the spouses jointly. The joint assets would usually include income and savings unless these are excluded from the joint assets in the marriage contract.
In accordance with Swiss law, the Swiss succession rules will apply to the deceased’s worldwide estate if he was domiciled in Switzerland at the time of his death. Unusually, worldwide estate here includes both moveable assets (such as shares in a company, bank accounts etc.) and immoveable properties (real estate). This is very unusual because generally, real estate is governed by the succession rules in the country where it is located.
Switzerland operates forced heirship rules. This means a portion of an individual’s estate automatically passes to the protected heir. Who is a protected heirs depends on the deceased’s marital status.
It is possible to override the forced heirship rules by electing for the succession law of the country of the deceased’s nationality to apply or for the protected heir (provided they are adult) to renounce their reserved rights.
Regardless of which succession rules apply, the canton in which the deceased was last domiciled has the right to tax the estate. This is, of course, subject to any existing double tax treaty. Inheritance tax is levied at the cantonal level and not at Federal level. Although there is discussion to introduce inheritance tax at Federal level. If introduced, it will take effect in 2016 but this new law may have retrospective effect.
In the meantime, each canton has exclusive rights to set inheritance tax rates. In general, inheritance between spouses is exempt from inheritance tax as is inheritance between parents and children.
If you are planning to move to Switzerland or have already moved then it is important that you seek clarification on which matrimonial regime applies to you. Failing to do so could significantly affect the devolution of your estate.