According to research carried out by Professor Marius Brülhart of the HEC Faculty at the University of Lausanne, around CHF 100 billion changes hands in Switzerland each year through inheritance. Much of that wealth transfers smoothly. Some of it does not. When a succession goes wrong, the damage is rarely just financial: family relationships fracture, businesses stall, and assets built over a lifetime are liquidated under pressure to settle disputes between heirs.
The difference between an orderly transmission and a conflict is almost never the size of the estate. It is whether the planning happened early enough, i.e. at least ten years before death, and whether the right tools were used.
This guide presents the legal tools and governance mechanisms that can help structure the succession, anticipate potential difficulties and mitigate the risk of conflict, with specific attention to the complexities that affect wealthy families and business owners.
Why Successions Turn Into Conflicts
Three factors generate most succession disputes.
Perceived inequality. The heirs do not always receive the same assets — and even when the values are equivalent, they may not perceive them as such. For example, a child who has worked in the family business for ten years may feel entitled to more. In a different context, the eldest receives shares in the publicly listed family business, while the younger sibling receives real estate: although equivalent in value when the estate plan was drawn up, these assets may perform very differently over time.
Lack of communication. Most parents never discuss their estate plans with their children: neither what they intend to do, nor why, nor what they expect from each of them. The will is then discovered as a posthumous judgment, with no opportunity for dialogue. Unexplained decisions may be perceived as a sign of favouritism or a lack of affection. Surprise, then, is the enemy of acceptance.
Assets that are difficult to divide. Real estate, a business or an art collection do not lend themselves easily to being divided into three equivalent shares. Three heirs who jointly own a lakeside villa must agree on its management, use, necessary investments or sale. Decisions can then remain deadlocked for a prolonged period due to a lack of alignment. Alternatively, one heir may withhold crucial information in order to induce the others to make a decision contrary to their interests. Such situations can lead to a breakdown of trust.
For entrepreneurs and families with substantial wealth, these three factors can compound one another. One child wants to preserve the family business for future generations. Another wants to sell it. Without proper planning, a family business can become paralysed and ultimately be sold at a significant discount because the heirs cannot reach an agreement.
Estate planning does not begin at the notary’s office. It begins with the conversations you have — or do not have — with those closest to you.
The Legal Tools for Preventing Disputes over Inheritance
Swiss law provides three principal instruments. Each serves a different purpose, and most well-structured plans use more than one.
The Handwritten Will (Testament olographe)
A handwritten will is the simplest instrument. Under Art. 505 of the Civil Code, it is valid if written entirely by hand, dated (day, month, year), and signed (first name and surname). No notarisation is required, but a notary may verify that it complies with the relevant requirements and keep a copy, which could potentially prevent it from being destroyed by a malicious individual who might find it.
With a will, you are free to allocate your freely disposable portion — the share of your estate that is not subject to forced heirship rules. Since the reform of the Swiss Civil Code, which entered into force on 1 January 2023, this freely disposable portion amounts to 50% of your estate (compared with 37.5% previously). You can therefore favour one heir, leave part of your estate to an institution, or compensate a child who receives fewer income-producing assets. You cannot, however, modify the statutory reserved shares or bind the heirs to any arrangement — each heir retains the right to contest the relevant clauses (Art. 522 et seq. of the Civil Code).
A will can be amended unilaterally at any time. This is its strength. It is also its limitation for complex estates, where the commitment of the heirs may be necessary.
Reviewing your will every three to five years, i.e. following a birth, divorce, the death of an heir, or a significant change in your assets, is a good practice.
The Inheritance Agreement (Pacte successoral)
An inheritance agreement (Art. 494 et seq. CC) is a contract between the future deceased and their heirs. It must be executed as a public deed before a notary. All parties must be of full age and have legal capacity. Once signed, it can only be amended with the consent of all parties. Its defining feature is that, by signing it, an heir may renounce all or part of their forced heirship share in the future distribution of the estate. It forces a structured conversation that often resolves tensions before they become disputes.
This makes it the instrument of choice for families where certainty matters more than flexibility. Common uses include:
Allowing the surviving spouse to inherit 100% of the estate. The children contractually waive their forced heirship rights for as long as the surviving parent remains alive. The aim is to defer the transfer of wealth to the next generation until the death of the second parent. The assets remain consolidated and manageable, helping to ensure continuity. Before entering into the agreement, it is important to assess the tax treatment of the subsequent transfer of the surviving spouse’s estate to the children, bearing in mind that transfers between spouses are exempt from inheritance tax.
Structuring the transfer of the family business. The heir taking over the business receives the shares at an agreed value. The other heirs are compensated with cash, property or other assets. This arrangement avoids forced co-ownership and helps preserve operational continuity.
The 2023 reform provides greater flexibility: with the freely disposable portion increased to 50%, it is easier to compensate heirs who are not taking over the business without fragmenting the company’s share capital.
Waiver of inheritance. An heir agrees in advance to waive all or part of their entitlement, often in exchange for a current-value settlement. This is particularly relevant when heirs have already received significant financial support during the deceased’s lifetime.
The Executor (Exécuteur testamentaire)
Articles 517 et seq. of the Civil Code allow a person to appoint an executor responsible for ensuring that the deceased’s last wishes are carried out. For straightforward estates, a family member may fulfil this role, even if he or she is also an heir, provided there is no conflict of interest. For more complex estates, a professional with the necessary expertise — such as a notary, lawyer or wealth adviser — is preferable.
Independent of the heirs’ individual interests, the executor administers the estate, settles debts and taxes, prepares the distribution of the estate and carries it out in accordance with the deceased’s wishes. The executor is entitled to reasonable compensation, taking into account the scope of the mandate and the responsibilities involved. The appointment may be declined, which makes a carefully considered choice all the more important.
Family Governance: When the law is not enough
Legal documents define what happens after death. Family governance provides a framework for how family members communicate, make decisions and fulfil their respective roles before, during and after the succession process.
This distinction matters. An inheritance agreement governs how assets are distributed. It cannot repair a relationship strained by fifteen years of misunderstandings over the value of the family business or family group, each person’s role, or decisions taken without consulting the siblings.
A family charter formalises the shared values, principles, and rules that guide the family’s relationship with its wealth. It addresses questions that legal documents cannot: who can join the family council, how decisions are made when heirs disagree, what conditions apply if an heir wants to sell their share of a jointly held asset.
A family council gives the family a structured forum for decisions that affect shared interests. Regular meetings — held while the testator is alive and well — normalise conversations about wealth, transmission, and expectations. Families that hold these conversations regularly do not face the same shock at succession that families who avoid the subject do.
For families with a business, governance takes a more formal shape: a shareholders’ agreement defines voting rights, pre-emption clauses, conditions for entering or exiting the capital, and rules for valuation in the event of a buyout. This agreement does not replace the inheritance agreement — it complements it by specifying what happens to the business as a going concern.
For families without a business, governance often focuses on shared real estate or investment assets: who bears maintenance costs, what are the rules governing the use of shared assets, and what process applies if one heir wants to sell.
The family foundation — meaning a foundation established at the initiative of a family, rather than a family foundation within the meaning of Art. 335 of the Civil Code — is a tool that deserves greater consideration. It allows part of a person’s wealth to be permanently dedicated to a specific purpose and placed under its own governance structure. Assets transferred to the foundation are therefore no longer intended to be divided among the heirs. A foundation may, for example, fund philanthropic projects or preserve over the long term a group of assets that the founder does not wish to see dispersed, such as an art collection. In this way, it can provide continuity across generations and shield certain assets from the difficulties associated with the division of an estate. Establishing a foundation nevertheless requires careful consideration of its purpose, the assets to be transferred to it and its long-term governance.
Family governance is not a crisis-management tool. It is the relational architecture that prepares for and supports the succession process.
Business Succession: The Most Complex Succession to Orchestrate
Business succession combines every difficulty of estate planning with the additional complexity of a going concern that cannot be paused, divided, or easily valued.
Four challenges appear in almost every business succession.
Valuation. The value attributed to the business at the time of succession directly affects the entitlements and compensation of the heirs who are not taking over the business. Book value, market value, earnings value? At what value should the shares be transferred to the successor? A valuation that has not been adequately explained or discussed can foster a sense of unfairness and become a source of disagreement among the heirs.
Liquidity. If the successor receives shares worth CHF 5 million and the estate holds only CHF 1 million in liquid assets, compensating the other heirs requires either borrowing, selling part of the business, or structured deferred payments. None of these are simple. All of them should be planned in advance.
Control. Even a partial transfer of share capital to heirs who are not taking over the business can fragment decision-making power and complicate its governance. A shareholders’ agreement providing, in particular, for rights of pre-emption, combined with an inheritance agreement governing the allocation of shares to the successor, can help preserve control and ensure continuity of the business.
The reform of Swiss inheritance law that came into force in 2023 facilitates business succession. The reduction in forced heirship entitlements, which in certain circumstances increases the freely disposable portion to 50%, gives business owners greater flexibility to concentrate ownership in the hands of the successor while respecting the forced heirship rights of the other heirs. Their compensation must, however, be carefully planned in advance.
Timing. Business succession planning requires a minimum of five to ten years. The testator needs time to prepare the successor, to restructure the capital if necessary, and to negotiate the legal documentation without the pressure of an impending health crisis.
The role of a personal strategist or external family office in business succession is to coordinate the legal, tax and family dimensions. These three dimensions are inseparable: a tax-efficient structure that creates conflict among the heirs is not a good structure. A legally sound agreement that the family does not understand may not be respected in spirit. Coordination ensures consistency across the entire structure and prevents each specialist from optimising their own area at the expense of the whole.
Swiss Inheritance Tax: Key Considerations for Substantial Estates
Switzerland has no federal inheritance tax. Each canton applies its own rules — effectively creating 26 different regimes.
With the exception of real estate, which is taxed where the property is situated, taxing rights generally lie with the canton in which the deceased was domiciled.
For direct descendants, the position is particularly favourable in most cantons.
With the exception of Obwalden and Schwyz, all cantons levy inheritance tax, although the tax burden varies, notably according to the degree of kinship with the deceased. Direct descendants are nevertheless exempt in the vast majority of cantons. Four situations in which tax may still arise remain:
- Appenzell Innerrhoden: 1%, after an allowance of CHF 300,000 per descendant.
- Neuchâtel: 3%, after an allowance of CHF 50,000 on each child’s share.
- Vaud: exemption up to CHF 1 million per family branch, followed by progressive taxation above this threshold, up to a maximum of 7% (including cantonal and communal inheritance taxes). Subject to certain conditions, the canton also provides a 50% reduction in the taxable value of business assets when a family business is transferred.
- Luzern: descendants are exempt at cantonal level, but certain communes levy inheritance tax on their share above CHF 100,000, with progressive rates of up to 2%.
Two further particularities are worth noting. In Geneva, the exemption for direct descendants does not apply if, at the time of death, the deceased had been taxed under the expenditure-based taxation regime in any of their three most recent tax assessments. In Solothurn, descendants are exempt from inheritance tax on their individual shares, but the estate itself remains subject to the Nachlasstaxe, which is levied on the net estate before distribution and can reach 1.2%.
Advance on inheritance or donation:
Transferring assets during the disponor’s lifetime can reduce the assets remaining in the estate at the time of death. An advance on inheritance is, in principle, subject to collation upon distribution of the estate, while certain lifetime gifts may be subject to reduction if they infringe forced heirship rights. Their tax treatment varies from canton to canton, notably according to the degree of kinship.
Cross-border assets:
For families holding assets in several countries, double taxation treaties and the specific rules applicable to real estate add further complexity. A family domiciled in Switzerland that owns a holiday home in Italy, a flat in London and a holding structure in Liechtenstein may therefore find itself subject to several legal and tax regimes simultaneously. It is worth noting that France and Switzerland are no longer bound by a double taxation treaty in respect of inheritance tax, which makes advance tax planning all the more important.
This is precisely the type of complexity that an external family office or a personal strategist can help coordinate across legal, tax and international dimensions.
These issues call for tax modelling before any inheritance agreement or will is drawn up. An unsuitable structure can create a tax liability that the heirs do not have sufficient liquidity to meet — potentially forcing them to sell assets at the wrong time.
Checklist: 10 Steps to plan your succession in Switzerland and prevent conflict
- Compile a complete asset inventory — moveable and immoveable assets, debts, life insurance policies, pension pillar 3a balances, and any assets held in structures (holding).
- Identify the legal heirs and calculate their forced heirship entitlements — the descendants’ forced share is equal to half of their statutory entitlement; the surviving spouse’s forced share is equal to half of their statutory entitlement. The freely disposable portion must be calculated after the matrimonial property regime has been settled, taking into account any advances on inheritance and other lifetime dispositions that must be brought into account on succession.
- Identify assets that are difficult to divide and anticipate potential tensions — real estate, shares in a family business, works of art: who wants what, and who is in a position to compensate whom.
- Choose the appropriate legal instrument — a will for a straightforward estate where the heirs are aligned; an inheritance agreement where waivers are required or a business is to be transferred.
- Consult a notary — for any inheritance agreement and for estates involving assets located in several cantons or abroad.
- Appoint an independent executor — an external professional where the estate is complex or the heirs have conflicting interests.
- Establish a family governance framework — a family charter, family council or communication protocol, depending on the size and complexity of the family group.
- For business owners: put a shareholders’ agreement in place before finalising the inheritance agreement — pre-emption rights and valuation mechanisms should be agreed before the succession arrangements are finalised.
- Model the tax implications — based on the intended canton of residence, the cantons in which real estate is situated, and the circumstances of the heirs. Identify where tax planning opportunities may exist.
- Review the entire structure every three to five years — following a divorce, death, birth, significant change in financial circumstances or change in legislation.
Bibliography
— Swiss Confederation — Reform of succession law, in force 1 January 2023 — admin.ch
— Swiss Federal Tax Administration — Inheritance and gift taxes (cantonal comparison table) — estv2.admin.ch
— Federal Tax Administration — Tax Brochures 2025, section ‘Inheritance and Gift Tax’, last updated on 16 December 2025.
— Canton of Vaud — Legislative changes to inheritance and gift taxation, in force 1 January 2025 — vd.ch
— Canton of Geneva — Estimate inheritance tax — ge.ch
— International Finance Corporation, World Bank Group, Manual of Corporate Governance for Family Businesses
Legal basis :
Federal law
— Swiss Civil Code of 10 December 1907, RS 210 (referred to as : CC) – admin.ch
— Federal Act on Direct Federal Tax of 14 December 1990, RS 642.11 (referred to as : LIFD)
Cantonal law
— Law of the Canton of Vaud of 27 February 1963 on transfer tax on property transfers and inheritance and gift tax (referred to as : LMSD)
— Law of the Canton of Geneva of 26 November 1960 on inheritance tax (referred to as : LDS), RSG D/3/25
— Neuchâtel Act introducing a tax on inheritance and inter vivos gifts (referred to as : LSucc), RSN 631.0
— Act on State and Municipal Taxes, Solothurn (referred to as :: StG-SO), BGS 614.11
Municipal law
— Vaud Act on Municipal Taxes (LICom), ROCF 650.11
— Municipality of Lausanne, Tax Assessment Order of the Municipality of Lausanne for the years 2025–2029, ROCF 610.1
