How do I achieve most-favored-nation status?

We have been married for 33 years and have two adult children together. We would like the surviving spouse to inherit the entire estate, remain in the condominium, and for the children to inherit later. Can we arrange this in a will?

Upon the death of one spouse, a division of the estate must first be preceded by a settlement of the matrimonial property regime. This division is made according to the applicable matrimonial property regime (participation in acquisitions, community of property, or separation of property), allocating the marital assets to the surviving spouse on one side and the estate of the deceased spouse on the other. Unless you have entered into a marriage contract, you are likely subject to the participation in acquisitions regime, unless you have made a declaration to maintain the property connection or if there is an extraordinary property regime.

Each spouse has two types of property: personal property (Eigengut) and acquisitions (Errungenschaft). Personal property includes what a spouse brought into the marriage or received as a gift (inheritance or donation) as well as items for exclusive personal use. Acquisitions include, in particular, earned income or returns from personal property. Under the participation in acquisitions regime, upon the death of a spouse, each spouse retains their personal property and half of both spouses' acquisitions. In practice, this means that when one spouse dies, it must be calculated which assets belong to which property category and the magnitude of each property category. From this, it follows how much wealth and which assets belong to the surviving spouse under matrimonial property law. Only thereafter do the inheritance laws come into effect.

You intend to maximize the benefits for the surviving spouse. Depending on the composition of your marital assets, you can achieve this goal (to a significant extent) with a marriage contract in which both spouses agree, with notarization, that the surviving spouse will receive the acquisitions of both spouses. If the marital property primarily consists of savings since the marriage, then only a small portion of the first deceased spouse's assets will fall into the estate. Consequently, the children's inheritance claims will also be based on a small estate.

Through an estate planning arrangement (will or inheritance contract), you can limit the children's inheritance claims and further benefit each other as spouses. A "preference" for the surviving spouse regarding the self-occupied marital home is provided for both in matrimonial property law and inheritance law.

It may also be possible for you, together with the children, to enter into an inheritance contract whereby the children largely waive their inheritance claims in the estate of the first deceased parent (so-called inheritance waiver agreement), in favor of the other parent. While a will provides a unilateral stipulation "with limits," an inheritance contract would establish a binding arrangement. With an inheritance contract with the children, the need to calculate and differentiate the property categories later is generally eliminated. Since there are various interests and aspects to consider, you should seek careful advice from a notary!

Luzern, November 9, 2020

Reto Marbacher