Estate Planning  

 General  
Drafting a will can sometimes feel like staring death in the face. It forces you to think about what happens when you’re no longer here—something most of us prefer not to dwell on. You might feel that by doing so, you’re acknowledging the inevitable finality of life, something we all try to push aside, hidden in the shadows of our daily existence. Yet, it is precisely this inevitability, this reality that we will all face one day, that makes taking this step so important. By creating a will, you ensure that your children and loved ones are not left in uncertainty and confusion.  

 Insights and Benefits  
Estate planning is a crucial aspect of wealth management that helps arrange inheritances and minimize the tax burden for heirs. The law distinguishes between families with only common children and those with children from multiple marriages or relationships. This distinction is critical in determining how an estate is distributed.  

 Common Children  
For families with only common children, the surviving spouse becomes the direct owner of all the deceased’s assets upon the other spouse’s death. The children must wait to receive their inheritance until the surviving parent passes away. This legal arrangement provides clarity and security for the surviving spouse but may mean that children receive their inheritance much later.  

 Children from Different Relationships  
For children from multiple marriages or relationships, the situation is more complex. Without a will, the surviving spouse and the children must immediately divide the deceased’s estate upon death. This can lead to conflicts and uncertainties unless the deceased has drawn up a will applying the statutory distribution. In complex family situations, creating a will remains absolutely essential.  

 Wills and Inheritance Tax  
For individuals with larger estates, taking proactive measures is also advisable. A tax-efficient will can help save on inheritance and transfer taxes. There are various ways to reduce the tax burden, such as gifts, amendments to prenuptial agreements, loans and waivers, testamentary arrangements, and more. Examples of flexible wills and combinations include:  
– Two-step inheritance arrangements: Dividing the estate in two steps, which can provide tax advantages.  
– Appointment of an executor and/or settlement administrator: Ensures the estate is managed efficiently and in accordance with the deceased’s wishes.  
– Arrangements for grandchildren: Special provisions for grandchildren can reduce taxes while meeting their future needs.  

Estate planning primarily focuses on marital property, gift, statutory, and testamentary inheritance law. Additionally, it considers life insurance and pension law and, in international cases, private international law and foreign law.  

 A Tax-Efficient Example of Real Estate Transfers Within Marriage  
The Transfer Tax Ordinance of 1908 provides exemptions for certain inheritance and marital property acquisitions from transfer tax. For instance:  
– Estate consolidation (marrying under community property law, revoking prenuptial agreements, or introducing a limited community of property involving one or more real estate properties) is exempt from transfer tax.  

If, in anticipation of divorce, prenuptial agreements are modified to create a community of property, thereby bringing a real estate asset into the community, and then new prenuptial agreements are drawn up allocating the property to its intended owner, this can be done without incurring transfer tax according to the Supreme Court. A period of marriage is required.  

Similarly, cohabitants with a simple shared ownership of real estate can, under roughly equal survival probabilities and equal entitlements, transfer real estate to one another tax-free. This can be particularly beneficial for maintaining harmony.  

 Conclusion  
Estate planning offers a wide range of advantages and possibilities to efficiently manage inheritances and minimize tax burdens. Especially in complex family situations, it is essential to draft or review a well-thought-out will.  

Enrico van der Meij  
enrico@estateplanningcur.com  
Enrico van der Meij is an expert in estate planning and can answer questions, provide advice, and draft documents in the areas of personal, family, and inheritance law, as well as inheritance taxation.