Inheritance Planning: Avoidance of Disputes Within the Community of Heirs

Inheritance Planning: Avoidance of Disputes Within the Community of Heirs

I. Overview

Sooner or later, the topic of the community of heirs affects all of us. When a person dies and leaves several heirs, these heirs together form a community of heirs until the inheritance is divided amongst them.

The community of heirs is regulated in Art. 602 ff. ZGB. Since the community of heirs can, in principle, only act unanimously, it is considered a cumbersome instrument and can quickly become incapable of acting in the event of disputes between the heirs. The aim should therefore be to minimize this risk and, as far as possible, to prevent disputes by planning the inheritance in advance.

II. The Community of Heirs as Joint Owners of the Estate

According to mandatory statutory provisions, all heirs are joint owners of the entire estate until it is distributed. This means that all heirs must decide jointly on the inheritance (principle of unanimity). For example, if a property is to be sold within an inheritance, all heirs of the community of heirs must agree. If one heir does not agree, the sale is not possible.

III. Drawing Up a Will or a Contract of Inheritance

Many disputes can be prevented by drawing up a clear will with unambiguous contents. By recording one’s own will and specifying which individuals are to receive which share or which valuables, possible ambiguities are eliminated. In a will, compulsory portions (mandatory inheritance claims) must be taken into account. Furthermore, advance inheritance payments should be listed and included in the inheritance planning in order to avoid injustice.

The advantage of a will is its ease of use. Since it is a unilateral declaration of will by the testator, he or she can easily amend the will again and take into account any later concerns by adapting the will.

In contrast to the will, the contract of inheritance is an agreement between several persons. This makes it possible, for example, to involve the subsequent community of heirs in the inheritance planning and to determine their shares in a binding manner for the persons involved in the inheritance contract (e.g. also the distribution of the compulsory portion). This avoids later disputes. Such inheritance contracts are often concluded within families, between parents and children of full age.

When concluding an inheritance contract, however, it must be borne in mind that the content of the inheritance contract cannot, in principle, be unilaterally amended at a later date – as is the case with a will. An amendment is only possible if this has either been specifically provided for or if all the individuals involved agree.

IV. Appointment of an Executor

The executor is charged by law with carrying out the last will of the testator. The executor is commissioned to administer the inheritance, pay any existing debts and carry out the division. Often it is also part of the executor’s activity to sell certain assets (e.g. real estate). The executor can also act against the will of individual heirs. Thus, the executor has a major advantage: he or she can decide independently and a dispute between the heirs does not lead to an impasse. The appointment of an executor is therefore highly recommended.

It must be noted that the executor can only be appointed by the testator him or herself. As part of careful inheritance planning, it is also advisable to list one or more substitute executors (e.g. because the appointed executor does not accept the mandate or is predeceased). It is not possible for the community of heirs to appoint an executor.

V. Representation of the Community of Heirs by the Authority

According to Art. 602, para. 3 of the Swiss Civil Code, the authority responsible for the community of heirs may, at the request of a co-heir, appoint a representative until the division. However, the requirements for this are high and the authorities do not consider themselves responsible.

The prerequisite for the appointment of a representative of the heirs is the inability of the heirs to protect the interests of the community of heirs externally due to differences of opinion or absences (non-exhaustive list). Only internal disputes – e.g. about a claim of the testator against a co-heir – do not justify the appointment of a representative of the heirs. Finally, it is at the discretion of the authority to comply with the request for the appointment of a representative of the heirs.

VI. Action for Division of an Estate by an Heir

As a last resort in order to receive his or her share as an heir, the action for the division of an inheritance remains. In this way, an heir demands the division of the estate in court. However, this step is time-consuming and costly. In addition, it is often not clear what the outcome of the lawsuit will be and how much the share will ultimately be, especially after deducting the costs of the lawsuit and lawyers’ fees. For these reasons, the inheritance distribution action should only be used as a last resort.

VII. Conclusion

Disputes within communities of heirs often arise because an heir feels unfairly treated or the distribution of the estate is unclear. Such disputes are emotionally very stressful, as they often occur within the family and cause massive and long-term damage to family cohesion.

The testator can prevent such disputes, at least in part, with an inheritance plan tailored to his or her needs and reduce the corresponding risk. In addition to defining one’s own last will and testament in a will, an inheritance contract with the future heirs can also help to avoid later disputes. It is also advisable to always appoint an executor (and substitute executor). This person can either be the heir himself or – since this is sometimes problematic due to conflicts of interest – the lawyer or notary.

-MLaw Armin Gilg, Attorney at Law and Notary, Partner at Studhalter & Meier Rechtsanwälte AG