Passing wealth on to the next generations

The generational transition is the moment when wealth built over decades can consolidate or disperse. It is not a sudden event: it is a process which, done well, lasts years and involves succession law, taxation, family governance and — when there is a business — the continuity of the enterprise. In Switzerland the tools to manage it exist and, after the 2023 reform of succession law, they offer more freedom than before. The real mistake is to arrive unprepared.

Start during your lifetime, not after

The golden rule is to begin while you still have full decision-making capacity, rather than leaving everything to the succession. Transferring gradually during your lifetime allows you to guide the heirs, check that they are ready, spread the tax burden over time and reduce the grounds for conflict. Those who delay risk ending up with heirs who jointly inherit indivisible assets — a business, a property — with no rules to manage them.

The civil-law tools

Swiss law provides a well-proven toolbox:

• the gift, including as an advance on inheritance, to transfer resources when they are genuinely needed;
• the will, to dispose of the freely disposable portion and assign specific assets;
• the inheritance agreement, a binding contract ideal for giving certainty to the transfer of the business or for having an heir waive their statutory share in exchange for compensation;
• the gift with reserved usufruct, to transfer ownership (of real estate or shares) while retaining income and enjoyment.

After the 2023 reform, the freely disposable portion is larger: the statutory share of descendants has been reduced to half of the legal share and that of parents has been abolished. Those planning today therefore have more room to favour a specific successor or to keep a business intact.

Tax coordination

On the tax side, the transfer between parents and children is often favoured: in most cantons spouses and descendants are exempt or nearly so from inheritance and gift tax (the matter is cantonal and must be verified case by case). But some issues remain to be managed:

• the real estate capital gains tax in the event of a property transfer;
• withholding tax and double taxation where corporate structures and dividends are involved;
• the risk of reclassification (for example as a professional dealer in real estate or securities).

The sequence and form of the deeds — what you gift, what you pass on through succession, what you contribute to a structure — significantly change the final bill.

Passing on the family business

When the wealth includes a business, what is at stake is its continuity. The key questions are: who will lead it? How are the non-active heirs compensated? How do you prevent deadlocked decisions from paralysing the company?

The typical tools to answer them:

• inheritance agreements that assign the business to whoever will carry it forward, with a balancing payment to the other heirs;
• a family holding that gathers the shareholdings, separating ownership (the shares, transferable gradually) from management;
• articles-of-association clauses and shareholders’ agreements on voting, pre-emption rights and the admission of new shareholders;
• a clear governance that distinguishes the roles of owner, director and manager.

The holding, in particular, allows shares to be transferred in stages over time and control to be kept intact, avoiding the fragmentation that often marks the decline of family businesses in the second or third generation.

The family dimension: the most underestimated

Many generational transitions fail not for technical but for relational reasons: unspoken expectations, perceptions of unfairness, roles never clarified. Sound planning includes dialogue between the generations, written and shared rules (even a simple “family charter”) and transparency about the criteria behind the choices. Legal tools hold up better when they rest on a real agreement between people.

Coordinating all the plans

Succession, marital property regime, pension provision (second and third pillar), real estate and corporate structure must not be treated in separate compartments. A decision taken on one front — for example gifting a property — has effects on the others. A successful generational transition is one in which these plans are aligned towards a shared objective.

How we work at SIH ONE

We build the transfer plan starting from the family’s objectives: we map the wealth, quantify statutory shares and taxes, choose the combination of gifts, inheritance agreements and any corporate structures, and define the governance that keeps together what has been built.

Do you want to pass your wealth on to the next generations without dispersion or conflict? Discover the services of our private division and plan the transition years in advance.