Today, the Swiss Parliament passed the revision of the Private International Law Act ("PILA"), which has been under discussion for several years.
What it is all about:
The revision aims at modernising the provisions of international succession law and align them, at least partially, with European law (EU Succession Regulation), in particular in order to reduce conflicts of jurisdiction in the future. It also aims at eliminating existing ambiguities.
The revised PILA continues to follow the principle of unity of succession (one court and one governing law for the entire estate) and applies the deceased's last place of residence as the primary connecting criterion.
The most important changes:
A. Jurisdiction
1. Restricting Swiss jurisdiction (Art.87 §1, 88 §1
nPILA)
If the deceased's last residence was abroad, the Swiss
authorities are only exceptionally competent to deal with their
estate (as before). In the case of a Swiss deceased with last
residence abroad, it is now clear that the Swiss courts/authorities
at their place of origin only have jurisdiction if the authorities
in the country of last residence (previously: "the foreign
authorities") do not deal with their estate. However, in order
to avoid jurisdictional conflicts, Swiss authorities may decline
jurisdiction if the authorities of a foreign national State of the
deceased, the State of their last residence or, in the case of
specific assets, the State of their location deal with the estate.
The same applies for jurisdiction over assets located in
Switzerland when the foreign decedent had their last residence
abroad.
2. No mandatory jurisdiction if Swiss law is chosen (Art.87
§2 nPILA)
So far, Swiss authorities were always competent for handling the
entire estate when a Swiss national residing abroad chose Swiss law
to govern their estate; thus, this choice automatically led to a
Swiss jurisdiction. In future, the testator can make a reservation
to exclude Swiss jurisdiction. This reduces the risk of positive
conflicts of jurisdiction and can avoid the risk of the potential
levying of inheritance tax in Switzerland.
3. Precluding any Swiss jurisdiction (Art.88b §1
nPILA)
A foreign national, who has their last residence in Switzerland and
who chooses the law of their foreign national State to govern the
estate, can now explicitly declare that State's authorities to
be competent, thereby waiving Swiss jurisdiction.
B. Applicable inheritance law
1. Principle (Art.90 nPILA)
As before, the estate of a deceased person, whose last residence
was in Switzerland, is governed by Swiss law (subject to a choice
of law). If the deceased had their last residence abroad, the
estate is governed by the law referred to by the conflict rules of
their country of residence. Henceforth, where these rules refer
back to Swiss law, the substantive succession law of the country of
residence will apply (§2). However, if the Swiss authorities
at the place of origin of a Swiss national who died with last
residence abroad have jurisdiction, Swiss substantive law continues
to apply in the absence of any choice of law (§3).
2. New choice of law options (Art.91 nPILA)
Until now, Swiss citizens were not allowed to choose a foreign law.
The initial draft envisaged that Swiss dual nationals would also be
able to choose one of their national laws to govern their estate.
This proposal gave rise to disagreement between the Chambers due to
the risk of circumventing Swiss forced-heirship rights. By way of
compromise, the following now applies: Swiss dual nationals can
choose one of their national laws, but they may not derogate from
the Swiss provisions on the freely-disposable share (§1).
Accordingly, Swiss law on forced heirship remains reserved.
However, it may still be advisable to choose foreign inheritance
law, e.g. in order to make use of foreign planning tools such as
trusts, or to ensure consistency between the governing matrimonial
and succession laws.
Moreover, Swiss nationals living abroad can continue to make a partial choice of law with regard to their assets located in Switzerland if this choice also involves Swiss court jurisdiction (§3).
Goals (not) achieved?
The PILA revision broadens the scope for cross-border estate planning, which is welcomed. In future, careful planning should make it easier to avoid conflicts of jurisdiction. Combining a choice of law with a choice of jurisdiction should facilitate the application of the law. However, conflicts of jurisdiction cannot be completely ruled out even under the revised PILA.
Despite the possibility of choosing one of their foreign national laws, Swiss dual nationals will still have to respect Swiss forced-heirship rights.
With these new possibilities, international estate planning is likely becoming even more demanding. We will be happy to assist you with this!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.