Renouncing inheritance: When a negative inheritance contract can be useful

With a renunciation of inheritance, a future heir officially declares that they renounce their inheritance. This is possible even during the testator’s lifetime and requires their consent. The renunciation of inheritance is formally declared through a negative inheritance contract. A full or partial renunciation of inheritance is possible. The two parties decide whether to renounce only the free share or the entire inheritance. In the latter case, the heir also loses the right to any statutory share to which they would be entitled as a legal heir. Unless otherwise stipulated in the renunciation contract, the heir’s descendants also lose their right of inheritance.

A renunciation of inheritance is also possible after death and the occurrence of the inheritance. In this case, however, it is referred to as a so-called declaration of renunciation of inheritance. This is regulated in the Swiss Civil Code (ZGB) in Articles 566 et seq.

What does a renunciation of inheritance regulate?

A renunciation of inheritance can be structured in different ways. The wishes of both the testator and the heir are taken into account. For a contract to be concluded, both parties must agree. Among other things, the following points should be clarified:

• Do the renunciator’s descendants also renounce their claims?
• Should another person be named as the heir instead of the renunciator?
• Does the heir renounce all or only certain items/assets?
• Like a positive inheritance contract, a negative inheritance contract can also be subject to conditions (Article 482 of the Swiss Civil Code).

Difference to a Buyout

A renunciation of an inheritance is generally made without consideration. A buyout, on the other hand, is subject to the payment of a settlement. This is usually received by the renouncing heir from the testator. Formally, the same requirements apply to a buyout as to a waiver of an inheritance agreement: It must be in writing and with the consent of both parties. The amount of the settlement should be precisely specified, as should the date by which it is to be paid.

Renunciation of inheritance is regulated by the Swiss Civil Code (CC). The possibility of renouncing inheritance and purchasing an inheritance is addressed in Article 495 CC. Unless otherwise specified in the renunciation of inheritance agreement, the descendants are also affected by the renunciation of inheritance (Article 495 paragraph 3 CC).

Article 497 CC addresses the case where the estate is indebted. In this case, the renunciators may, under certain circumstances, also be required by creditors to pay the debts. However, this is only the case if the renunciator received a gift from the testator in the five years prior to the death of the testator and this gift is still available at the time of the inheritance.

Since the renunciation of inheritance is governed by a negative inheritance agreement, the formal requirements and all other requirements for inheritance agreements also apply to it (Article 468 CC; Article 481 et seq. CC; Article 494 CC). The general contractual provisions of the Code of Obligations (CO) must also be observed.

The purpose of a waiver of inheritance may seem questionable at first glance—especially given the possibility of renouncing an inheritance upon inheritance. However, there are some situations in which a waiver of inheritance can be sensible and helpful:

• Disputes between the parties: If the testator and heir no longer wish to have anything to do with each other, a waiver of inheritance can provide clarity. This allows contact to be broken off without leading to later inheritance disputes.
• Voluntary waiver of inheritance: This is especially the case when a family member is wealthy and wishes to leave the entire inheritance to the other heirs. This situation occurs, for example, when siblings have a good relationship. This provision can also apply if one of the heirs is already elderly or very ill.
• Patchwork families: If the partners have remarried or entered into a civil partnership, a waiver of inheritance can prevent disputes between the children. A waiver of inheritance agreement by the new spouse can facilitate a clear separation of assets and thus the fair treatment of the offspring.
• Unmarried couples: So-called cohabiting couples have no legal right to inherit from each other. Even if this is stipulated in the will, the legal heirs always have a statutory share. If a cohabiting partner wishes to provide financial security for their partner, it may be advisable for their offspring and parents to waive the inheritance.
• After a gift or advance inheritance: If a testator grants one of their offspring an advance inheritance, the remaining heirs can be treated equally. To avoid disputes, this should be clarified with all heirs.

What is the purpose of a waiver of inheritance?

In many cases, a waiver of inheritance primarily serves to eliminate the statutory share, which must be paid out to the legal heirs (Article 471 of the Swiss Civil Code). While the statutory order of succession (Articles 457 et seq. of the Swiss Civil Code) can be changed by the testator herself, for example, through a will, a change to the statutory shares requires the consent of both parties. This is precisely possible with a waiver of inheritance. Otherwise, statutory shares can only be withdrawn in serious cases through disinheritance.

The typical reason a testator requires a legal heir to waive their inheritance is to provide financial security for another person. Many testators, for example, want to provide financial security for their life partner. In this case, the waiver agreement stipulates that the offspring will only inherit after the death of both parents. Otherwise, they would be entitled to a statutory share, and the inheritance would have to be divided between the offspring and the surviving spouse.

A renunciation of inheritance is recorded in a declaration or a contract. It is important that both parties, i.e., the testator and the heir, agree to it. It is an inheritance contract, albeit in the negative sense. Therefore, certain formal requirements must be strictly observed.

An inheritance contract must be in the form of a public testamentary disposition (Article 512 of the Swiss Civil Code). Two witnesses and a notary (notary public or notary) must be present at the conclusion of the contract. Both contracting parties – the testator and the renouncing heir – must declare their wishes and then sign the contract. This must occur simultaneously and not later than the other parties. Both contracting parties must also be legally competent. This includes the capacity to make judgments and be of legal age (Articles 11 et seq. of the Swiss Civil Code). Minors require the consent of their legal representative to enter into such a legal transaction (Article 19 of the Swiss Civil Code).

Failure to comply with these requirements may result in the invalidity of the inheritance contract (Article 11 paragraph 2 of the Swiss Code of Obligations). In addition, the contract can be challenged by other persons, e.g. if there is an inheritance dispute.

A renunciation of inheritance can certainly be revoked. However, this is only possible during the testator’s lifetime. A renunciation of inheritance agreement can therefore be subsequently revoked or amended if both parties agree (Article 513 of the Swiss Civil Code). The same formalities must be observed as for the conclusion of the agreement (Article 12 of the Swiss Code of Obligations). This means that the revocation must be made in writing and in the presence of two witnesses, a notary public, and both contracting parties.

Renunciation of inheritance and settlement

The renunciators are generally not obligated to settle the estate. By renouncing the inheritance, it is assumed that they are not heirs in any way and have no claims. At the same time, this means that the renunciators are not liable for any debts arising from the inheritance.

Exceptions may arise if the testator made gifts to the renunciators during their lifetime. If these gifts exceed the available portion of the inheritance, the remaining heirs can file a claim for reduction (Article 535 of the Swiss Civil Code). However, this only refers to the difference between the donations and the compulsory share of the person waiving them.

If the claim against the renunciator is upheld and they are required to repay the payments, they have two options. They can either repay the other heirs or return the entire payment to the inheritance fund. In the latter case, the person will participate in the inheritance normally, as if the renunciation had never taken place (Article 536 of the Swiss Civil Code). However, it is advisable to contact a lawyer specializing in inheritance law.

What else you should consider when renouncing an inheritance

Renouncing an inheritance is a good way to avoid inheritance disputes. It is important that the negative inheritance contract is clearly worded and answers all important questions. It may happen that the renunciator decides to revoke the renunciation in court. This is especially the case if the assets increase after the contract has been concluded or are larger than previously assumed. Therefore, the renunciation contract should stipulate that the renunciation is valid in any case, regardless of the final amount of the inheritance.

Decide in advance whether a waiver of inheritance is necessary. If it is only a waiver by a legal heir, a will is often sufficient.