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The purpose of equalization is to ensure the equal treatment of the heirs. This is done by considering the substantial gifts made to the heirs during their lifetime in the context of the dividing the estate and acknowledging them against the respective heir’s share of the estate.
Settlement is governed by Art. 626 et seq. CC. Under Swiss inheritance law, the principle applies that heirs must be treated equally by the testator. This means that wholly or partially gratuitous donations made by the testator to individual heirs are, under certain conditions, accredited to their portion of the estate. This crediting to the estate is ‘equalization’ under inheritance law. If a testator has, during their lifetime, gratuitously donate more to one heir (in whole or in part) than to the other heirs, the other heirs can demand compensation as an expression of equalisation.
Pursuant to Art. 626 (1) of the Swiss Civil Code, the legal heirs must compensate everything that the testator gave them during the testator’s lifetime as a credit against the heir’s respective share of the inheritance. This affects all intestate heirs. This means that not only the descendants are subject to the equalization obligation under Art. 626, but also the surviving spouse or registered partner.
However, there is a legal presumption according to which lifetime gifts are not automatically subject to the equalization obligation. As a consequence, the testator must expressly order the equalization.
Pursuant to Art. 626 para. 2 of the CC, if the deceased has made a donation to their descendants in the form of marital property, a debt waiver, an endowment or an assignment of assets, etc., they are in principle covered by the obligation to compensate. Unless the testator has expressly excluded the donation from the obligation to equalize.
Para. 2 only subjects the descendants to the equalization obligation. The surviving spouse and also the registered partner do not count as descendants and, according to the case law of the Federal Supreme Court, do not have to settle the given elements of compensation as listed above. Nevertheless, they have the right to demand compensation from the descendants.
Appointed heirs only have to compensate if the testator orders the equalisation. Legal heirs become appointed heirs if the testator changes the legal share of the inheritance by means of a disposition of death.
Our team of attorneys in St. Gallen, Zurich and Frauenfeld will be happy to answer any questions you may have about the legal options for compensation.