The young family wants their own property for the future with the security that the children will grow up in one place and be able to attend schools until the end of their school years. The grandparents, on the other hand, may have a property of their own and have also been able to put aside liquid assets and already know that they will no longer need them during their lifetime. It is therefore obvious to pass these funds on to the next generation as an inheritance in advance, so that they can firstly fulfil their dreams and secondly do not have to pay unnecessary interest to third parties. In short: the assets remain in the family.

Less tax for the testator, hardly any more for the beneficiary

But all this has a few more advantages. For example, the parents can reduce their taxable assets and the tax burden decreases. For the offspring, on the other hand, the taxes are insignificant compared to the countervalue - the enabling of the purchase of a property. This tax varies from canton to canton and there are also differences within cantons. Incidentally, the same also applies if the parents move to another property and they pass on the large family home to the next generation while they are still alive.

Important: Compulsory parts must be observed

Especially in the case of several heirs, it is crucial that one does not violate the compulsory portions in the case of an advance inheritance and thus cause an inheritance dispute among siblings and relatives after one's death. A dispute that not infrequently leads to the advance beneficiaries having to pay back such a large share to the other heirs that they are unable to keep the property in the end. This is because, in principle, an advance inheritance does not have to be officially certified. In fact, a written contract is not even necessary, even though it is of course advisable to have one. A verbal agreement would be sufficient, but it does not change the fact that the compulsory portions must be taken into account in any case.

No alternative within the family: the donation

Anyone who thinks that a donation would circumvent this is wrong: In the case of financial donations from parents to descendants, it is generally assumed that an advance inheritance is subject to compensation, unless the obligation to compensate has been expressly waived. However, this must not violate the compulsory portion of the other heirs. If you wish to take this course of action, it is highly recommended that you seek professional advice on how such a gift should be structured.

The only real option: the loan

The other option to support the descendants during their lifetime is a loan. While in the case of an advance inheritance and a donation the money is transferred to the children's assets, in the case of a loan it remains as a credit balance in the parents' assets. Therefore, assets and any interest must be taxed by the parents. The children can deduct the debt and interest from their taxable assets and income instead. A low interest rate can of course also relieve the burden on the descendants when buying a property.

In summary, it can be said that if the parents know in all clarity that they will not need all their assets for their livelihood until the end of their lives, an advance inheritance is an extremely sensible variant to positively influence the well-being of the descendants when they need it most. Namely in mid-life and especially when they themselves are in the process of starting a family. With the purchase of a property, one also has the greatest possible security that the advance withdrawal will remain an asset for the family.