Inheritance Law for Swiss Bank Accounts
Swiss banks have a very good reputation in the world. But sometimes you can still encounter problems if you inherited a Swiss bank account.
Banks not always allow access if you want information of accounts held by your ancestors at Swiss banks. Also in many cases, children dont know the exact name of the bank or which banker was responsible for the account management.
In the following, we will give you an overview of the legal framework and the information rights which you can enforce against Swiss banks. This information rights can also apply for other financial intermediaries such as asset managers, wealth advisers, trustees or fiduciaries. However, since these other financial intermediaries are not subject to the Swiss bank secrecy laws, it might be easier to obtain information from them than from a Swiss bank.
Your contractual rights with your bank
A client can enter into several contracts with his bank or with other financial intermediaries. But the main contract with the bank is usually a so-called custodial contract combined with mandatory elements. Here, the bank is the agent for the client. According to the Swiss Code of Obligations, you as a principal are entitled to receive all relevant information in connection with the activities of the account. Such information includes, but is not limited to, current account statements. In addition, the principal has also the right to receive information regarding payments received and made in the past, the performance history, portfolio composition and all signatory rights.
The principal cannot waive this information rights and they are passed to his heirs after his death. To whom all the rights are passing over depends on the applicable inheritance law in the specific succession case.
Let us give you an example:
An Italian resident has a Swiss bank account. After he has passed away his legal estate and succession is governed according to the inheritance law of his last residency. Italian inheritance law would be applicable.
A lot of people dont know that Swiss banks are imposing post-mortem power of attorney to their clients on a standard basis. This post mortem power of attorney will protect the bank form the risk to execute a payment to the wrong person. In case the bank was not informed that the account holder has passed away the bank is still authorized to effect payments after the death to the beneficiaries of the power of attorney.
Under Swiss law, each heir has the individual right to request account information. Also you are allowed to request any information regarding the relationship between the bank and the deceased. The bank secrecy laws cannot prevent the heirs from acquiring information on the banking relationship of the deceased. The heirs take over the position of the deceased by virtue of the principle of universal succession. Such request for information can also include names of people who have received payments from the account holder or incoming payments.
The only limitation of the information right can be time. Swiss banks have to archive account statements etc. for a period of 10 years. Bank statements are normally destroyed after ten years. Other information (e.g. account opening forms and agreements) are usually kept for 10 more years after the bank account has been closed. To make life easier for your heirs, you can make a request for a preliminary injunctionâ€ after you opened your Swiss bank account to make sure the bank doesnt destroy the documents. We can assist you with all legal and financial matters regarding Swiss bank account succession and succession planning.
The situation is more complicated if the assets were held through a trust, a foundation or a company. The contractual relationship exists between the respective trustee and the bank and therefore no information rights can be passed to the heirs. We can advise you on how to proceed if your relative had a trust but didnt mention you in his will. We have protected many of our clients based on forced heir ship rules.
Signatory or information rights based on a power of attorney given by the trustee to the deceased person do not pass to the heirs, since according to Swiss law a power of attorney ceases to exist on the death of the empowered person in this specific case. It is often difficult to obtain information from service providers. Often they are located offshore and do not physically respond to any requests. Also the information they have is very limited. The heirs have no rights under the applicable local law. Therefore always be careful what jurisdictions you choose for your trust or offshore bank account.
Information Rights based on Inheritance Law
Under Swiss law, children, the spouse and the parents of the deceased have mandatory inheritance rights. The Swiss Federal Supreme Court gives the undisputed right to the heirs to collect all bank account information from banks. Even in cases where the deceased was the beneficial owner or the economic owner of the assets. This information rights are much stronger and detailed than contractual information rights.
Swiss courts must also respect inheritance rights you have under foreign inheritance law.
Many countries foresee tax return procedures. This can be a useful tool to proof the existence of a bank account. The bank will never contact you as legitimate heir and successor of the bank account. In this case, it is our job to find out in which bank your father, for example, had his Swiss bank account in place.
How to Proceed?
What to do when someone dies and you are not completely sure if they have had a secret Swiss bank account? There are many problems to face when you approach a bank and ask for information. In many case the bank refuses to answer or simply ignores your request. In order to make a successful information request, you should gather all relevant documents showing that the account holder has died (death certificate) and that you are a legal successor of the deceased (grant of probate). If the deceased lived abroad, the banks will usually require to see the original documents or notarized copies and super-legalization with apostille.
You can receive this information more easily and quickly if a Swiss representative or even better your Swiss lawyer contacts the bank. We have wide network in the banking sector in Switzerland and can assist you with all these bank account inheritance procedures. Also we highly recommend contacting us in more difficult cases with forced heir ship rules or abuse. For example, if the deceased was the â€˜beneficial owner or the economic owner of the assets. In this case, a trustee or a legal entity was the contractual partner of the bank and not the beneficial owner itself. Call us for advice before you do anything that might have bad impact on the further evolution of your case. You might risk to lose your legal status as heir.
For the future, if you are a non-resident Swiss bank account holder, you can make the life of your children much easier when planning their legal estate. You can instruct your responsible account manager to contact your heirs to receive the information they need. Also, vice-versa, you can leave the name of the relationship manager to your children to find your account. Or even better, instruct us to inform your loved-ones about your Swiss bank account.
On the other hand, it is very important to know your information rights and the limits of Swiss bank secrecy in connection with estate planning. Often, the goal is not to conceal anything, but to ensure that the estate is distributed to the right person or that a person is provided for. Plan carefully based on our support and experience. This concerns tax compliance and potential inheritance tax consequences, as well as mandatory forced heir ship rights. Trusts or foundations also can be very useful tools to circumvent forced heir ship rules; however, in other cases a simple donation act mortis causa or a marriage contract will be a better way to achieve your goals.
A German tax resident has 2 sons from a first marriage. The 2 sons have not satisfied the fathers expectations – one went bankrupt, the other is a high ranking scientology official. The German client has the intention to not consider the 2 sons of the first marriage. He has a new family and a new life. He wants to devolve as much as possible to his new family.
Most of the assets of the official estate are donated to a Panama family Foundation. Panama has not established forced heir ship rules. Therefore, the assets were transferred into a jurisdiction without protection of the legal heirs. Our German client can freely dispose on his own assets. The donation to the Panama Family Foundation cannot be contested 3 years after the donation.
If you have inherited a Swiss bank account you have some legal rights that you can enforce against the bank. The Swiss bank secrecy laws are not entirely applicable in that situation. However, if a trustee or a legal entity is the legal owner of the respective bank account and the deceased was only the beneficial owner` of the assets in this account, it is much more difficult to obtain information and access. Contact us in case of need. We will find out if you are legally entitled to receive information from the trustees or the legal entity. This mostly depends on the jurisdiction where the trustee or the legal entity is domiciled. However it can be very difficult to enforce this rights in some offshore jurisdictions. Ask us for our opinion before you start writing letters to banks.
Be careful when you write your last will without legal support of experienced senior estate lawyers familiar with Swiss bank accounts. Consider all your options and scenarios carefully with a trusted estate lawyer familiar with international HNW families. To secure a smooth access to the assets held with your Swiss bank accounts there are many aspects you should consider in cooperation with our law firm.