Gifts and advances on inheritance are essential succession planning tools under Swiss law. They allow assets to be transferred during the donor's lifetime, with different effects on the future estate division. The bringing of gifts into account (rapport), the no-imputation clause and the limits imposed by forced heirship provisions structure this area of law. PBM Avocats in Geneva and Lausanne advises clients on these complex mechanisms and their interaction with tax planning.
Gifts under Swiss Law (arts. 239-252 CO)
A gift is a contract by which the donor gratuitously transfers all or part of their assets to the donee. The Code of Obligations distinguishes:
- Manual gift: immediate transfer of the asset without a written deed (possible for movable property of modest value);
- Inter vivos gift (art. 243 CO): for assets other than real estate, a written promise if the gift is future;
- Gift of real property: authentic form mandatory (notary) plus registration in the land register;
- Mixed gift: sale at a price below market value (the difference constitutes a gift).
A gift can only be revoked in the limited cases of art. 249 CO (serious ingratitude, birth of the donor's children, inability to perform maintenance obligations). Once made, it definitively binds the donor. The donor's legal capacity and the absence of defects of consent are essential conditions.
The Advance on Inheritance and Bringing Gifts into Account (art. 626 SCC)
An advance on inheritance is a gift made by a person to one of their legal heirs with the intention that the asset will be set off against the beneficiary's future hereditary share. Art. 626 SCC provides for the bringing into account (imputation) of inter vivos gifts received by legal heirs at the time of the estate division.
Bringing into account means in practice:
- The heir who received an advance on inheritance must take it into account when calculating their hereditary share;
- If the value of the advance is less than the heir's legal share, they receive the difference at the time of division;
- If the value of the advance exceeds the legal share, the heir may (depending on the canton and the value of the estate) be required to return the excess.
The Value to be Brought into Account: Valuation of Gifts (art. 630 SCC)
The value to be brought into account is determined at the time of the division (current value) pursuant to art. 630 SCC, which accounts for changes in value over time. However, the parties may agree in the deed of gift on a fixed value to be brought into account (nominal value). The choice of valuation method is particularly important for real estate whose value has risen significantly.
| Type of Gift | Value to be Brought into Account | Legal Basis |
|---|---|---|
| Gift of money | Nominal value (amount given), without interest in principle | Art. 630 SCC |
| Gift of real estate | Current value at the time of division (unless agreed otherwise) | Art. 630 SCC |
| Gift of a business | Current or agreed value | Art. 630 SCC |
| Education/training expenses | Subject to imputation if extraordinary (beyond the usual level) | Art. 626 para. 2 SCC |
The No-Imputation Clause
The donor may stipulate that the gift is made as a preferential gift (hors part) and that the donee will not be required to bring it into account at the time of division. This no-imputation clause must be expressly stated in the deed of gift or in a subsequent will. It transforms the advance on inheritance into a preferential gift: the donee benefits from the gift in addition to their legal hereditary share, within the limit of the freely disposable portion.
Important: the no-imputation clause is only valid to the extent it does not encroach on the forced shares of the co-heirs. If the preferential gift exceeds the freely disposable portion, it is challengeable through a reduction action.
Gift Taxation in Geneva and the Canton of Vaud
In the two main cantons where PBM Avocats practises, the tax rules are as follows:
- Geneva: gifts in direct line (parents/children) and between spouses are exempt from gift tax. Gifts between siblings, nephews/nieces or other beneficiaries are taxed according to a progressive scale;
- Vaud: same exemption for gifts in direct line and between spouses; progressive taxation for other beneficiaries;
- For real estate: the gift of real property may trigger real estate capital gains tax if the value exceeds the donor's acquisition cost.
Frequently Asked Questions about Gifts and Advances on Inheritance
What is the difference between an ordinary gift and an advance on inheritance?
An ordinary gift is a gratuitous transfer made without any link to the future succession: the beneficiary keeps it in full in addition to their hereditary share. An advance on inheritance (avancement d'hoirie) is a gift made to a legal heir with the implicit or explicit intention that it will be set off against their future share in the succession. At the time of the estate division, the heir who received an advance on inheritance must bring it into account (impute it against their share) so that heirs of the same rank receive equivalent shares. By default, gifts to legal heirs are presumed to be advances on inheritance.
What is a no-imputation clause and what purpose does it serve?
A no-imputation clause is a provision whereby the donor specifies that the gift made to a legal heir shall not be set off against their hereditary share. This clause, inserted in the deed of gift or in a subsequent will, transforms the advance on inheritance into a preferential gift (don préciputaire): the beneficiary keeps the gift in addition to their legal hereditary share. Important: the no-imputation clause is only valid to the extent it does not encroach on the forced shares (réserves héréditaires) of the other heirs. If the gift exceeds the freely disposable portion, it remains subject to a reduction action.
Are gifts to children subject to tax in Switzerland?
In Geneva and the canton of Vaud, gifts in direct line (parents/children) are exempt from cantonal gift tax. However, certain cantons (such as Zurich or Berne) tax gifts, even in direct line, above a certain amount. At the federal level, there is no gift tax. A gift may nonetheless have indirect tax implications: income tax if the gift consists of taxable income, and real estate capital gains tax if it involves real property. A prior tax analysis is essential.
Can a gift be revoked under Swiss law after it has been made?
Revocation of a gift is possible in very limited cases (arts. 249-251 CO): serious ingratitude of the donee (grave offence against the donor or their relatives, crime committed against the donor), birth or discovery of descendants of the donor (unless the marriage contract stipulates otherwise), and inability of the donor to fulfil their legal maintenance obligations. The time limit for seeking revocation is one year from knowledge of the ground. Revocation for ingratitude is an exceptional remedy; courts apply it strictly.
How should a gift or advance on inheritance be properly documented?
For gifts of movable property or money, a written deed of gift is recommended even if not required by law (art. 243 CO requires written form for future gifts). For real estate, the gift must be executed in authentic form (notary) due to registration in the land register. The deed should specify: the property given and its estimated value, the donor's intention (advance on inheritance or preferential gift), the no-imputation clause if desired, and any conditions. Clear documentation prevents disputes at the time of estate division.