The inheritance of the parents is often a reason for quarrels for the children. Above all, the bereaved parental home holds potential for conflicts – because it is difficult to divide.
“In many cases, the parental property is a substantial part of their total assets,” says Mattia Hotz (38), estate expert at UBS.
If there are several children, the question arises as to who should get the house – and how the compensation to the siblings looks like. Is there sufficient other wealth to make the children equal?
Do not disadvantage a child
“Most parents want to treat their children the same,” says Gabrielle Sigg (43), head of will enforcement at VZ Vermögenszentrum. That is what inheritance law wants. But that is not always possible. For example, if there are not enough other assets in addition to the one property.
“If this is the case, the child who takes over the property has to pay off his siblings with his own assets, which can be a major financial burden,” says Hotz.
Alternatively, the parents may choose not to treat the children equally. So to give preference to the child who takes over the parental property. “However, such a measure often leads to conflicts between the children and should therefore be carefully considered,” says the estate expert.
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The rating is crucial
But even if parents want to treat all siblings equally, there are a few stumbling blocks to overcome. The first thing that needs to be clarified is how the value of the house should be determined. Is it the market value of the property at the time the estate is divided or should it be the value set in a will?
An example: A will states that the house should go to the daughter for 500,000 francs. However, the will is already ten years old. The market value of the house would be up to three times as high today.
If the house is valued at 500,000 francs, the sister owes her only brother 250,000 francs as compensation. If it is valued at 1.5 million francs, she has to pay her brother 750,000 francs.
The appraisal of the parental home can be decisive in determining whether a child can even afford the inherited property or not. “It is therefore best to put an order in the will as to how the property should be valued,” says Hotz. For example, by the average of two expert opinions.
What about the property gains tax?
And then there is another pitfall: What about the real estate gains tax? The tax arises when a homeowner sells their property and makes a profit. As long as the house remains in the family, the real estate gains tax is deferred – but still latent.
“It mainly depends on whether the child wants to sell the property or not,” says Sigg. If the parental home is sold, the real estate gains tax can be considerable. Real estate prices in Switzerland have risen sharply over the past 20 years. How high the tax is depends on the canton and the length of time you have owned it.
“In practice, it has proven useful to deduct half of the deferred real estate gains tax when valuing the property,” recommends Sigg.
An inherited house is not free
Children who inherit the parental home should also ask themselves whether the property is even viable for them. Parents have not always paid off their house. Whoever gets the parental home also takes on the mortgage.
No matter how much potential for conflict there is when inheriting a property, it is so easy to avoid: by parents thinking about it while they are still alive and talking to their children about it.
“In our consultations, we always find that the wishes and ideas of parents do not match those of the children,” says estate expert Hotz. In many families, the subject of inheritance and inheritance is still taboo and little is said about it.
For various reasons, many children are no longer interested in taking over their parents’ property. “A clarifying conversation within the family can help to find a good solution for everyone involved,” says the estate expert at UBS.
Sigg sees it similarly. “The inheritance should be made transparent from the start and discussed in the family,” says the estate expert. She advocates that families work out a solution together and put it in writing. In addition to a will, an inheritance contract that is signed by both the parents and the children is also suitable. “This way, disputes can definitely be minimized,” says Sigg.