In the case of private succession, there are numerous tax and legal issues to consider. There is significant scope for action at the interface between inheritance and tax law – both where an asset succession arrangement is made as early as possible during a person’s lifetime, as well as in the case of succession of property upon death.
Arrangements for the transfer of assets may be set out in a will or contract of inheritance so that the assets are passed on as part of the estate only after the death of their owner. In many cases, however, it is advantageous for testators to pass on at least some of their assets during their lifetime – to take advantage of tax-free allowances and to reduce the inheritance tax payable at a later date, for example. A lifetime transfer between private individuals may also be worth considering as a way of reducing compulsory shares in a subsequent inheritance or avoiding conflict within the family. The use of foundations (Stiftungen) is also becoming more common in succession planning.
The range of options available for achieving succession objectives are as varied as the objectives themselves. It is useful to plan early and take into account the financial environment and those aspects of inheritance and tax law that come into play in case of succession.