Facilitated subsequent taxation, tax succession and liability of heirs
Workshop on the occasion of the ISIS) seminar on 26 November 2020 entitled "Advance withdrawal, inheritance, division of an estate and execution of a will in tax law".
Case 1 - Subsequent taxation in the estate
Mr and Mrs Meier were married in 1948 and had been living in Zurich without children ever since. Mrs Meier's husband died unexpectedly on 5 June 2019. As part of the official inventory of her husband's death, Mrs Meier decided to disclose the previously untaxed assets at a Liechtenstein bank. This is a numbered account. The bank forms (Form A) show first Mrs Meier and later Mr and Mrs Meier together as the beneficial owners.
Question 1 - Post-taxation
How is the subsequent taxation for the previously untaxed assets and income to be carried out? The tax authorities of the Canton of Zurich do not wish to allow simplified subsequent taxation in inheritance cases for this numbered account. Is this right?
Facts Variant 1
Mr and Mrs Meier were married in 1948, had two children, Stephanie Meier and Thoma Meier, and resided in Zurich. Freu Meier's husband died completely unexpectedly on 5 June 2019. As part of the official inventory of her husband's death, Mrs Meier decided to disclose the previously untaxed assets at a Liechtenstein bank. This is a numbered account. The bank forms (Form A) show first Mrs Meier and later Mr and Mrs Meier together as the beneficial owners.
Question 2 - Eligible heirs/surviving spouse/surviving registered partner
The heirs, Mrs Meier and the two children Stephanie Meier and Thomas Meier, disagree on whether to report the assets to the tax authorities. What happens in this case? Would the situation be different if Mr Meier had lived in a registered partnership? In that case, the heirs would be the registered partner and the two descendants.
Question 3 - Eligible heirs/legatees
How is the case to be assessed if Mr Meier in his will gives the numbered account to his niece Nadia Weber as legatee? Can the niece, as legatee, declare the account independently? What needs to be taken into account here?
Question 4 - Entitlement of the executor to file a petition
In the joint inheritance contract, Mr Meier appointed an executor to take care of the estate settlement. Is the executor entitled to file an application for the assets in the inventory procedure?
Facts Variant 2
In 1968, Mrs Meier inherited a considerable sum from her aunt, which she paid into an account at a Liechtenstein bank. The account was opened in the name of Zermatt. At the bank, Mrs Meier was listed as the beneficial owner of the assets (Form A). In 2002, Mrs Meier and her husband entered into a marriage and inheritance contract. In this marriage contract, they subjected their marriage to the matrimonial property regime of general community of property pursuant to Art. 221 of the Swiss Civil Code. They agreed that all property should belong to the joint property, with the exception of the legally defined personal property (pursuant to Art. 222 para. 1 CC). In particular, assets acquired through previous and future gifts and inheritances are also to form part of the joint property.
Mrs. Meier's husband passed away completely unexpectedly on June 5, 2019. As part of the official inventory of her husband's death, Mrs. Meier decided to disclose the previously untaxed assets to the Liechtenstein bank.
Question 5 - Influence of property law on subsequent taxation
The tax authorities of the Canton of Zurich do not wish to allow simplified subsequent taxation in inheritance cases for this numbered account. Mrs Meier is of the opinion that, on the basis of the marriage contract, the assets in the Zermatt custody account must be qualified as joint property within the meaning of Art. 222 of the Swiss Civil Code and that the spouses are therefore each individually liable to declare the joint property, which would mean that half of the assets could be subject to simplified subsequent taxation in cases of inheritance. Rightly so?
Case 2 - Heir's liability
Mr. Müller, a successful retired dentist, resident in Zurich, passed away on 20 August 2019 at the age of 85. He left as his only legal heirs his two descendants Anja, aged 55 and her brother Stefan aged 58, both childless and also residing in Zurich. On 10 October 2019, the two children declared the disclaimer of the inheritance in their father's estate. The competent district court of Zurich noted the disclaimer by all next legal heirs. Anja and Stefan thus thought that their father's estate had been settled for them.
On 15 January 2020, the Zurich Tax Office served Eben Anja and Stefan with a liability order by registered letter for their father's outstanding 2015 and 2016 state and municipal taxes. The Zurich tax office informed the heirs Anja and Stefan that they are liable for the outstanding tax claims based on the gift of the properties received from their father in December 2017. The two children are very surprised about this - rightly so? Are the descendants liable for their father's outstanding tax debts despite the disclaimer?
Question 1 - Liability of heirs for tax debts of the father
Are the descendants, despite the disclaimer, liable for the outstanding tax debts of their father?
Question 2 - Liability of the executor or the representative of the heirs for tax debts
Assume that Mr. Müller has named an executor for his estate in his will. Is he liable for the tax debts? What is the situation if the heirs have appointed a representative?
Question 3 - Payment obligations for inheritance taxes on the estate
Who is responsible for paying inheritance taxes if inheritance taxes are due on Mr. Müller's estate? Is there an obligation on the part of the executor or representative of the heirs to pay inheritance tax in an estate represented by them?
Question 4 - Liability issues for inheritance taxes on the estate
Are heirs mutually liable for unpaid inheritance taxes? Is there also liability of the executor or representative of the heirs for inheritance taxes?