Inheritance and gift tax procedure
Workshop by Nicole Bühler at the ISIS) seminar on 12 May 2022 entitled "Tax procedural law including appeal procedures".
Case 1: Inventory procedure
1. facts of the case
Mrs Huber died unexpectedly on 12 February 2021 in Bülach, Canton Zurich. She was not married, left no descendants and no testamentary dispositions. Legal succession applies. The investigations of the District Court of Bülach have shown that her next legal heirs are her nephew Marcel Meier in Bern and her niece Nathalie Meier-Weber, resident in Geneva. Her niece Nathalie is also her godchild. No other heirs were identified. Mrs Huber left the two heirs a property in Bülach as well as various bank accounts and securities deposits at several banks in Zurich and Basel.
In the estate of Mrs. Huber, the procedure for the tax inventory was initiated by her municipality of residence in Bülach.
- How is the tax inventory procedure carried out in the Canton of Zurich? Would a tax inventory procedure also have been carried out if Mrs Huber had been destitute?
- What are the rights and obligations of the parties involved in the inventory procedure? Would a possibly appointed executor have the same rights and obligations?
- Assume it is necessary to issue protective measures in the estate of Mrs. Huber. When are protective measures possible and which ones are available?
Case 2: Inheritance tax proceedings
1. facts of the case
The written inventory procedure in the estate of Mrs. Huber was initiated and carried out by the municipality of residence in Bülach. Mrs. Huber's niece participated to the best of her ability by submitting the documents she had available and found. Nathalie submitted the compiled documents to the inventory authorities of the town of Bülach for examination and forwarding to the Zurich Cantonal Tax Office. Among other things, the latter has to assess the inheritance tax liability.
In a next step, the Zurich Cantonal Tax Office opens inheritance tax proceedings in the estate of Mrs Huber, for the attention of Nathalie as representative of the community of heirs. The basis for this is the values declared in the inventory procedure in the tax return as of the date of death and the information provided in the inventory questionnaire. On 16 November 2021, the Zurich Cantonal Tax Office issues the inheritance tax ruling for Mrs Huber's estate.
- The heirs Beatrice and Cedric do not agree with the inheritance tax ruling of the Zurich Cantonal Tax Office and consult a tax advisor. They consider the net estate values taken into account for the assessment of inheritance taxes to be too high, especially the real estate. How can they now proceed?
- Who is responsible for paying the inheritance taxes due on Mrs Huber's estate? Does a possibly appointed executor or representative of heirs have a duty to pay inheritance tax on an estate represented by them?
- Are the heirs mutually liable for unpaid inheritance taxes? Is there also joint and several liability of the executor or representative of the heirs for inheritance taxes of the heirs?
Case 3: Subsequent taxation in the estate
1. facts of the case
Mr and Mrs Wolf were married in Basel in 1945. The couple has two children, the daughter Laura Wolf-Meyer and the son, and lived in Stäfa. Mrs Wolf's husband died completely unexpectedly on 20 January 2021. As part of the official inventory of her husband's death, Mrs Wolf disclosed the previously untaxed assets at a Liechtenstein bank in the inventory questionnaire of the Canton of Zurich. This was a numbered account. In the first few years, the bank forms (Form A) showed Mrs Wolf and later the Wolf couple together as the beneficial owners.
- 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 want to allow simplified subsequent taxation in inheritance cases for this numbered account. Rightly so?
- The heirs, Mrs Wolf and the two descendants Laura Wolf-Meyer and Lorenz Wolf, do not agree whether they want to report the assets to the tax authorities. What happens in this case?
- How would the case be assessed if Mr Wolf had given the numbered account to his niece Anna Winter as legatee in his will? Can the niece, as legatee, declare the account independently?
- In his will, Mr Wolf has appointed an executor to take care of the estate. Is the executor entitled to apply for the filing of assets in the inventory procedure?