Advance inheritance in Switzerland: Gifts, obligations to equalization, and estate planning
When an advance inheritance can make sense, in which situations a gift may be subject to equalization, and the key considerations when gifting real estate or businesses as part of estate planning.
Published on 11.09.2026 CEST
Many parents want to support their children financially during their lifetime, for instance by helping them to buy a home, fund their education or set up a business. An advance inheritance can make it possible. This also raises important questions, however: is every gift automatically treated as an advance inheritance? Are the other heirs entitled to compensation for the gift? What are the implications for real estate or business succession?
Our inheritance advisors examine the financial, familial and legal implications of these questions, outlining the key points to consider and demonstrating how to reduce the risk of unintended consequences.
What is an advance inheritance? What is a gift?
The distinction between “gift” and “advance inheritance” is important, as each may give rise to different legal consequences.
In Switzerland, the term “gift” has a clear legal definition. It refers to the free transfer of anything of value, such as cash, real estate or securities. The waiver of a right or the provision of a service that would normally be subject to payment, such as the waiver of rent or the forgiveness of a loan, may also qualify as a gift. A gift is not automatically subject to compensation among other heirs in the event of inheritance.
In contrast, advance inheritances are not expressly defined by law, although the term is commonly used in inheritance law. It generally refers to gifts made to future heirs which, in principle, must be taken into account when the estate is later distributed. This process of compensation between heirs is called a hotchpot.
In other words, the inheritance calculation recognizes that part of the inheritance was already transferred during the deceased’s lifetime. If, for example, a child receives an advance inheritance of CHF 200,000, that amount must be credited against the child’s inheritance share when the estate is later divided. The purpose of this hotchpot is to ensure equal treatment of the descendants, as far as possible.
The decisive difference between a gift and an advance inheritance therefore lies in whether an obligation to equalize arises upon the death of the person making the gift.
When gifts are subject to equalization
In matters of inheritance, equal treatment is not merely a question of fairness. In certain cases, it may give rise to a legal entitlement. Swiss inheritance law follows the principle of equal treatment among descendants. As a result, gifts made to direct descendants are, in principle, subject to equalization (hotchpot) in the event of inheritance, unless the testator has expressly released them from this obligation. It should be noted, however, that such a disposition must not infringe the forced heirship claims of the other heirs.
The general obligation to equalize, however, does not apply to gifts made to someone who is not a direct descendant, unless the testator expressly provides otherwise.
Whether a gift should be given as an advance inheritance and thus become subject to later equalization is therefore largely at the discretion of the person making the gift and should always be assessed in the context of the overall estate planning. What is intended as financial support today may later affect both the financial position of the donor and the distribution of the estate among descendants. An advance inheritance should therefore only be made if the donor’s long-term financial security is assured. In the case of substantial transfers, a thorough income and wealth planning analysis is advisable beforehand.
Creating clarity at an early stage
Advance inheritances can have far-reaching financial, tax and familial implications. It is therefore worth reviewing them early and as part of comprehensive financial and estate planning. Arrange a non-binding initial consultation with our wealth planning experts.
Key pitfalls in relation to hotchpots
Particularly when there are several descendants, hotchpots can become unexpectedly complex and may lead to unintended unequal treatment.
The law sets out different valuation mechanisms for cash gifts and for the transfer of specific assets, such as real estate or securities. If several children receive advance inheritances of equal value, but in the form of different asset classes, significant differences may arise regarding the value to be brought into hotchpot. In addition, gifts may come from different sources. For instance, if a son receives a gift from his mother's estate and a daughter receives an equivalent gift from her father's estate, depending on the timing of their deaths and the estate planning arrangements, one child may never have to equalize the gift, while the other child may be obliged to do so vis-à-vis their sibling.
To avoid conflict, it is advisable to discuss equalization openly and early on. For example, it may be agreed that all gifts will only be taken into account when the inheritance of the second parent is settled. It may also be sensible to arrange for binding values of the advance inheritance, to avoid disputes later on about the amount of the hotchpot.
When does it make sense to combine an advance inheritance with usufruct?
Parents often wish to transfer real estate to their descendants while continuing to live in it themselves or to receive income from it. In legal terms, this arrangement is known as usufruct. This often allows to strike a balanced solution between transferring wealth and preserving financial security. Parents can arrange their future estate planning at an early stage while maintaining their quality of life and financial independence.
The granting of usufruct in favor of the parents is currently treated as consideration, legally speaking. As a result, the value of the advance inheritance, and therefore the hotchpot burden, may be reduced.
Loans as an alternative
In the case of larger assets, particularly real estate or in the context of business succession, it should be assessed whether a loan may be more appropriate than an advance inheritance. This allows the child to receive financial support while remaining obliged to repay the amount. As a result, no hotchpot obligation arises in the later division of the estate.
At the same time, parents retain greater flexibility. They can structure the repayment terms individually or waive the loan in whole or in part at a later date. If the loan has not been fully repaid by the time of their death, the outstanding amount generally forms part of the estate and is taken into account in the estate division. Any increase in value that has meanwhile accrued on the property or business, however, is not subject to equalization. A loan also enables financing to be staggered, which can be particularly advantageous in the context of a family business being passed down to the next generation.
FAQ: Frequently asked questions about advance inheritance in Switzerland
An advance inheritance is the early transfer of assets to future heirs. In practice, it is a gift that is credited against the recipient’s inheritance share in the later inheritance matter (hotchpot).
The key difference is the obligation to account for it in the inheritance process. A gift is a transfer of assets without compensation and does not automatically have to be taken into account when the estate is distributed. An advancement on inheritance, on the other hand, is a transfer of assets made to a future heir that must generally be credited against that heir’s share when the estate is later divided. This ensures that a portion of the inheritance already transferred during the donor’s lifetime is considered in the final distribution of the estate.
This allows assets to be transferred while the parents continue to retain the use of, or income from, a property. Usufruct reduces the value of the advance inheritance and therefore the amount subject to equalization (hotchpot).
As a general rule, an advance inheritance does not lose its relevance simply because time has passed.
