by Julia Conrad, financial planner at Graubündner Kantonalbank
In particular, women who are cohabiting and financially dependent are well advised to deal with their personal provisions at an early stage. This is especially true when real estate is involved.
Risk coverage in cohabitation
The 1st pillar (AHV, IV) does not recognize cohabitation status. This means that no survivors’ benefits are paid to the life partner. Benefits are only paid to one’s own children. The same applies to accident insurance (2nd pillar). And even in the event of death due to illness (pension fund, 2nd pillar), the cohabiting partner is legally not entitled to any benefits. However, many pension institutions (pension funds) now provide for a partner’s pension or – under certain conditions (for example joint children) – a lump-sum payment. An orphan’s pension is paid out in any case.
For cohabiting couples without mutual financial dependency, this fact is of minor importance. However, the situation is completely different when a couple wants to buy a property together and takes out a mortgage to do so. If a partner dies, the surviving person is entitled to little or no benefits, depending on the constellation.
For the woman, who is still mainly responsible for childcare today and often only works part-time or not at all, the financial consequences in the unfortunate event of the cohabiting partner can be fatal: If the income of the main breadwinner falls away, the bank’s demands on imputed affordability are the mortgage is no longer met. In the worst case, mother and child (ren) have to give up their own home.
Consequences if the partner dies
Not to be neglected are the consequences of the death of a woman if she was largely responsible for childcare and had no or only a low income. In this case, mostly only minimal benefits from the 1st pillar flow to the children. Childcare must be organized or taken over by the surviving partner, which can generate additional costs.
The right of inheritance today
Cohabiting partners are not legal heirs. Therefore, from an inheritance law perspective, there are basically no mutual claims. Without any precautions during lifetime, the legal succession applies. This means that the heirs of the deceased (e.g. the parents) must be paid out. If there are not enough liquid funds available to compensate for this, in the worst case scenario, the home has to be sold.
By means of a will, cohabiting couples can obtain that at least part of their property goes to their partner. The statutory compulsory portions of any children who are not together are, however, very high at three quarters of the estate. This limits the privileged options so that you can allocate a maximum of a quarter to your life partner. Cohabiting partners without children must also observe the compulsory portion of the parents. Each parent is entitled to a quarter of the estate.
Inheritance law in the future
The Federal Council would like to adapt inheritance law to the new social forms of coexistence. In particular, he suggests reducing the compulsory portions for descendants. In this way, life partners, for example, can be better favored.
Professional advice is an advantage
It is worthwhile to take a look at the individual situation with a specialist and to take precautions in good time. For example, by means of professional pension advice.
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