Case studies, basic paper, slides and detailed solution notes (+90 pages of documents) from the workshop held by Natalie Peter on October 28, 2025 on the occasion of the ISIS seminar "Gratuitous asset transfers in tax law".
Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (German)Mr. Stoll, a German citizen, has lived in the canton of Schwyz for over 30 years. He inherited substantial assets from his father, including real estate companies in Germany and bank investments, which he transferred to a Liechtenstein family foundation shortly after moving to Switzerland. The foundation was structured as follows:
The founder wishes to ensure that the foundation is treated as fiscally opaque in both Switzerland and Germany.
Ms. Muster resides in Zug and wishes to establish a Liechtenstein family foundation before the vote on the Juso initiative. This is intended to protect a portion of her assets from the inheritance tax that would apply if the initiative is adopted.
Ms. Muster has two daughters who also reside in the Canton of Zurich.
In addition to bank assets, Ms. Muster intends to contribute her 50% stake in the family business to the foundation. She is also wondering whether she can contribute her real estate to the foundation.
Lucy is a U.S. citizen and married to a Swiss national. She lives with her husband and their two children in Uster, Canton of Zurich.
Lucy’s parents, who live in the U.S. and have substantial assets, have finalized their estate planning. To this end, they have each drafted a mirror-image will. In both wills, Lucy’s sister is designated as executor and trustee, as she also still resides in the U.S. Should she be unable or unwilling to assume this role, Lucy is to serve as alternate executor and trustee. The executor is instructed in the will to transfer, upon the testator’s death, any assets not already held in trusts and not bequeathed to third parties into two trusts—the “Qualified Terminable Trust” and the “Residuary Trust.” The structure of both trusts is specified in the will.
Both trusts are established upon inheritance in order, on the one hand, to avoid the lengthy U.S. probate process and, on the other hand, to fully utilize the U.S. tax exemptions.
Assets are placed in the “Qualified Terminable Trust” in an amount corresponding to the then-current tax exemption for the U.S. Federal Estate Tax. If the surviving spouse does not survive the decedent by more than 60 days, the “Qualified Terminable Trust” will not be established. In this case, the entire estate would be transferred to the “Residuray Trust.”
Until both trusts are established, the executor/trustee should estimate the income from the trust assets and distribute it to the surviving spouse. Once the trust is established, the trustee may make annual distributions from the realized income to the surviving spouse.
Upon the death of the surviving spouse, the trustee is instructed to pay the accumulated income to the surviving spouse’s estate and to distribute the remaining trust assets to the heirs of the second-to-die parent in accordance with the provisions of the will.
The remaining assets are to be transferred to the “Residuary Trust.” The beneficiaries are the surviving spouse and the descendants. It is at the trustee’s discretion whether and to which beneficiaries distributions from the income or the assets are made. The beneficiaries shall not be able to derive any claim from the distributions. Accumulated income is added to the trust assets. However, the spouse shall only receive distributions from the assets once the assets of the “Qualified Terminable Trust” have been exhausted.
Upon the death of the surviving parent, the remaining trust assets are distributed directly to the descendants in accordance with the parent’s testamentary instructions. If a descendant has not yet reached the age of 30, the trustee shall distribute the income from the trust share at his or her discretion until the descendant’s 25th birthday. Starting on the beneficiary’s 25th birthday, the beneficiary shall receive the annual income as a distribution. It is at the trustee’s discretion whether to also distribute assets to the beneficiary. Once the beneficiary has reached the age of 25, they may request distributions from the trust assets. Should a descendant die before the assets are distributed, it is provided that these assets shall be distributed in accordance with the testamentary dispositions of that descendant (A) or, if no will exists, to the next of kin (B).
Lucy’s father also established “The 2024 Family Trust” last year. The trustees are two independent corporate trustees. Should one of the appointed trustees no longer wish to serve, the settlor has reserved the right to appoint another “corporate trustee,” with the requirements for a new trustee set forth in the trust deed.
The settlor has not reserved any control rights in the trust deed. However, he may exchange assets at any time.
The trust deed provides for specific withdrawal rights. Under these provisions, the wife may request payments from the trustee within 60 days or no later than December 31 of the year if additional assets are contributed to the trust. These payments are capped to prevent gift taxes from being incurred on this amount in the U.S.
If the assets contributed to the trust exceed the wife’s withdrawal rights, the descendants may submit a written request for payment of the surplus within 30 days or no later than December 31. However, these payable amounts are also limited for the same reasons.
After the father’s death, the assets that the descendants could have claimed but have not yet claimed are to be separated and held in a separate trust. The trustee is to distribute income from the remaining trust assets to the wife quarterly or more frequently. The frequency and amount are at the trustee’s discretion. The trustee may also distribute assets to the wife or descendants. Upon the wife’s death, the remaining assets shall be divided and distributed into one trust per descendant. The trust’s income shall then be distributed quarterly to the beneficiaries once they have reached their 25th birthday. Furthermore, it is at the trustee’s discretion to distribute trust assets to the beneficiaries. The descendants shall then specify in their wills to whom the assets are to be distributed after their death.
How are these trusts treated for tax purposes in Switzerland?
Ms. Looser is childless and lives in the Canton of Zurich. Her husband passed away years ago. Together, they had established a Liechtenstein foundation and contributed a large portion of their assets to it. According to the supplementary statutes, the sole beneficiaries are Mr. and Mrs. Looser.
It was Mrs. Looser’s wish that the foundation become a charitable foundation after her death. She expressed this wish to both the foundation board and the executor. However, this wish was never recorded in a letter of wishes or incorporated into the supplementary statutes.
Mrs. Looser passed away in the spring. In accordance with Mrs. Looser’s wish, the Foundation Board amended the statutes so that the foundation became a charitable organization upon her death. The supervisory authority in Liechtenstein has recognized these changes, and the tax authorities have granted the foundation tax exemption effective from the date of Mrs. Looser’s death.
What are the tax consequences in Switzerland?
Hans Dürst, a resident of Zurich, established a family foundation under Liechtenstein law in 2002. He contributed securities worth CHF 20 million to the foundation.
During his lifetime, the founder had the right, pursuant to the foundation deed, to issue a supplementary statute and to regulate the beneficiaries therein. He was also authorized to amend the supplementary statute at any time.
Upon the death of Hans Dürst on June 30, 2024, pursuant to the supplementary deed most recently issued by Hans Dürst, his only daughter, Andrea, is to be paid 12% of the foundation’s net assets as of the end of the previous year annually by the end of February. The board of trustees, which is not bound by any instructions from the beneficiaries, may amend the supplementary deed at any time.
Following T’s death, the foundation must, in accordance with the supplementary statutes, pay a total of 12% of its net assets to his descendants annually by the end of February.
