Advance on Inheritance: Equalisation, Home, Taxes

In short: What parents give a child during their lifetime as an advance on inheritance is credited when the estate is divided, at its value on death, not at the time of transfer. For a home purchase it counts as own funds, and gifts to children are tax-free in most cantons. If the parents later claim supplementary benefits, a means-tested top-up to pensions from old-age and survivors’ insurance (AHV) and disability insurance, the assets they gave away are still taken into account.

A common trigger is a child’s home purchase: the child needs own funds, and the inheritance is decades away. Legally, an advance on inheritance is easily made. Its consequences often show only much later, when siblings divide the estate or when the parents apply for supplementary benefits.

An advance on inheritance is a gratuitous transfer between living persons to a future statutory heir, credited against that heir’s share of the estate. The Civil Code (CC) speaks of property received “as advancements against their share of the estate” (Art. 626 para. 1 CC). Whether a transfer is meant in this way depends on its purpose; a written designation spares the heirs that question of interpretation.

The key facts at a glance

• What parents give their descendants as an endowment, transfer of assets, debt waiver or similar is subject to equalisation (hotchpot) on death, unless they expressly order the opposite (Art. 626 para. 2 CC, version in force on 1 July 2026).
• Equalisation is based on the value at the time of succession or, if the item was sold beforehand, on the sale proceeds (Art. 630 para. 1 CC).
• For a home purchase, at least 10 percent of the lending value must come from own funds that do not come from the 2nd pillar; advances on inheritance and gifts count towards them (Source: Swiss Bankers Association (SBA), minimum requirements for mortgage financing, in force since 1 January 2025).
• Gifts to children are not taxed in any canton except Appenzell Inner Rhodes, Neuchâtel and Vaud, where a deduction, an allowance or an exemption threshold applies (Source: Federal Tax Administration (ESTV), status of legislation 1 January 2025).
• For supplementary benefits, gifted assets are still taken into account, reduced by CHF 10,000 each year (Art. 11a para. 2 ELG, Federal Act on Supplementary Benefits, version in force on 1 January 2026; Art. 17e ELV, Ordinance on Supplementary Benefits, version in force on 1 January 2025).

Must an advance on inheritance be equalised on death?

As a rule, yes. Statutory heirs must account to one another for what they received from the deceased during his or her lifetime, and have it counted against their share of the estate (Art. 626 para. 1 CC). Equalising means that the advance is counted against the share, not repaid, as long as it does not exceed the share.

For gifts to descendants as an endowment, transfer of assets, debt waiver and similar transfers, the law presumes this duty unless the parents have expressly ordered otherwise (Art. 626 para. 2 CC). If the child dies before the parents, the child’s descendants must equalise the advance (Art. 627 para. 2 CC). The heir who has to equalise chooses whether to return the item to the estate in kind or to have its value counted against his or her share (Art. 628 para. 1 CC). If the advance exceeds the share, the recipient must pay the excess to the co-heirs, unless the parents demonstrably meant to favour the recipient (Art. 629 para. 1 CC). An example: a widowed mother has given one of her two children CHF 200,000, and her estate amounts to CHF 100,000. Each child is entitled to CHF 150,000, so the child who received the gift owes the sibling CHF 50,000.

Customary occasional gifts for birthdays or Christmas are not equalised (Art. 632 CC). Upbringing and education costs are equalised only to the extent that they exceed the customary level (Art. 631 para. 1 CC).

The parents can expressly exempt a gift from equalisation. That freedom has a limit: the compulsory portions of the other heirs. Since 1 January 2023, the compulsory portion is one half of the statutory inheritance entitlement (Art. 471 CC). If an heir receives less than the compulsory portion in value, he or she can demand abatement of the gifts made during the deceased’s lifetime (Art. 522 para. 1 CC). These expressly include advances that the deceased exempted from equalisation (Art. 527 no. 1 CC).

Which value counts in equalisation?

The value at the time of succession applies, not the value on the day of transfer. If the item was sold beforehand, the proceeds are used (Art. 630 para. 1 CC). Transfer and death are often decades apart. By then the result differs greatly between cash and property: a sum of money is normally counted at its nominal amount, a property at its value at death.

Someone who receives CHF 200,000 will normally have CHF 200,000 counted against his or her share on death, even if the money has long been spent or has grown. Someone who receives a property has its value at the death of the parent who transferred it counted against his or her share. If the flat has risen from CHF 800,000 to CHF 1.2 million in twenty years, the recipient has CHF 1.2 million counted against his or her share. The siblings share in the increase in value; if the value falls, correspondingly less is counted. Improvements and damage to the item, and income drawn from it, are taken into account under the rules on possession (Art. 630 para. 2 CC).

The law allows the deceased to provide otherwise (Art. 628 para. 2 CC). Whether and how the parents fix a set credit value for a property belongs in the agreement or in the disposition on death. If such a value infringes compulsory portions, the siblings can demand abatement; that claim can be excluded only with their consent in an inheritance contract, which requires a public deed (Art. 495 para. 1 CC and Art. 512 para. 1 CC). For married parents, when the first spouse dies, the matrimonial property regime is settled first (Art. 204 para. 1 CC), and only then is the estate divided.

How does an advance on inheritance help with buying a home?

Banks require own funds for a mortgage. Under the minimum requirements of the Swiss Bankers Association, at least 10 percent of the lending value must come from own funds that do not come from an early withdrawal or a pledge of the 2nd pillar. Advances on inheritance and gifts count as such own funds. FINMA recognises the guidelines as a minimum standard.

A loan from the parents also counts as own funds if it is assigned to the bank or covered by a subordination agreement. For owner-occupied property, a written confirmation to the bank that repayments are possible only with the bank’s consent is enough for loans from close family (Source: Swiss Bankers Association, minimum requirements for mortgage financing, in force since 1 January 2025).

Besides own funds, the bank checks the affordability of the mortgage on its own assumptions. An advance on inheritance increases own funds and thereby lowers the loan amount and the imputed costs; the mortgage still has to pass that check.

Advance on inheritance or loan: what is the difference?

An advance on inheritance is a gift: a transfer between living persons without corresponding consideration (Art. 239 para. 1 of the Code of Obligations, CO). A loan, by contrast, obliges the recipient to repay (Art. 312 CO). For parents who might need the money themselves later, that is the key difference.

Parents can revoke a completed gift only in narrow cases, for example where the recipient commits a serious offence against them or fails to fulfil a condition attached to the gift (Art. 249 CO). They can call in a loan under the agreed terms. If it counts as own funds for the bank, however, repayment is tied to the bank’s consent. With a loan, the amount passes into the estate on death as a claim; with an advance on inheritance, the amount is counted against the share. If the parents waive a loan, the debt waiver is subject to equalisation in respect of descendants (Art. 626 para. 2 CC).

Which taxes apply to an advance on inheritance?

Gift tax is regulated by the cantons. What counts is the canton of residence of the donor, and for property the canton where the land lies. For children, an advance on inheritance is tax-free in most cantons. For property, the real estate gains tax is also deferred (Art. 12 para. 3 let. a of the Tax Harmonisation Act, StHG). The ESTV overview lists these rules for gifts to children:

Source: ESTV, information dossier Inheritance and gift taxes (in German), sections 2 and 6.2, status of legislation 1 January 2025. The law of the canton concerned applies; the terms are explained in the glossary entry Inheritance and Gift Tax.

Some cantons add earlier gifts back to the estate when they calculate inheritance tax on death. In Lucerne and Neuchâtel this applies to prior gifts from the last five years before death; in Lucerne, the municipalities can also levy a descendants’ inheritance tax to the extent that individual gifts exceed CHF 100,000 (Source: ESTV, dossier Inheritance and gift taxes, sections 5.1.3 and 6.2, status of legislation 1 January 2025).

The child pays later for the deferral of the real estate gains tax: if the child sells the property, the increase in value from the parents’ period of ownership is taxed as well. If the child assumes a mortgage on transfer or pays something, the transfer is not a gift to the extent of that consideration (Source: ESTV, section 5.2); depending on the canton, that part may already count as a sale at the time of transfer.

What does an advance on inheritance mean for later supplementary benefits?

Assets that a person waives, meaning gives away without a legal obligation and without equivalent consideration, are still taken into account as assets when supplementary benefits are calculated (Art. 11a para. 2 ELG). An advance on inheritance falls under this. A waiver also exists where the consideration is less than 90 percent of the value (Art. 17b let. a ELV).

The amount taken into account falls by CHF 10,000 a year. The first reduction applies one year after the 1 January that follows the waiver, so for a transfer in 2026 from 1 January 2028 (Art. 17e ELV). If a widowed mother transferred CHF 200,000 to a child in 2026 and applies for supplementary benefits in 2036, CHF 110,000 is still taken into account. Unlike excessive consumption of assets, there is no look-back period for this kind of waiver (Art. 11a para. 2 and 4 ELG).

The waived assets also count towards the asset threshold: supplementary benefits are paid only to those whose net assets are below CHF 100,000 for single people and CHF 200,000 for married couples (Art. 9a para. 1 and 3 ELG). The CHF 110,000 taken into account can therefore rule out entitlement entirely, not only reduce it.

The question before making an advance on inheritance is whether the parents’ remaining assets, together with AHV and pension fund, will cover their expenses into old age, including a stay in a care home. A completed gift cannot be revoked because the parents later fall into hardship themselves; that ground is not in Art. 249 CO. They can revoke only a gift promise that has not yet been fulfilled, and only if their financial circumstances have changed so that the gift would place an exceptionally heavy burden on them (Art. 250 para. 1 no. 2 CO).

What belongs in a written agreement?

A gift promise requires written form, and a gift of land requires a public deed (Art. 243 CO). Even where the law prescribes no form, a written agreement can record how the transfer is to be treated on death. That can spare the siblings a later dispute over interpretation.

An agreement usually states:

• the amount or item and the date of the transfer
• whether it is to be credited as an advance on inheritance or is exempt
• for a property, any credit value
• any reservations or conditions, such as a right of residence or a usufruct in favour of the parents
• for an exemption from equalisation or a fixed credit value: whether the siblings consent in an inheritance contract

How intestate succession, compulsory portions and cantonal inheritance taxes interact is explained in the guide Inheritance in Switzerland. The glossary entry Advance on Inheritance summarises the terms.

Frequently asked questions about advances on inheritance

Does an advance on inheritance have to be repaid on death?

As a rule, no. The advance is credited when the estate is divided (Art. 626 para. 1 CC). The heir who has to equalise chooses whether to return the item to the estate in kind or to have its value counted against his or her share (Art. 628 para. 1 CC). If it exceeds the recipient’s share, the recipient must pay the excess to the co-heirs, unless the parents demonstrably meant to favour the recipient (Art. 629 para. 1 CC).

Which value applies to an advance on inheritance on death?

The value at the time of succession applies, not the value at the time of transfer. If the item was sold beforehand, the proceeds realised are used (Art. 630 para. 1 CC). For a property whose value has risen over the years, the recipient therefore has the higher value counted against his or her share.

Does an advance on inheritance count as own funds for buying a home?

Yes. Under the minimum requirements of the Swiss Bankers Association, advances on inheritance and gifts count as own funds. At least 10 percent of the lending value must come from own funds that do not come from the 2nd pillar. Loans from the parents also count as own funds for owner-occupied property if the parents confirm to the bank in writing that they will be repaid only with the bank’s consent.

Can a gift to a child be exempted from equalisation?

Yes, the parents can expressly order that a gift is not to be equalised (Art. 626 para. 2 CC). The compulsory portions of the other heirs remain protected: if they receive less than their compulsory portion, they can demand abatement of the gift (Art. 522 para. 1 CC and Art. 527 no. 1 CC).

What does an advance on inheritance mean for supplementary benefits?

Assets that someone gives away without a legal obligation and without equivalent consideration are still taken into account as assets when supplementary benefits are calculated (Art. 11a para. 2 ELG). The amount taken into account falls by CHF 10,000 a year (Art. 17e ELV) and also counts towards the asset threshold for entitlement (Art. 9a para. 3 ELG).