Next Generation Wealth: Preparing and supporting wealth inheritance

Out of 100 Swiss family businesses founded, only 30 reach the second generation, 13 the third and just 3 the fourth generation. These statistics show that successfully preserving wealth over generations is a challenging task. The largest transfer of wealth in history is about to take place as the baby boomer generation passes on its life’s work to the next generation. If you want to secure your wealth for the long term, you need more than a will. Strategic planning, the right instruments and professional support are crucial.

The most important facts at a glance

• Early planning ensures the long-term preservation of wealth over several generations
• Advance withdrawals and gifts are key planning instruments for the structured transfer of wealth
• Different risk profiles enable customized investment strategies for different phases of life
• Professional asset management prevents loss of value due to wrong emotional decisions
• Tax optimization through timely structuring significantly protects assets
• Transparent communication creates clarity for all parties involved and facilitates the handover
• Systematic portfolio management with FINMA-regulated solutions ensures sustainable asset growth

Why strategic wealth planning over generations is crucial

Many people are familiar with the so-called three-generation rule : The first generation builds up the wealth, the second manages it and the third loses it again. This pattern can be observed in countless family histories. The reason is rarely a lack of will, but rather a lack of strategic planning.

Anyone who wants to pass on wealth is faced with a fundamental decision : should the wealth simply be bequeathed or handed over strategically? The difference is significant. With pure inheritance , the assets change hands after the death of the testator. The next generation receives assets without being prepared for them. With a strategic transfer, on the other hand, you plan the transfer with foresight, prepare your descendants and structure your assets optimally.

A long-term perspective is essential. If you are 60 years old today, you should think at least 20 to 30 years into the future. Your children may manage your assets for another 40 years, and your grandchildren for several more decades. This intergenerational perspective requires planning that goes beyond your own life horizon.

Preserving wealth does not mean passing it on unchanged. Inflation acts as a silent wealth destroyer. Without professional management, your assets will lose value in real terms. Strategic wealth transfer therefore also means actively increasing your assets so that the next generation can build on a solid foundation.

Structuring the three asset categories correctly

Not all assets are the same. For a successful transfer, it is advisable to differentiate between three categories:

• Business assets include all operational holdings that a family holds jointly. This can be a holding structure through which you exercise control over your business. Ideally, these assets should remain together so that the company management speaks with one voice.
• Family wealth refers to assets that a family tribe owns jointly: minority shareholdings, real estate, agriculture and forestry or share portfolios. These assets can be managed by a professional asset manager or family office.
• Private assets belong to the individual family members personally. These include homes, individual securities accounts, life insurance policies and other private assets. This is where the descendants have the greatest freedom of choice.

This separation offers several advantages: it prevents the operating business from being burdened by private asset withdrawals. It enables better risk protection. And it makes it much easier to divide the estate among several descendants. Structuring means clarity - for you and for the next generation.

Various constructs are suitable as structuring vehicles. Holdings enable the joint management of shareholdings. Foundations can limit co-determination rights and anchor long-term goals. The choice depends on your individual situation, your goals and the size of your assets.

Overview of instruments for passing on assets

Advance inheritance: planning instrument with compensation obligation

An advance inheritance is a voluntary, free gift to legal heirs during your lifetime. You can transfer sums of money or tangible assets such as real estate. The big advantage is that you get to see how your descendants use the assets and can intervene if necessary.

The statutory equalization obligation ensures that your children are treated equally. If a child has already received an advance inheritance during your lifetime, this value will be taken into account when the estate is subsequently divided. The decisive factor is the value at the time of your death, not the value at the time of transfer.

You can exempt your children from this obligation by means of an equalization dispensation. However, this must be explicitly stated in a will or inheritance contract. In doing so, you must not violate the statutory compulsory portions.

Important : Record every advance inheritance in writing. Document who received what and when, and whether there is an obligation to compensate. This transparency prevents ambiguities later on.

Gift: donation with or without offsetting

In legal terms, there is hardly any difference between a gift and an advance withdrawal. The decisive factor is not the name, but whether or not the gift must be offset when the estate is divided.

Gifts to your descendants are generally subject to offsetting - unless you expressly exempt the recipients. Gifts to other persons such as siblings or third parties, on the other hand, are not normally subject to equalization.

For tax purposes , gifts are subject to cantonal gift tax. In most Swiss cantons, direct descendants are exempt from tax liability, but not in all. Check the regulations in your canton in good time.

Occasional gifts such as birthday or wedding presents are not subject to the equalization obligation. Education and training costs are also only subject to compensation if they significantly exceed the usual level.

Loans: Maintain flexibility

The loan offers a flexible alternative. Instead of giving away assets, you can grant your child a loan, with or without interest. The big advantage: the money remains legally in your possession. You can draw on it if necessary.

In the event of inheritance, the loan is included in the estate as a claim. This means that no descendant is favored. This solution is particularly suitable if you do not want to jeopardize your own financial security or are unsure how much you will need in the long term.

Set out the most important key points in a written loan agreement: amount, interest rate (zero percent is also possible), repayment terms and what happens in the event of inheritance.

Comparison of instruments

Criterion	Advance withdrawal	Gift	Loan
Legal status	Remains in the assets of the beneficiary	Remains in the assets of the recipient	Remains in the assets of the donor
Compensation obligation	Yes, provided for by law	Only for descendants (can be waived)	No, falls into the estate
Flexibility	Low	Low	High
Tax treatment	Varies from canton to canton	Gift tax (cantonal)	No direct tax
Own protection	Assets gone	Assets gone	Assets remain
Suitable for	Clear transfer	Favoring individual heirs	Preserving security

Timing and scope of the transfer of assets

The question of the right time is a concern for many asset owners. Transferring too early harbors risks for your own financial security. Transferring too late gives away room for maneuver.

Rules of thumb for the timing:

• Start planning at the age of 55 to 60
• The first transfers can make sense from the age of 60 to 65
• Always retain sufficient assets for your own needs
• Take your life expectancy into account (today often 85 to 95 years)

How much you should pass on during your lifetime depends on several factors.

1. Your own financial security comes first. Calculate generously. Take into account rising costs in old age, possible need for care and the desire for quality of life.
2. Tax optimization also plays a role. By staggering transfers over several years, you can take advantage of tax benefits in some cantons. Reducing your taxable assets also reduces your annual tax burden.
3. Please note the effects on any supplementary benefits. Waiving assets is taken into account in the calculation of supplementary benefits. Although CHF 10,000 is deducted each year, large transfers can affect your entitlement for decades.

The gradual transfer offers advantages over a one-off large transfer. You retain control, can gain experience and adjust the transfer if necessary. Start with smaller amounts or assets, observe the development and increase gradually.

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Legal framework in a nutshell

Swiss inheritance law places certain limits on your freedom of design. The compulsory portion protects close relatives from complete disinheritance. Your descendants and, depending on the family constellation, your spouse or registered partner are entitled to a compulsory portion.

The compulsory portion amounts to 50 percent of the statutory inheritance entitlement. For example, if you have two children, each child is legally entitled to half of your assets (50 percent each). The compulsory portion is therefore 25 percent each. You can freely dispose of the remaining 50 percent - the so-called disposable share.

You can use this free quota to benefit individual descendants, provide better protection for your partner or provide for third parties. You can also support charitable organizations or foundations with the free quota.

You can set out your wishes in a will or inheritance contract. You can change your will at any time. An inheritance contract, on the other hand, is binding for all parties involved and can only be changed by mutual agreement. An inheritance contract is often more suitable for basic arrangements such as the takeover of a family business.

Have your dispositions checked by a notary or lawyer. Formal errors can lead to invalidity. Any ambiguities in the content will also burden your descendants.

Tax optimization when transferring assets

The tax burden on the transfer of assets varies considerably between cantons. In most Swiss cantons, direct descendants are exempt from gift tax. Some cantons, such as Schwyz or Lucerne, generally do not levy gift tax. Other cantons also tax gifts to children.

Check the regulations in your canton of residence carefully. Your canton of residence is decisive for sums of money. Land and real estate are taxed where they are located, even if you live in another canton.

If you transfer real estate, you may also be subject to property gains tax. As a rule of thumb, if the gift share is at least 25 percent of the market value, no real estate gains tax is payable. If the gift share is less, for example because the transferee is taking on a mortgage, tax may be payable.

Your wealth tax is reduced by the transfer of assets. This reduces your annual tax burden and can amount to considerable sums over the years. Early planning is also worthwhile here.

Consult a tax expert for complex asset transfers. The cantonal and communal regulations are complex. Professional advice often pays for itself several times over through tax savings.

Reading tip : Financial advice for women: Your path to financial independence

Professional wealth management for generations

Transferring wealth is one thing. Preserving and increasing wealth in the long term is another. This shows that systematic investing beats emotional decisions.

People are subject to so-called behavioral biases , systematic errors in thinking when investing. In times of crisis, many sell out of fear. When prices rise, they buy out of greed. These emotional reactions destroy wealth. A systematic, quantitative approach avoids these mistakes.

Different risk profiles are suitable for different phases of life. Younger generations can take higher risks as they have a long investment horizon. Older generations often prefer more conservative strategies with stable returns. This differentiation enables optimal returns with an acceptable level of risk.

Diversification across different asset classes is essential. Equities offer growth potential, bonds stability, real estate current income and commodities inflation protection. Alternative investments such as private markets complement the portfolio with a low correlation to traditional investments.

Inflation is around 1.5 to 2.5 percent per year in the long term. What sounds harmless actually halves purchasing power over 35 years. Only by growing your assets above the inflation rate will you maintain their real value. An average return of 4 to 5 percent per year enables real asset growth.

Performance monitoring over decades requires discipline. Regular reviews, rebalancing and adjustments to changing market conditions ensure long-term success. Professional asset management takes on these tasks systematically.

How Everon supports your wealth succession

Everon combines Swiss tradition with modern technology to create a powerful approach to passing on wealth over generations.

As a FINMA-regulated asset management company , Everon offers the highest security standards. Your investment strategies are developed and monitored in accordance with strict regulatory requirements. This regulation creates trust - for you and for the next generation.

The systematic investment approach is based on scientifically sound methods. The in-house Everon Portfolio Engine filters the investment universe according to quantitative criteria. Emotions are eliminated and behavioral biases are avoided. Investment decisions are rational and fact-based.

Different investment strategies cover different needs:

• Multifactor: Balanced approach for long-term wealth accumulation over generations. Uses scientifically proven factors such as value, momentum and quality.
• Income: Focuses on current income through dividends and interest. Ideal for generations with liquidity needs. Analyzes dividend growth, payout yield and sustainability.
• Sustainability: Invests exclusively in sustainable stocks according to strict ESG criteria. Particularly attractive for younger generations with a value orientation.
• Private Markets: Access to private equity, private debt and private real estate. Uses semi-liquid products (“evergreens”) for better liquidity. Higher return potential with moderate volatility.

The transparent platform gives all generations an insight into the portfolio. Parents can see the performance of their investments. Children can already observe how professional wealth management works. This transparency creates trust and prepares the next generation for their future responsibilities.

Everon also integrates pillar 3a and vested benefits accounts into the overall wealth strategy. These tax-privileged options are the perfect complement to free asset management. Your descendants can start building up pension assets at an early stage.

Reading tip : ESG and sustainable investments: client advice with a future

Your roadmap: 5 steps to successful wealth transfer

A structured approach makes planning much easier. Follow this tried-and-tested roadmap:

1. Analyze and categorize assets

First, get a complete overview. Record all assets: bank accounts, securities accounts, real estate, shareholdings, insurance policies, pension assets. Determine the current market values.

Then assign each item to one of the three categories: Company assets, family assets or private assets. This categorization shows which assets should be managed jointly and which can be transferred individually.

Calculate your own financial requirements for the next 20 to 30 years. Take into account your desired standard of living, possible care costs and a buffer for unforeseen events. In principle, the remaining amount is available for transfer.

2. Define goals and develop a strategy

What long-term wealth strategy do you want to pursue? Should the assets be kept together or divided up? What role should your descendants play - active participation or passive beneficiary?

Define specific goals for the transfer of assets. Would you like to support your children in becoming independent? Do you want the family home to remain in the family? Are you planning philanthropic activities? Clear goals make all further decisions easier.

Determine how much wealth you want to pass on and when. A staggered transfer over several years offers flexibility. You can gain experience and make adjustments if necessary.

3. Selecting instruments and structuring them legally

Decide on the right instruments: advance inheritance, gift or loan. A combination often makes sense. Larger assets such as real estate can be transferred as an advance inheritance. Smaller amounts of support are suitable as a gift. Loans preserve your flexibility.

Be aware of the equalization obligation. Do you want to treat all children equally or favor individual children? Record your decisions in writing. For real estate and larger amounts, a notarized inheritance contract is recommended.

Draw up a will or update an existing one. Use the available quota for your individual wishes. Make sure that the compulsory portions are preserved.

4. Optimize taxes and reduce costs

Check the tax regulations in your canton. Can you take advantage of staggering? Is a transfer before a change of canton worthwhile?

When transferring real estate, calculate the gift portion. If it is more than 25 percent of the market value, you will avoid property gains tax. If necessary, plan the assumption of mortgages accordingly.

Take into account the reduction in your wealth tax. This annual relief adds up to considerable amounts over the years.

Seek advice from a tax expert for complex situations. The investment often pays for itself several times over through tax savings.

5. Professional implementation and support

Commission professional asset management for the assets to be transferred. A systematic investment approach ensures long-term growth and prevents emotional mistakes.

Choose risk profiles according to your life situation. Conservative strategies are suitable for assets that you still need yourself. For assets of the next generation, you can choose more dynamic approaches.

Establish regular reviews - at least once a year. Discuss performance, adjust strategies if necessary and inform all parties involved transparently.

Document all steps carefully. Keep contracts, transfer documents and agreements in a safe place. Inform your descendants about the storage location of important documents.

Conclusion: Safeguarding assets across generations

Successfully passing on wealth over generations requires more than just a will. Strategic planning, the right instruments and professional support are crucial.

Start early - ideally between the ages of 55 and 60. Structure your assets into three categories: Business assets, family assets and private assets. Use advance inheritance withdrawals, gifts and loans as flexible planning instruments.

Optimize your tax burden through timely planning. Ensure your own financial security. Document all steps transparently.

Rely on professional wealth management with a systematic investment approach. Different risk profiles for different phases of life, diversification across asset classes and regular monitoring ensure long-term success.

With the right strategy, you can break the 3-generation rule. Your assets grow over generations - for the benefit of your family and as a foundation for future generations.