Family Foundations

Swiss Family Foundation for Estate Planning & Wealth Transfer

A Swiss family foundation (Familienstiftung) is an autonomous legal entity that can hold family assets and channel them to relatives across generations. In estate planning it offers continuity and cohesion, but it has one hard limit that founders must understand before they act: it cannot override Swiss forced heirship. Reserved heirs keep their compulsory portion, and assets given to a foundation can, in some cases, be clawed back.

This guide explains how a family foundation fits into estate planning and wealth transfer, what the 2023 inheritance-law reform changed, how the transfer mechanism works, where the limits and abatement risks lie, and why a foundation works best alongside a will.

By Hansruedi Mueller, Swiss foundation lawyer, Foundations in Switzerland. Published 4 June 2026 · Last updated 4 June 2026.

Key takeaways

• A Swiss family foundation preserves and channels family wealth across generations, but it cannot defeat compulsory portions (Pflichtteil) under Swiss inheritance law.
• The 2023 reform (in force 1 January 2023) cut descendants’ compulsory portion from three-quarters to half of their statutory share, abolished parents’ reserved share, and left the spouse’s at half, so a founder can now freely dispose of at least half of the estate.
• Gifts to a foundation can be clawed back by forced heirs through abatement (Herabsetzung), especially if made within five years of death or with intent to evade the rules.
• Article 335 of the Swiss Civil Code limits a family foundation to education, endowment and support of relatives, it is not an open-ended wealth-transfer vehicle.
• Family foundations are generally not tax-exempt; funding may trigger gift or inheritance tax, and distributions are usually taxed as income.
• Best practice: endow early, transparently and within the freely disposable portion, and combine the foundation with a will or succession contract.

The Swiss family foundation in estate planning

A family foundation (Familienstiftung) is created when a founder irrevocably dedicates assets to a defined family. The assets are no longer owned by the founder or the beneficiaries; a foundation has no owners, only a purpose and a governing body, the foundation board (Stiftungsrat). For the full picture of what the structure is and how to set it up, see our guide to the Swiss family foundation (Familienstiftung).

In an estate plan, the foundation does three useful things. It keeps assets together as one cohesive block rather than splitting them among heirs. It provides for relatives in a disciplined, rules-based way through the board. And it gives cross-border families a stable Swiss vehicle that survives the founder’s death. For families holding an operating business or an indivisible estate, this can prevent the forced sale or fragmentation that an ordinary inheritance division might cause, a theme we develop in our article on succession across generations.

One point matters from the outset. A family foundation only ever covers the assets that are actually endowed into it, and only for its permitted purposes. It is therefore one instrument within an estate plan, not a replacement for the plan itself.

Forced heirship and the 2023 inheritance-law reform

Swiss inheritance law does not give you complete freedom over your estate. It protects close relatives with a compulsory portion (Pflichtteil, also called the reserved share). Whatever is left after the protected portions is the freely disposable portion (verfügbare Quote), the part you can leave to anyone, or to a foundation.

The size of these portions changed materially on 1 January 2023, when a revision of the Swiss Civil Code came into force.

The 2023 reform, in brief (paraphrased; see Articles 470–471 ZGB). The compulsory portion of descendants was reduced from three-quarters to one-half of their statutory entitlement. The separate reserved share of parents was abolished. The compulsory portion of the surviving spouse or registered partner remains one-half of the statutory entitlement. As a result, a person with forced heirs can now freely dispose of at least half of the estate.

We deliberately paraphrase rather than reproduce the statute verbatim; the substance above is consistent across the leading legal sources.

The practical effect of the reform is more room to fund a foundation. A founder who once had only a quarter of the estate to dispose of freely may now have half or more. Statutory heirs, descendants, spouse and, before 2023, parents, retain their compulsory portions regardless; the freely disposable portion is simply what remains after those protected shares are satisfied. But the reserved portion is untouchable, and that is where the next section becomes essential.

How wealth transfer works through a family foundation

The transfer mechanism is straightforward in outline. The founder irrevocably dedicates assets, cash, securities, property or shares, to the foundation. The foundation, as a separate legal person, holds those assets. The foundation board (Stiftungsrat) then administers them and makes distributions to the defined family beneficiary circle, in line with the foundation’s statutes.

There are two main ways to endow the foundation:

• By lifetime gift (inter vivos), you transfer assets while you are alive. This starts the foundation working early and, as we explain below, the timing affects abatement risk.
• By will or succession contract (mortis causa), the foundation is endowed on death, either through a testamentary disposition or through a binding succession contract (Erbvertrag).

Families choose this route to keep a business or estate intact, to provide for relatives’ education and development in a structured way, and to give an international family a single, durable Swiss home for its assets. It pairs naturally with the broader wealth-planning strategy and the asset protection that a foundation can offer.

It is worth stating plainly: assets pass to the foundation, not to the heirs as owners. Beneficiaries receive distributions for permitted purposes; they do not own the foundation’s assets. That separation is the source of the structure’s continuity, and also one reason it must respect inheritance law, which we turn to now.

Limits and abatement risk

This is the section that most changes how founders plan, so we set it out plainly.

A family foundation cannot defeat forced heirship. Endowing assets into a foundation does not erase a reserved heir’s compulsory portion. If the endowment encroaches on that protected share, the heir has a remedy.

Abatement (Herabsetzung)

A forced heir whose reserved portion has been infringed can bring an abatement claim (Herabsetzungsklage) under the Swiss Civil Code, Articles 522 and following. Abatement reduces the offending disposition so that the reserved portion is restored. Crucially, this reaches lifetime gifts, including the endowment of a foundation.

Under Article 527 of the Civil Code, the gifts most exposed to abatement include:

• gifts that the founder could freely revoke;
• gifts made within the five years before death (other than customary occasional gifts); and
• any alienation made with the manifest intent to circumvent the compulsory-portion rules, for which there is no five-year safe harbour.

Order and time limit

The order of reduction matters. Under Article 532, testamentary dispositions (mortis causa) are reduced first; only if that is not enough are lifetime gifts reduced, in reverse chronological order, the most recent first. There is also a time limit: the abatement action is subject to a one-year forfeiture period, running from when the heir learns that their reserved portion has been infringed. The Swiss Federal Supreme Court has confirmed that this framework applies to distributions from trust and foundation structures.

The practical lesson is clear. To use a foundation in wealth transfer without inviting an abatement claim, endow it early, keep the endowment within the freely disposable portion, act transparently, and document the rationale. Endowments made long before death, within the disposable quota, are far harder to challenge.

A further limit comes from the foundation’s own purpose rules. Under Article 335 of the Swiss Civil Code, a Swiss family foundation may fund only the education, endowment and support of relatives, not their general, ongoing maintenance, and family entails (Familienfideikommisse) are prohibited. So the foundation is not a discretionary vehicle for passing unrestricted wealth to the next generation. A reform mandate adopted by Parliament in 2024 would relax the maintenance ban, but it is not yet law; the current restriction still applies, as we cover in our note on the 2024 family foundation reform.

Combining a family foundation with a will

Because the foundation covers only endowed assets and only permitted purposes, it works best as part of a wider plan rather than on its own. Families pursuing dynasty planning, the structured, multi-generational transfer of wealth and values, typically combine the foundation with a will and, where appropriate, an inheritance contract to address the full estate coherently.

A will still does essential work: it disposes of the residue of your estate, names heirs for assets you keep outside the foundation, and records personal wishes. A succession contract (Erbvertrag) goes further, because it is agreed with the heirs, it can, for example, record a reserved heir’s consent to waive part of their compulsory portion, which removes much of the abatement risk for an endowment. That consent route is often the cleanest way to combine generous foundation funding with legal certainty.

Two honest caveats round out the picture. First, tax: a family foundation is generally not tax-exempt. Funding it can trigger cantonal gift or inheritance tax (rates depend on the canton and the degree of relationship), and distributions to beneficiaries are usually taxed as income, which can produce economic double taxation. A Familienstiftung is chosen for structure and continuity, not for tax savings. Second, cross-border: which country’s inheritance law governs your estate depends on your domicile and the Swiss Private International Law Act, and the analysis is fact-specific. International founders should take advice before assuming Swiss forced-heirship rules apply, or that they do not.

Frequently asked questions

Can a Swiss family foundation override Swiss forced heirship? No. Reserved heirs keep their compulsory portion (Pflichtteil). A foundation can receive an endowment within the freely disposable portion, but it cannot be used to deprive a forced heir of their protected share. If it does, the heir can bring an abatement claim.

What changed with the 2023 Swiss inheritance-law reform? With effect from 1 January 2023, the compulsory portion of descendants was reduced from three-quarters to one-half of their statutory share, the parents’ reserved share was abolished, and the spouse’s compulsory portion stayed at one-half. A founder with forced heirs can now freely dispose of at least half of the estate.

Can gifts to a family foundation be clawed back by heirs? Yes, through abatement (Herabsetzung). Under Article 527 of the Civil Code, revocable gifts, gifts made within five years before death, and alienations made with intent to evade the rules can be reduced to restore a reserved heir’s portion. Endowing the foundation early and within the disposable quota reduces this risk.

Is a Swiss family foundation a substitute for a will? No. The foundation covers only the assets endowed into it, and only for permitted purposes under Article 335. A will or succession contract is still needed for the rest of the estate and to give the plan legal certainty.

Does putting assets in a family foundation reduce inheritance tax? Not as a rule. Family foundations are generally not tax-exempt. Funding can trigger cantonal gift or inheritance tax, and distributions are usually taxed as income. The foundation’s value lies in structure and continuity, not in tax reduction.

How is the freely disposable portion calculated after the 2023 reform? The freely disposable portion is what remains of the estate after every forced heir’s compulsory portion has been satisfied. Following the 2023 reform, descendants retain one-half of their statutory share and the surviving spouse retains one-half of theirs. If a founder has both descendants and a spouse, the combined compulsory portions will consume part of the estate, and the freely disposable remainder is available for a foundation endowment. The exact calculation is fact-specific and must account for lifetime gifts added back to the estate for the purposes of the reserved-portion calculation.

What is the five-year rule for lifetime gifts and how does it affect a foundation endowment? Under Article 527 of the Swiss Civil Code, gifts made within the five years before the founder’s death are liable to abatement (Herabsetzung) if they encroach on a forced heir’s compulsory portion. An endowment to a family foundation counts as a gift for this purpose. Gifts made earlier than five years before death are generally safer from abatement, unless the founder acted with the manifest intent to circumvent the compulsory-portion rules, for which no time limit applies. Endowing the foundation early and within the freely disposable portion is therefore the principal way to manage abatement risk.

Can a reserved heir consent to waive their compulsory portion? Yes, through a succession contract (Erbvertrag). A succession contract is a binding agreement between the founder and the heir in which the heir consents to waive or reduce their compulsory portion. Because it is agreed rather than unilaterally imposed, a waiver in an Erbvertrag removes the basis for a later abatement claim in respect of amounts the heir has accepted. This is often the cleanest way to combine a generous foundation endowment with legal certainty. The contract must be notarised and complies with the formal requirements of the Swiss Civil Code.

What is an abatement claim and who can bring one? An abatement claim (Herabsetzungsklage) is a civil-law action under Articles 522 and following of the Swiss Civil Code by which a forced heir asks a court to reduce a disposition, including a foundation endowment, that has encroached on their compulsory portion. Only reserved heirs (descendants and surviving spouse) may bring the claim. The claim is subject to a one-year forfeiture period running from when the heir becomes aware that the reserved portion has been infringed, and in any event to a ten-year period from the opening of the succession. Swiss courts have confirmed that this framework applies to distributions made through foundation and trust structures.

Does the 2023 reform affect existing wills and succession contracts? The 2023 reform applies to estates of persons who die on or after 1 January 2023, regardless of when the will or succession contract was made. However, a succession contract that fixed a specific compulsory portion under the old law remains binding on the parties who agreed it. Founders who drafted estate plans before 2023 should review them in light of the new compulsory-portion figures, because the reform may have enlarged the freely disposable quota, creating additional room to endow a foundation or make other testamentary gifts.

What does “support” (Unterstützung) mean under Article 335, can it cover medical costs? Under Article 335 ZGB, “support” (Unterstützung) is targeted assistance in genuine hardship, illness or special need. Contributions to a family member’s medical costs in the context of serious illness or disability are generally considered within this category, provided the distribution addresses a specific need rather than subsidising general living expenses. The distinction between support and maintenance is one of fact and degree; Swiss courts apply Article 335 restrictively, and the foundation’s charter should define the criteria for support distributions with sufficient precision to guide the board and withstand scrutiny.

How does Swiss private international law affect cross-border estate plans involving a family foundation? Whether Swiss inheritance law applies to a founder’s estate depends primarily on domicile at the time of death. Under the Swiss Private International Law Act (PILA), the estate of a person domiciled in Switzerland at death is governed by Swiss law, including its forced-heirship rules. A foreign-domiciled founder may, within limits, elect Swiss law in respect of assets situated in Switzerland. For international families, the interaction between Swiss and foreign forced-heirship rules can be complex: some jurisdictions impose their own reserved shares regardless of a Swiss foundation structure. Cross-border founders should take coordinated advice in each relevant jurisdiction before endowing the foundation.

Can a family foundation distribute assets to a beneficiary who is a minor? Yes, but the distribution must serve one of the permitted purposes under Article 335, education and upbringing is the most natural fit for a minor beneficiary. Distributions to a minor are typically made to a parent or legal guardian, or held in a sub-account in the beneficiary’s name until they reach majority, as specified in the charter. The foundation board must document that the distribution genuinely serves the child’s education or support rather than the parent’s benefit. Care is needed to ensure the arrangement does not inadvertently create a deemed parental transfer with separate gift-tax consequences.

Speak to a Swiss foundation lawyer

A family foundation can be a durable way to hold and transfer wealth, but only when it is built around Switzerland’s forced-heirship and abatement rules, not against them. We help families and family offices structure foundations that achieve their succession goals while respecting compulsory portions. Speak to a Swiss foundation lawyer to review your estate plan.

This article is general information and not a substitute for formal legal advice. Inheritance and tax outcomes depend on your individual circumstances, your canton and, for international families, your domicile. Please seek tailored advice before acting.

Sources

1. Prager Dreifuss, “Revised inheritance law enters into force on 1 January 2023”, descendants’ reserve cut from three-quarters to one-half, parents’ reserve abolished, spouse one-half, disposable quota at least one-half. https://www.prager-dreifuss.com/en/news/revised-inheritance-law-enters-into-force-on-1-january-2023-778 (accessed 4 June 2026).
2. PBM Avocats, “Forced Heirship in Switzerland (2023 Reform)”, compulsory versus freely disposable portion after the reform. https://www.pbm-avocats.ch/en/forced-heirship-disposable-portion/ (accessed 4 June 2026).
3. International Bar Association, “Switzerland International Estate Planning Guide”, Article 527 abatement of revocable gifts, gifts within five years of death and alienations to evade the rules; reserved share calculated on the reunited estate. https://www.ibanet.org/document?id=private-client-tax-estate-planning-guide-Switzerland (accessed 4 June 2026).
4. Schellenberg Wittmer / Mondaq, “Too Late to Sue the Trustee? … One-Year Forfeiture Period for Abatement Claims under Swiss Forced Heirship Rules”, order of abatement under Article 532 (testamentary first, then lifetime gifts in reverse chronological order); one-year forfeiture period; application to trust and foundation distributions. https://www.mondaq.com/trusts/1700954/too-late-to-sue-the-trustee-the-swiss-federal-supreme-court-issues-a-landmark-ruling-on-the-one-year-forfeiture-period-for-abatement-claims-under-swiss-forced-heirship-rules (accessed 4 June 2026).
5. Reichlin Hess / Mondaq, “No Swiss Trust – But Liberalisation Of The Family Foundation”, Article 335 limited to education, endowment and support; maintenance ban and fideicommissa prohibition; 2024 reform mandate (Motion 20.4445) adopted but not yet in force. https://www.mondaq.com/trusts/1471212/no-swiss-trust-but-liberalisation-of-the-family-foundation (accessed 4 June 2026).
6. Startups.ch, “What is a family foundation according to Swiss law?”, exhaustive Article 335 purposes; family foundations not tax-exempt; gift and inheritance tax on funding; distributions taxed as income. https://blog.startups.ch/en/what-is-a-family-foundation-according-to-swiss-law/ (accessed 4 June 2026).