Guardianship

Once a child reaches the age of majority (18), he or she may dispose of their own assets. This is usually not a problem if the assets are not large and one or both parents are still alive. It usually becomes different if both parents have died and the child has inherited assets of some size from them.

Why a guardianship?

When both parents are no longer there and one or more minor children are left behind, a guardian takes over the parents' duties. This means that the guardian assumes responsibility for the children, both the actual care and management of the child's assets. The guardian can be appointed by the parents by will or appointed by the district judge. Once the child turns 18, the guardian's job ends, both the practical care and the management of the child's assets.

There are reasons why you may find it undesirable that your child -after your death- takes charge of the management of his or her assets on his or her 18th birthday. It could be that you think your child is simply too young for that, that your child is addicted to alcohol, drugs or gambling or that your child is unable to manage his or her own assets due to a mental and/or physical disability. To get someone else to manage your child's assets, you can establish a guardianship by will.

The law has fairly extensive regulations regarding guardianship. Guardianship does not work "automatically"; therefore, if you wish to establish guardianship, it must be arranged in a will. However, most guardianship provisions in the law are of "regulatory law," that is, you can make arrangements by will as you wish. However, some provisions are of "mandatory law"; you cannot deviate from them.

Guardianship is established over one or more assets left or bequeathed by the deceased, or over the entire inheritance. Thus, the regime is established over goods, not over the person himself. In principle, the entitled party (the person to whom the assets actually belong) can no longer independently dispose of the assets in question.

Forms of regime

A guardianship set up for the benefit of the entitled party (for example, the child) in order to protect them from themselves is called protective guardianship. The guardianship can also be instituted for the benefit of another person than the entitled party in order to protect that other person against the entitled party. We call this a conflict regime.

A third form is the settlement regime: a regime established for the benefit of a common interest, for example for the joint heirs.

The will should indicate which type of administration is meant since the legal consequences of various types of administration can be different. In the following, only protection guardianship will be described.

Guardianship

Unless otherwise stipulated by the testator, the regime takes effect at the time of death. The regime can be set up for a certain period of time, for example until the child reaches a certain age. The testator himself can appoint an administrator in his will. If the will does not provide for the appointment of an administrator, the cantonal judge will appoint an administrator. If two or more administrators are appointed, each of them may perform all duties alone, unless otherwise provided in the will or by the subdistrict court.

The administrator shall -where applicable- register the administrator himself and his appointment with the land register, in the shareholders' register and the commercial register.

The administrator is obliged to prepare a description of the assets placed under administration. The latter obligation cannot be waived by will.

Annually, the administrator must render an account of his activities to the beneficiary. If the beneficiary is unable to take this account, it must be submitted to the district judge.

The proceeds of the assets placed under administration (interest, dividends, rental income received, etc.) will -if the entitled party is of age- be paid annually to the entitled party, unless another arrangement has been made by will.

Task of an administrator

The task of the administrator is to manage the assets under the regime.

Without the cooperation of the trustee, the entitled person may only perform acts that cannot tolerate delay and ordinary maintenance on the goods in question that he has in use. This may include, for example, repairing ditches or mowing grass.

Disposing of the goods (sale of house or securities) in case of a protective regime (regime in the interest of the entitled person) can only be done by the entitled person with the cooperation or consent of the administrator, unless a different arrangement has been made by will.

Under the old inheritance law (prior to 2003), a legitimee (child or grandchild) could successfully oppose an administration. Under current inheritance law, a child unwilling to accept the administration will have to defend against it by rejecting the inheritance. To retain the right to an inheritance, he or she will have to invoke the legitimate portion. This means that the inheritance share is reduced to half at most and, in addition, is converted into a claim, which means that the child or grandchild is no longer an heir. Whether that claim has value or not depends on the reason why the administration was instituted.

The law provides that the value of what the legitimee could have obtained should be deducted from the legitimate portion if:

• a. the legitimee is unfit or unable to provide for the administration;
• b. without a guardianship, the legitimee's assets would mainly benefit his creditors.

In case the guardianship is rightly established on one of the aforementioned grounds (for example, the child is a gambling addict and has only debts), he or she may oppose the guardianship, but the claim turns out to be worth nothing because what an heir could have obtained is deducted from his legitimate portion.

So reason to just accept the guardianship.

Salary

The administrator is entitled per year to 1% of the value of the assets under administration at the end of the year. If the assets are large, this remuneration may be (too) high and if the assets are small, this remuneration may be (too) low. If there are several administrators, they should share this amount together. A different arrangement can be made by will. The cantonal judge has the possibility to change the remuneration based on unforeseen circumstances.

End of the regime

Among other things, the regime can end by:

• the expiration of the term for which it was established;
• the rejection of the estate or bequest;
• the death of the beneficiary;
• dissolution by the court.

If the regime has been established in the interest of the beneficiary, the court may dissolve that regime at the request of the administrator on the basis of unforeseen circumstances. Furthermore, the regime may be lifted at the request of the administrator if it is plausible that the entitled person himself can manage his assets responsibly.

On the latter ground, the administrator can be lifted by the court at the request of the entitled party if five years have passed after the testator's death.

For example: a testator has stipulated that his children's inheritance will be under guardianship until the child reaches the age of 25. If the testator dies and the child is 19 years old at that time, at age 24, the child can request the court to lift the guardianship because he or she believes that he or she can responsibly manage the inheritance himself or herself.

The current inheritance law came into effect on Jan. 1, 2003.

In the case of a will established before that date, while the testator died after January 1, 2003, the rules of current inheritance law apply, to the extent that no different arrangements have been made by will.

If the testator died before January 1, 2003, and the estate is therefore already "ongoing," the new rules also apply as of that date, unless other arrangements have been made by will.

The rules contained in the will are therefore in force even if they should conflict with the new legal rules. What was valid remains valid.

For this purpose, the administration of an inheritance or bequest is described. It is also possible to establish a trust in the case of a gift. A requirement for this is that the donation be recorded in writing.