1. Facts of the Case

E.A. (the "Deceased") passed away in 2016, leaving behind his second wife and two grandchildren from his first marriage. During his life, he had covertly settled two trusts with a Singapore trustee and also made substantial lifetime gifts to his second wife (the "Wife"). In accordance with a succession pact between the Deceased and his Wife, the Wife was entitled to inherit 5/8 of the estate, while the grandchildren should each receive 3/16 of the estate, and thus only their compulsory share. After the Deceased's death, a dispute arose in connection with the estate inventory, whereby the grandchildren questioned whether the gifts to the Wife and the transfers into the trusts violated their compulsory shares. Following an unsuccessful conciliation proceeding, the grandchildren filed an abatement claim against the Wife and the Singapore trustee, demanding that their compulsory shares be restored. Both the first and second instance courts dismissed their abatement claims, arguing that the claims were filed to late and thus forfeited. The grandchildren took this decision to the Supreme Court which had a slightly different view on the forfeiture period.
 

2. Supreme Court Ruling

a) Individual Forfeiture Period for Each Recipient

The main issue in this case was whether the grandchildren's abatement claim had been filed within the prescribed one-year period. According to art. 533 §1 of the Swiss Civil Code ("SCC"), an abatement claim prescribes "one year after the date on which the heirs learned of the infringement of their rights and in any event after ten years have elapsed since the succession, in the case of disposition mortis causa, or since the testator's death, in the case of other dispositions".

The relative one-year period generally begins when the heir whose compulsory share has been infringed becomes aware of the factual elements based on which they may assume that they will succeed with a possible abatement claim. The start of the relative forfeiture period therefore requires knowledge of the grounds for the action, i.e. knowledge of the necessary elements to justify the abatement claim. The Supreme Court first addressed the gifts the Deceased had made to his Wife. It agreed with the Cantonal High Courts' conclusions that (i) by August 2017, the grandchildren were aware of the violation of their compulsory portions caused by these gifts, (ii) the one-year period under art. 533 §1 SCC had expired by August 2018 and (iii) thus the action filed on 15 October 2018 was time-barred.

However, a key issue was whether the forfeiture period for the action against the trustee began to run at the same time as for the gifts to the Wife, given that the forced heirs already knew at this time that their compulsory shares were infringed, or whether a separate period applied. The Cantonal High Court had held that the grandchildren didn't know the trustee's identity until 17 October 2017, and did thus not know all necessary elements to assume the success of a possible abatement claim. Nonetheless, it believed that an abatement claim could only be filed once. If, subsequently, a further reducible disposition of assets was found, this would not lead to a new violation, but merely to an increase in the value of the previous violation. Thus, the limitation period under art. 533 §1 SCC continued to run even if more gifts or donees were discovered later on.

The Supreme Court disagreed, reminding that abatement claims have a protective function, namely to protect heirs from lifetime dispositions violating their compulsory shares. This function can only be fulfilled if the forfeiture period only starts to run from the time when the essential elements for an abatement claim are known. Otherwise, the forfeiture period could expire before the abatement claim could be asserted. And, in order to file an abatement claim with a chance of success, one of the essential elements that a party must be aware of is the identity of the gift recipient. Therefore, as long as the forced heir does not know the identity of the gift recipient, the relative forfeiture period under art. 533 §1 SCC cannot start.

Against this background, the Supreme Court held that the one-year period for bringing an abatement claim runs separately for each individual gift recipient and only starts once the forced heir has the necessary knowledge for each respective action. Accordingly, the abatement claim against the trustee was not time-barred, since the grandchildren only learned about the trustee's identity in October 2017. The case against the trustee was thus remitted to the first instance court to proceed.
 

b) Trust Distributions as Dispositions of the Testator / Settlor?

Interestingly, the Supreme Court further stated that distributions from the trust assets in favour of the Wife and/or third parties do not need to be dealt with, as these distributions do not qualify as dispositions of the Deceased. This finding is surprising given the Supreme Court held in another recent decision of 16 December 2024 (5A_89/2024), that trust distributions made to beneficiaries/heirs during the settlor's lifetime are generally subject to hotchpot and thus treated trust distributions as lifetime gifts of the settlor (see also our Newsflash of 22 January 2025 in this regard). Hence, it seems that the treatment of trust distributions under Swiss inheritance law is not yet entirely clear.
 

3. Key Takeaways and Outlook

This groundbreaking decision provides much-needed clarity on the relative one-year forfeiture period for abatement claims. It runs individually for each gift recipient and starts when the forced heir knows the facts necessary to sue that specific gift recipient, i.e. it only starts to run once the heir has sufficient knowledge of the violation of his forced heirship rights and of the donee's identity. It will be interesting to see how the first instance court will assess the merits of the abatement claim against the trustee. Update to follow...