Bank clients desiring to transfer their bank assets in the event of death to certain persons outside of regular inheritance proceedings often approach their bank with the idea of granting a power over their assets that will become effective only on the death of the grantor. Swiss banks refuse to accept such powers because, under Swiss law, this would be considered a matter of inheritance laws requiring the mandatory form of a testament. On the other hand, Swiss law recognizes a power of attorney granted with immediate effect and remaining in effect after the death of the grantor (post mortem power). Such a power does not require a testamentary form. This type of power has until now frequently been used as a means of estate planning, although its obvious disadvantage is that the beneficiary of the power can dispose of the assets already during the life time of the grantor.
Recent court cases, however, show that it has substantial further risks. Upon the death of the grantor of a post mortem power his heirs become the clients of the bank as the banking contract passes to them. In this capacity every individual heir can revoke the post mortem power at any time - the bank is bound by such a revocation. The grantor of the power, therefore, has no assurance that his wishes will be executed. And even worse: if the bank knows about the death of the grantor of the power, it has a duty of diligence towards its new clients, the heirs. Therefore, the bank may not blindly rely on the post mortem power, but will have to use its critical judgment in assessing whether dispositions of the beneficiary of the power are not contrary to the interests of the heirs, a matter that may be of considerable difficulty for the bank. In doubt, the bank will refuse to carry out the dispositions of the beneficiary of the power or require the consent of the heirs who – very often – do not even know of the existence of the bank account. The bank will certainly do so if the beneficiary of the power wants to transfer assets to himself. Therefore, a power of attorney of this kind is totally unsuitable for purposes of "parallel" estate planning, where a client wants to bequeath his bank assets to a person unbeknown to his heirs.
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