Marriage or Cohabitation: Which Status is More Advantageous?
When an unmarried couple lives together under one roof in Switzerland, this is referred to as "Konkubinat." Although the two individuals share their daily lives in much the same way as a married couple, they do not enjoy the same legal and social protections under the law. In this article, you will learn more about the differences between marriage and cohabitation, as well as the advantages and disadvantages of each status.
Marriage or Cohabitation: The Three-Pillar System
One of the main reasons for getting married in Switzerland is to ensure adequate social and legal protection for both spouses, especially in the event of death or separation. Before considering marriage or cohabitation, it is important to understand how Switzerland's "Three-Pillar System" of social security functions.
What is the Three-Pillar System?
The Three-Pillar Social Security System has been enshrined in Article 111 of the Swiss Federal Constitution since 1972. It consists of three types of insurance: public insurance, occupational insurance, and individual insurance. The state insurance covers the minimum livelihood, while occupational pension funds are paid by employers. The third pillar is voluntary individual insurance.
1st Pillar: Old-age, Survivors', and Disability Insurance (AHV/IV)
The first pillar is managed by the state and provides a minimum social security for individuals upon retirement, in case of death, or disability. This insurance is mandatory for all individuals living and working in Switzerland and includes:
- Old-age and survivors' insurance (AHV)
- Disability insurance (IV)
- Unemployment insurance (ALV)
- Income compensation for service in the army (EO)
2nd Pillar: Occupational Benefits
The second pillar consists of occupational pension funds, managed by employers. Self-employed individuals can typically choose to participate voluntarily. This pension scheme, often referred to as "Pensionskasse," supplements the benefits of the first pillar to maintain the same standard of living upon retirement, death, or disability.
3rd Pillar: Private Savings
The third pillar involves individual voluntary savings for retirement. This optional provision supplements the benefits of the first and second pillars.
What is Cohabitation?
In legal terms, "Konkubinat" refers to a non-marital cohabitation. While in daily life, cohabiting couples may not differ much from married couples and generally share their lives similarly, they are considered as individuals under the law. Therefore, in case of separation or death of a partner, they do not receive the same social and legal protection as a married couple.
Insurance Coverage in Case of Illness or Death
If you live in a cohabitation relationship, your partner does not have entitlement to benefits from the first pillar. Generally, benefits from the second pillar are not available to the other partner either. However, this depends on specific pension regulations, and sometimes a pension may be provided for the partner. It is advisable to directly inquire with your pension fund to understand if and how this works.
This means that in the event of death, the surviving cohabiting partner does not have rights to a widow's or widower's pension, AHV, or the partner's accident insurance. There is no automatic inheritance. It is possible to be named as a beneficiary in a will, but minimum amounts for descendants or parents of the deceased must be taken into account and must be borne in mind.
Arrangements in Case of Separation
Upon separation of a cohabiting couple, there is no mutual division of second pillar pension capital. This situation can be very unfavorable for the partner who has taken care of the household during the relationship and may potentially put them in a precarious financial situation.
Benefits of the Third Pillar
There are also no regulations requiring the payment of third pillar benefits, which can be voluntarily and individually designed. The restricted and free retirement benefits (pillars 3a and 3b) can be paid to a cohabiting partner, but this depends on the insurance coverage.
Cohabitation and Children
For couples living in cohabitation, parental authority automatically falls to the biological mother of the child (Article 252 CC). To acknowledge their rights and obligations towards their child, the biological father must submit an application for parental authority to the civil status office, preferably within one year of the child's birth (Article 260 CC). This declaration must be made jointly by both parents who agree to share responsibility for their child and agree on the terms of the child's care. Since January 1, 2018, it has also been possible to apply for adoption of a partner's child (Article 264 CC).
What are the Benefits of Cohabitation?
Although the legal and social protection of cohabitation is significantly weaker compared to marriage, this form of living arrangement does have certain advantages. For example, each cohabiting partner may receive an individual pension from the first pillar up to a maximum amount of CHF 4,700. For married couples, this amount is limited to CHF 3,585. Additionally, due to separate taxation, cohabiting couples may have tax advantages over married couples.
Advantages of Marriage over Cohabitation
In Switzerland, marriage is defined as a legally protected relationship. Therefore, it generally offers more protection than a cohabitation since both spouses are recognized as a couple under the law. Thus, the surviving partner is entitled to benefits from the first and second pillars in the event of death. Therefore, the old-age insurance grants and is generally supplemented by occupational provisions.
As for the benefits of the third pillar, each arrangement is different depending on the contract. Generally, the spouse has priority for the payment of benefits, followed by children, beneficiaries, parents, siblings, and other heirs of the couple.
Protection in Case of Divorce
Unlike cohabitation, marriage determines the division of property between spouses in the event of divorce. According to Article 181 CC, the ordinary community of property applies to married couples, although spouses can also conclude a marriage contract and agree on a different property regime, such as separation of property. Therefore, issues of property settlement are already regulated in the event of a divorce.
As for social benefits, a court may decide to pay a pension to one of the spouses. In addition, the benefits of the first pillar (AHV) are divided according to the duration of the marriage. The assets of the second pillar are divided equally, except for the pension funds.
Why Should You Enter into a Cohabitation Agreement?
If you choose to live together with your partner in a cohabitation arrangement (Konkubinat) in Switzerland, you do not enjoy the same social and legal protections as a married couple. In the event of death or separation, the consequences for one partner can be very unfavorable, as they would lack legal recourse. This is particularly critical when children are involved. Therefore, it is recommended for unmarried couples to enter into what is known as a cohabitation agreement (Konkubinatsvertrag).
How to Draft a Cohabitation Agreement?
Entering into a cohabitation agreement is neither obligatory nor legally required. To be valid, this written agreement does not need to be notarized unless it involves inheritance issues, in which case a public document is required. The cohabitation agreement serves to establish an inventory of assets, allocation of household and living expenses, as well as retirement provisions. Generally, such a contract covers the following points:
- Inventory of assets
- Status of acquired residences
- Disposition of the property in case of separation
- Breakdown of ongoing expenses
- Amount of monthly maintenance contributions to be paid to the partner in case of separation
- Beneficiary of a life insurance policy, if taken out
- Determination of parental authority
If you have further questions, a family law attorney can assist you.
FAQ: Cohabitation
Konkubinat refers to the cohabitation of an unmarried couple. In practice, such a couple lives together under one roof much like a married couple. However, the social and legal protections they are entitled to differ.
If one partner dies, the surviving partner is not automatically entitled to inherit. The deceased's children and parents have priority. However, it is possible to name the life partner as a beneficiary for a portion of the estate in a will, provided the reservations of descendants and parents are respected.
If you inherit from a cohabitation partner, you will need to pay inheritance tax. The tax reduction for inheritances from close relatives does not apply to life partners.
A couple living in cohabitation is taxed separately. This means each partner submits their own tax return, which can be advantageous in some cases.
An unmarried couple with a child must declare joint parental authority before the civil registry office so that the biological father can exercise his rights and responsibilities towards the child. If this joint declaration is not made by the partners, only the biological mother retains parental authority.
Cohabitation can have tax benefits since each partner is taxed separately. Additionally, each person is entitled to a pension from the first pillar, which can potentially be higher overall compared to married couples.
It is strongly recommended that unmarried couples legally recognize their union with a cohabitation agreement. A cohabitation agreement regulates the division of assets and expenses in the event of death or separation.