Dear all,
My partner and me will be having a baby in the coming months. We have been thinking in puting our salaries in a joint account but also we would like to know what’s the legal implication in case in the future we decide to split.
I have these questions:
From which point of time are we legally consider to be in a partnership where all goes 50% between us? is this really true?
Since I will be earning more than her (because of the extended maternity leave) could I deduct more expenses from the baby? Is there a better way to do the taxes?
Additionally, is there any disadvantage for not being married? I have included my partner as beneficiary of my 2nd pillar. Any other action I could take so she and the baby are covered in case of fatality?
1st remark : it might depend of your canton of residence. Where do you live ?
From which point of time are we legally consider to be in a partnership where all goes 50% between us? is this really true?
50% of what ? Tax ?
Since I will be earning more than her (because of the extended maternity leave) could I deduct more expenses from the baby? Is there a better way to do the taxes?
I don’t think so. By the way, which expenses do you want to deduct ? Again, where do you live ?
Additionally, is there any disadvantage for not being married? I have included my partner as beneficiary of my 2nd pillar. Any other action I could take so she and the baby are covered in case of fatality?
Have a look for the 3rd pillar, it might have different rules.
Personally, I also contracted a life insurance. My wife and childrens will receive 200k if I die in the next 20 years. This cost me around CHF 270 per year.
Do you already have a health insurance for the baby ? If not, you can PM me I have a tip for you.
Being unmarried and living together with a kid is probably optimal for taxes. For federal taxes, “splitting” will apply: as you are the highest earner your income will be added together with that of your kid - 0 - and then divided by 2 and taxed at the applicable rate for 2 people. Your wife will be taxed separately as a single person. In some cantons the same applies for catonal tax although in many it was abolished e.g. Geneva. This works out heavily favourable vs being married
The disadvantage could be inheritance tax, depending on the canton if you are not married your partner could have to pay tax if you die
Best is probably to model being married with kid vs. unmarried in a tax simulator like Comparis as I am not sure how to explain it in a concise way.
If an unmarried couple with a kid live together, the parent with the highest income is viewed by the current law as being responsible for the maintenance of the kid, in the same way as a single parent. The income of this parent will be taxed at the rate for 2 people (being parent + kid), which is lower than the rate for 1 person.
The partner with the lower income will pay tax at approximately the same 1 person tax rate as before the birth of the kid.
If married, all the income is taxed as one and the end result is that married, dual career couples pay more tax than if living together umarried.
Before the rules changed in Geneva it cost me well over 1 months salary in extra taxes to be married with children
No inheritance at all for surviving partner if you don’t make a will. It will all go to your child and parents.
Inheritance taxes in case one of you dies.
No 2nd pillar pension in case one of you dies (check with your 2nd pillar providers, it depends on them).
No access to the partner’s funds in case they become unable to take care of themselves.
I would just go to a notary to do a Konkubinatsvertrag, a Vorsorgeauftrag and a will and to a financial advisor for the financial calculations. It will cost you a pretty penny, but in case you separate or one of you dies or becomes invalid, you’ll be a lot better off.
Unless I’m misunderstanding something, or there are specific cantonal laws that I wouldn’t know about, there’s no “splitting” since you are not married to your partner (or your kid)…otherwise taxes have nothing to with your kid that doesn’t (yet) have a revenu, other than providing you with reductions on your taxes. They are a dependant. You would also have responsibility for taxes on any funds/investments in their name though (see separate thread on that).
High earner with wife/husband at 0 CHF salary and 1-2 kids, is probably most efficient for taxes no? This is why unmarried couples don’t like the income splitting and why married couples love it
Inheritance is an issue (for your partner) if you are not married. I wouldn’t be worried about the “tax” until its confirmed what she would get if anything.
So the parent with the highest income gets taxed at the rate of 2 people due to the kid, which is a lower tax rate
Edit: I can confirm from experience my taxes went up significantly the year we got married vs. the prior year when we were living together with our kid.
Thank you guys! Very helpful information.
Only one question pending: In case we split in the future, we will have to split our savings 50/50? Since which point of time will they consider?
Barto, I have checked the comparis tax calculator and I dont see a way to put my data + my girlfriend information like you show. Am I doing something wrong?
Thanks
To model a scenario where you are not married, you need to complete the form twice, once for each of you, because you file separate tax returns. You include the kid in the form for the person with the highest income (because, per above, that person is viewed as being responsible for the essential maintenance of the kid)
There is a different form on comparis called “withholding tax” for non tax declarers and where you put your gross salary instead of net after deductions. You could use that even if you are a tax declarer as it is easier and will give you a rough idea.
I believe not being married with kids is probably one of the biggest mustachian hacks in CH
Additionally, do you know about my question above?
Only one question pending: In case we split in the future, we will have to split our savings 50/50? Since which point of time will they consider? How do you manage finances with your partner?
Perhaps someone else is more knowledgeable about this, off the top of my head when you get married the principle is that wealth increases after that date are shared 50:50 and wealth you bring to the marriage before that date is your own.
So, a disadvantage of being unmarried for the lower earning partner is less financial security. Usually this is the woman because she has to take career break and due to sad reality women have lower salaries. How we handled this was that I paid all the living costs during unpaid part of maternity leave, for example.
Not sure how maintenance costs for child is handled in that scenario, nor a joint account
So basically, if I understand well. If we are not married and we have a child and in the worst case scenario we split and we dont have a contract in place. We will not need to split all our savings (since the first child) and rather find a friendly agreement?
Hi,
If you are already thinking about the possibilty of splitting even before the baby arrives, then I would recommend to keep separate salary accounts and one joint account (e g. revolut) for expenses. You will not be financially liable to each other except for taking care of the baby
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