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Julien Tron
Swiss banks may propose to their clients to appoint the bank as their Estate Executor (exécuteur testamentaire, Willensvollstrecker) after their passing away. After a long-standing relationship with the bank that has been granted the custody of the client’s assets, the latter might indeed accept such a proposal. However, this might trigger various problems and eventually cause numerous conflicts of interests contrary to initial goals set out by the client.
The main factors of risks and of conflicts are:
1. The validity of the appointment of the bank itself, i.e. a company, as Estate Executor might be challenged. The appointment of a wealth manager working for the bank cannot however eliminate other potential conflicts of interests (see below).
2. Potential conflict of interests between the bank wanting to keep the estate’s assets under management and some of the heirs asking for a transfer of the same assets to another bank.
3. Unequal treatment between the bank and the heirs who are existing clients of the bank and those who are not. This is another potential situation of conflict and might also crystallise a lack of neutrality of the Estate Executor in its tasks vis-à-vis all heirs.
4. Conflict between the interest of the bank to ensure the respect of the core banking secrecy vis-à-vis the deceased and the interest of the heirs to obtain full disclosure of information from the bank appointed as Estate Executor. The same problem would be even stronger in case of judicial proceedings or with a foreign request for judicial assistance.
5. Conflict between the responsibility of the bank as asset manager / account holder and responsibility of the same stemming from its mandate as Estate Executor.
6. Conflict between the duty of fidelity and diligence (S. 321a CO) of the bank employee in charge of the Estate Executorship vis-à-vis his employer (i.e. the bank itself) and the duty of diligence of the bank employee vis-à-vis the heirs on the basis of the mandate of Estate Executor.
All these examples, which are far from being exhaustive, show that significant conflicts of interests between the Estate Executorship and the business of a bank may arise quite easily and often in such a way contrary to the interests of the estate or of the heirs. This may also be problematic for the bank and might even trigger the risk to jeopardise the proper business conduct requirement that is requested from the same (S. 2 para. 2 Swiss Bank Act).
Moreover, further problems may arise concerning the remuneration of the Executor and in the framework of any possible tax undeclared assets, as well as in the framework of the voluntary disclosure of the same that the Estate Executor might decide to initiate.
To conclude, one cannot recommend to appoint a bank (or bank employee) as Estate Executor due to a serious potential lack of independence of the bank itself. Further, a bank will not be able to be as flexible as a close friend or a third independent person appointed as an Estate Executor should be. On this basis, a bank should decline being appointed by its clients as their Estate Executor since this task will trigger far more juridical risks and potential conflicts of interests than true advantages.
