What you need to know about the Swiss Asset Protection Certificate


Frequently Asked Questions




Q:Why are the owner an the person insured identical?

A: The owner is the person who purchases the Asset Protection Certificate. He or she is the investor who designates the beneficiaries and who decides what amounts are going to whom after his or her demise. The Swiss Asset protection Certificate assures that the amount invested cannot be seized by creditors for the duration of the investment and - if kept in force - for the lifetime of the investor.

Q: Is there a possibility that an Asset Protection Certificate can be seized by creditors?

A: No, seizure of the policy is excluded by Swiss laws. But the validity of the policy can be challenged if the designation of the beneficiaries of the policy is a voidable preference under Swiss fraudulent conveyance rules (see next question).

Q: How can the validity of the policy be challenged?

A: Only in case of fraudulent conveyance. In that case, the creditor has to know about the existence of an Asset Protection Certificate and the name of the issuer, the insurance company. In case of bankruptcy or a judgement within the first 12 months of the existence of an Asset Protection Certificate, a Swiss court would have to accept the foreign bankruptcy decree or judgement order and declare the Asset Protection Certificate as null and void.
After twelve months and in order to achieve the same result, such an intent to defraud, however, cannot be proved if the beneficiaries where designated at a time the owner was solvent and no creditors had yet asserted any claims against the owner which could have rendered him insolvent. In addition the creditors need to prove that the intent to defraud was known, or should have been known, by the beneficiaries.

Q: Who can be designated as beneficiaries for the Asset Protection Certificate policy?

A: Swiss law requires that the policy owner designate his spouse or descendants as beneficiaries of the policy or irrevocably designate any other third party. If he chooses his spouse or descendants, the Certificate is protected from creditors irrespective of whether the designation is revocable or irrevocable.

Q: Where does a non-Swiss creditor enforce a claim to collect a Swiss insurance policy?

A: Any creditor has to enforce his claim in Switzerland since his claim for collecting the funds is against the insurance company and not the policy holder. Also, if a foreign bankruptcy decree should be recognized in Switzerland, a respective claim for recognition would have to be brought in Switzerland. For both procedures, Swiss rules apply in regard to the question what can be seized and what cannot be seized.

Q: What if a judge or any other person forces the owner of an Asset Protection Certificate to redeem the policy?

A: The Swiss insurance company can only accept orders from the owner and only if his actions are deemed not to have been made under duress. If there is evidence that an order has been forced upon the owner, the insurance company cannot follow the instructions so issued. In such a case, the beneficiaries (spouse or children) should inform the insurance company. This procedure should make it impossible for any foreign court to circumvent Swiss rules. In case of bankruptcy of the owner, protection is also guaranteed since the ownership is transferred to the beneficiaries automatically. Now the beneficiaries directly can block any instructions from the owner which are forced upon him.

Q: What currency should the Asset Protection Certificate be denominated in?

A: An investor wants to protect his assets in his home currency. Therefore, he would preferably have his certificate denominated in the currency he is based in. Looking at it from an investor's point of view, in addition to the USD, attractive alternatives are the Swiss franc and the Euro, which some feel may become a future world reserve currency.

Q: Why is there a duration of five years or multiple thereof?

A: According to Swiss insurance law, all insurance contracts must have a duration specified in the policy. For the Swiss Asset Protection Certificate we have chosen the shortest period possible with the option of constant renewals. Therefore, we have turned a short-term into permanent protection if needed.

Q: What if no extension of the Swiss Asset Protection Certificate is needed?

A: Prior to extension, the owner gives instructions how the investment should be paid out to him or the beneficiaries. They have the choice between a
a) lump sum payment
b) pay-out over a certain number of years, or
c) lifetime pay-out.

Q: Why should the Swiss Asset Protection Certificate be stored in Switzerland?

A: In legal terms, the Swiss Asset Protection Certificate is neither a registered nor a bearer certificate but a registered proof of ownership.
The policy must be presented to the insurance company to collect the money. If the policy is not available for some reason (seizure or attachment by an adversary), the owner or the beneficiaries will have great difficulty collecting their money in Switzerland. They will first have to prove that the third party is withholding the original certificate unjustifiably.
In practice, this can be a long and difficult procedure. This problem is avoided by storing the original policy in Switzerland. The sagest place, of course, is with the insurance company itself and such arrangements have been made for the Asset Protection Certificate.

Q: What is the role of the legal representative?

A: The legal representative in Switzerland advises the investor in regard to beneficiary management, can legally receive notifications from the insurance company and be of assistance in case there are legal matters to be clarified. The legal representative acts as a liaison between the client and the annuity and legal insurance carriers. They can refer you to the right legal professionals should this be necessary.

Q: What other services does the legal representative provide?

A: In case of death of the owner, the legal representative can assist in giving information about the documents required, forward them to the insurance company and supervise the correct execution of the payment orders. For example, the owner may wish some regular payments by check to be made to one beneficiary, to open a specific account for another beneficiary or to make a lump sum distribution to a third beneficiary.

Q: Are Swiss Asset Protection Certificates taxed in Switzerland?

A: The yield depends on the currency denomination of the Asset Protection Certificate and is comparable with or, in Swiss francs, exceeds the rates for government bonds or fixed-time deposits for that currency. Information about current rates will be given upon request.

Q: What is the meaning of "beneficiary management"?

A: The owner designates his spouse and children as beneficiaries on a revocable basis. At the end of the deferred period there are two possibilities:
a) If there are no claims existing or in sight and no further asset protection is needed, the owner revokes the existing beneficiary designation and replaces it by naming himself. Then at the end of the deferred period of the insurance policy he either collects the proceeds or extends the certificate for another five, ten or 15 years. b) If, on the contrary, asset protection should stay in force, the owner extends the policy.

Q:What if a proceeding is brought in Switzerland against the policy owner?

A: Asset Protection Certificates include legal insurance in case legal proceedings are brought against the policy owner in Switzerland under Swiss law. Legal expenses in Switzerland for cases against the owner on the basis of a foreign judgement or court order concerning the seizure of the policy and the underlying funds are covered. This, with the exception of fraudulent conveyances, includes any sort of debt collection against the policy owner by his creditors or attempts for inclusion in the estate in case of bankruptcy.


JML Swiss Investment Counsellors was founded by Jurg M. Lattmann in 1974 and specializes in developing and marketing Swiss and global investments to overseas clients.

As independent counsellors, JML has no obligation to banks or insurance companies. This rules out conflicts of interest and leaves us free to concentrate on our sole commitment - our client's welfare.

More than 20,000 overseas clients have entrusted JML with assets worth more than 3.5 billion Swiss francs. We are firmly committed to proving their confidence in us to be well-placed.

Take a look at JML's Main Services Page and request the information by filling out the form you're interested in.




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