Asset protection in Switzerland is first and foremost an accepted legal principle. It is embodied in Swiss Insurance law. Assets invested in Swiss annuities and life insurance politics are protected from the creditors if the policies have been recognized by the supervisory authority, the Federal Office for Private insurance, and special conditions are meet.
Specifically, if a non/resident of Switzerland purchases an annuity from a Swiss insurance company and designates his spouse or his descendants as beneficiaries or irrevocably designates any other third party as beneficiary, this insurance policy is protected by Swiss law against any collection procedures instituted by the creditors of the policy owner and it cannot be included in a Swiss bankruptcy procedure. Even if a foreign judgement or court order expressly orders the seizure of such policy or the inclusion in the estate in bankruptcy, it may not be seized in Switzerland or included in the estate in bankruptcy. It is protected from his creditors irrespective of whether the designation is revocable or irrevocable.
Apart from the legal situation, Switzerland has a long tradition in the world of finance. More than 35% of all worldwide private assets have been invested in or through Switzerland. Here are the reasons why:
Financial privacy is fully respected
Lack of financial privacy leaves wealth visible to government bureaucrats and lawsuit predators. It is too easy for someone sizing up investors for a lawsuit, to learn the details of their bank account, their investments and how they spend their money. And if a lawsuit is pressed, thousands of people they have never met may read the story of their financial life in the local newspaper.
Swiss law respects an individual's right to privacy and it is not by mere coincidence that Switzerland has the world's toughest confidentiality and financial secrecy laws. A tradition of maintaining client confidentially has been part and parcel of the success of Swiss banking through many generations - even before banking secrecy was enacted in 1934. The stringent law applies as well to Swiss insurers. Insurance companies may not disclose information about your policy to anyone other than you, including government authorities.
Safety for your investments is ensured
For full lawsuit protection, investments must be outside an investor's legal jurisdiction, both in principle and in practice - and inside a long established, stable country that discourages frivolous and inventive litigation. Going to a foreign jurisdiction is the only way your assets can be placed beyond the reach of the legal, political and economic system you live in. Going to a jurisdiction that discourages unnecessary litigation is your assurance of fair treatment and an environment that is not changing constantly as new precedents are set - the laws protecting you today will still be there tomorrow.
Switzerland is virtually synonymous with stability. It's longevity (more than 700 years old!) and neutrality (at peace with its neighbors for many centuries) will re-assure investors. And those who have had the foresight to place their wealth in Switzerland have never been hostage to war, strife or tyrannical governments.
The safety of Swiss insurance investments is brought into clear focus by the enviable record of the Swiss insurance industry. Throughout its more than 140-year history, no single Swiss insurance company has failed nor has a claim been forfeited.
The long-term record of Switzerland's currency, the Swiss franc, is enviable as well. The franc has maintained its value better than any other major currency in the world. Investing in Switzerland gives you the chance, if you wish, to diversify into a strong and safe currency such as the Swiss franc or into the two reserve currencies of the next millennium, the euro and the dollar.
Asset protection vehicles in Switzerland give you the privacy you want, but unlike a bank account, privacy is not the essential ingredient to protect your assets. As we've mentioned, asset protection is built-in with specific insurance investments. The device is in full compliance with Swill law, has been tested in court and generally accepted for decades.
Switzerland upholds wealth-preserving traditions
The right to privacy and the right to protect wealth for the family are traditional virtues supported by the Swiss people and their government. Underlying these legal principles is the desire to foster self-sufficiency: The more wealth a family keeps the less need for welfare programs. For the same reason Swiss estate taxes are minimal for Swiss residents and non/existent for asset-protected insurance investments owned by non-Swiss residents. Swiss laws are designed to keep insurance proceeds sage and sound for you and your loved ones, and completely out of reach of anyone else!
Watch out for fraudulent conveyance
As with other asset protection devices, there is one limitation to Swiss asset protection. Creditors may seize the policy or have it included in the estate in bankruptcy if the insurance policy can be declared invalid as a result of fraudulent conveyance. This can be done if the policy owner designated the beneficiaries less than twelve months before the bankruptcy decree was issued or his assets were seized in a collection procedure at home. It is also fulfilled if the beneficiary was designated with the clear intent to damage creditors, in which case the creditors have to file a lawsuit for fraudulent conveyance within five years after the designation was made. This intent, however, cannot be proven if the beneficiaries were designated at a time the policy owner was solvent and no creditors had yet asserted any claims which could have rendered him insolvent.
Swiss Asset Protection vs. Offshore Trusts
For most people, the complexities of offshore trust solutions for asset protection can be daunting. Investors need to do a lot of homework to find the right offshore trust domicile for their needs. They have to know the privacy tax, and fraudulent conveyance rules applicable as well as the legal framework for trusts. These vary with every domicile.
From the tax angle, Swiss-style asset protection is simple. Asset protection through insurance policies does not give rise to any tax liabilities in Switzerland.
And then there's the matter of cost. You'll be pleasantly surprised asset protection in Switzerland comes at no extra cost. Protection is a matter of law. This is a windfall when you think that setting up an offshore trust could easily cost you $20,000 in legal fees upfront and some percentage of every subsequent transfer!
Another advantage of protecting assets with insurance instruments is, unlike trusts, the investor remains the legal owner of the investment. You never have to relinquish control of your assets. This also makes it much simpler to liquidate, which one can do at any time before the scheduled maturity. Any time you need it.
There are offshore financial centers that have been around long enough to establish a solid reputation in a strictly-regulated environment, but the lucrative nature of the offshore business has spawned new offshore centers in every corner of the globe, needless to say, mostly untested. This is the main risk of going offshore, that is, when it's not Switzerland.
Since 1974 the JML Group has assisted over 20,000 overseas clients with assets totalling over 3.5 billion Swiss francs.
JML Portfolio Management, the investment advisor subsidiary of the JML Group, brings the skills and know-how to successfully manage your global portfolio. We have helped investors just like you looking to go beyond their borders with their investments. We make it as simple as possible for even novices in international investing to apply the most modern investment strategies to their portfolios.
As portfolio managers, we emphasize thorough strategic planning and a long-term perspective. As independent investment counsellors, JML Portfolio Management has no obligation to banks or insurance and other companies. This rules out conflicts of interests and leaves us free to concentrate on our sole commitment - our clients' welfare.
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