One of the unhappy facts of financial life in a lawsuit-
happy society such as the United States is the increasing danger
of being sued. And if you should have the misfortune to wind up
on the receiving end of some courtroom debacle, it could easily
cost you your life savings.
One of the best ways to protect yourself against such a
calamity is to invest in a vehicle that will be beyond the reach
of North American courts. One such vehicle is a Swiss annuity.
Swiss annuities can even be used to shield assets from a
bankruptcy proceeding. That is because the rights of an insured
U.S. person subscribing to a Swiss annuity policy are deemed to
be located at the domicile of the Swiss insurance company -- that
is, Switzerland, not the United States.
Even if a U.S. court specifically orders the seizure of
assets in a Swiss annuity -- or orders that they be included in,
say, a bankruptcy settlement -- such an annuity will be protected
under Swiss law.
The only way a creditor can seize such an annuity is if the
purchase of the policy -- or the designation of the beneficiaries
-- is found to be a fraudulent conveyance under Swiss law.
Fraudulent conveyance takes place only: (1) if the insured
person bought the policy or named the beneficiaries less than six
months before the bankruptcy decree was issued -- or six months
before some other collection action; or (2) if the insurance
policy was bought or the beneficiaries chosen with the clear
intent of damaging creditors.
Of course, such intent cannot be proven if the policy was
purchased and the beneficiaries named at a time when the insured
person was solvent or when no creditors claims were outstanding.
Nor can it be proven if your policy is not written for an
excessively large sum relative to the insurance needs of your
Another item that can make an important difference in the
amount of asset protection a Swiss policy provides is the
designation of beneficiaries. Beneficiaries may be named on a
revocable or irrevocable basis.
As long as your beneficiary is your spouse, it doesn't
matter whether he or she is named on a revocable or irrevocable
basis. In either case, your asset protection remains intact.
However, if your beneficiary is a third party (that is,
neither a spouse nor a descendent), the designation must be made
on a irrevocable basis. If not, the policy can be seized by a
Note that an annuity or life insurance policy can involve up
to four parties, each of which can be in a different country or
jurisdiction. The four parties are:
Note that a properly written Swiss annuity policy affords
better protection than Swiss bank accounts -- or Swiss securities
accounts. Swiss life insurance policies also make great estate-
planning vehicles -- regardless of the risk of bankruptcy or
- the insured individual. If he is not the policy owner,
he does not have any rights. When he dies, the contract matures
and benefits are paid to the beneficiaries.
- the policy owner or policyholder. He chooses the policy
options and designates the beneficiaries who are paid upon the
death of the insured person. The policyholder may be an
individual, a corporation, or a trust.
- the beneficiaries. These may be individuals,
corporations, or trusts. However, if asset protection under
Swiss law is your concern, your beneficiaries should only be
individuals -- preferably your spouse and/or children.
- the premium payer. This may safely be an individual,
corporation, or a trust.
If you would like more information, there is one Swiss
insurance broker dealing with North American clients. Contact:
- JML Jurg M. Lattmann AG
- Swiss Investment Counsellors
- Germaniastrasse 55, Dept. 212
- CH-8033 Zurich, Switzerland
- telephone: +41 41 368 8233
- fax: +41 41 368 8299; Attn: Dept. 212
About the Author
Adam Starchild is the author of over a dozen books, and
hundreds of magazine articles, primarily on international
business and finance. His articles have a appeared in a wide
range of publications around the world -- including Business
Credit, Euromoney, Finance, The Financial Planner, International
Living, Offshore Financial Review, Reason, Tax Planning
International, Trusts & Estates, and many more.
More information on Swiss annuities and other Swiss investments is available at
Copyright © 1993, 1997 by Adam Starchild
The Investor's Library has reprinted this copyrighted article with the permission of the author.