Swiss Annuities Aren’t All Bad
Swiss Annuities provide investment options not found in the U.S. annuities market, confidentiality, and asset protection.
Swiss Annuities were very popular in the 70’s and 80’s, but have lost some of their luster as the world has become more digitally connected, along with increasing government efforts to collect taxes and shut down tax avoidance strategies.
Swiss Annuities are not offered by conventional U.S. carriers.
You alone are responsible for any tax responsibility, and when to realize capital gains and pay taxes. The actual structure of a private placement Swiss Annuity are created and issued by a Swiss Insurer.
Swiss Annuities provide asset and creditor protection.
The funds that you place in the Swiss Annuity are not considered assets of the insurer, and typically do not appear on their balance sheet. Instead, your assets are commonly held in a segregated account of a custodian Swiss bank. This complex structuring is the primary reason that these annuity assets are protected from creditors.
Usually the bank that offers custodial services also can provide money management services as well, and most offer the packaging of those two key components.
Swiss Annuities investment options are broader than that of U.S. based carriers.
Swiss Annuities allow you to hold any type of investment inside of the annuity structure. This includes assets like futures, options, and pure commodities that cannot be held in a U.S. based annuity offering. U.S. annuities like the variable annuity structure promote tax deferred growth using mutual funds (called separate accounts in the annuity world). Those mutual fund choices might provide access to futures, options, and commodities, but not a direct investment in those asset classes like a Swiss Annuity allows. There really is no investment limitation with a Swiss Annuity, which is one of the primary reasons for its popularity. The entire investment world is your oyster with a Swiss Annuity.
Swiss Annuities offer unmatched privacy and anonymity many wealthy investors desire.
The primary benefit proposition of a Swiss Annuity is that the structure is based on the privacy, confidentiality, and asset protection statutes of both Swiss and Liechtenstein insurance law.
So, are Swiss Annuities bad or good?
Because there is no oversight and regulation of Swiss Annuities in the United States, no U.S. agent or advisor is licensed to sell this product. A Swiss Annuity is actually a private placement structure that is not overseen by the SEC (Securities Exchange Commission), and you are not regulated from an investment choice standpoint (click here to learn how most annuities are regulated). That’s not to say that Swiss Annuities can’t be purchased, but it is a murky world of middle men and Swiss contacts are needed to facilitate a transaction.
There are fewer Swiss Annuities available for a myriad of reasons.
It’s primarily due to the crackdown on tax avoidance by U.S. investors. Recent cases have put a huge wet blanket over the entire product category, which threatens the legitimacy and actual future of Swiss Annuities going forward in the U.S. (click here to learn more about a whistleblower involving Swiss investment firms and their strategies)
Swiss Annuities time in the spotlight has come and gone in my opinion.
If you decide to pursue a Swiss Annuity strategy, be prepared to go it alone and shoulder some risk along the way. Unless you actually get on a plane and fly to Switzerland to meet the parties involved, my advice is to stay away from the current underground of U.S. consultants and advisors still pushing this product.
Maybe there is still a place for this strategy with the ultra-wealthy one tenth of one percent crowd, but this is something that the rest of us should probably not pursue. Always remember, “If it sounds too good to be true, then it is.” This applies across the board with annuities, and that definitely includes the once sought after Swiss Annuity. Be careful and do your due diligence before wiring any money, if you still want to pursue this strategy.