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Could you benefit from more privacy... greater asset protection... lower taxes... a larger number of investment choices... and better investment returns? Of course you could... who wouldn't?
Take world famous private Swiss asset management and combine it with Liechtenstein's most sophisticated variable annuities and that's exactly what you get: the Swiss Strategy Portfolio Annuity.
The Best of Both Worlds
Swiss money managers are renowned for centuries of conservative wealth-building. And Liechtenstein variable annuities have some of the world's strongest asset protection features.
By itself, an account with a Swiss money manager doesn't provide a great deal of asset protection. And, until recently, with Liechtenstein annuities, you didn't have a great deal of choice about how your assets were invested.
But by combining the best features of a Swiss managed account and a Liechtenstein variable annuity, things have now changed. As a result of a collaboration between Marc Sola and Robert Vrijhof, two Swiss-based members of The Sovereign Society's Council of Experts, you can now combine the rock-solid asset protection of a Liechtenstein annuity with portfolio management by one of Switzerland's leading independent asset managers. Plus, because this is structured through a tax-advantaged variable annuity, you won't pay any taxes on the profits until you begin drawing an income from the annuity.
How it Works
The term "annuity" is often misunderstood because it is used in so many different ways. But the arrangement is merely a contract in which an insurance company agrees to make a series of payments to a beneficiary for a fixed period of time (or for life) in exchange for a single premium.
In a fixed annuity, the insurance company agrees to make payments of a fixed amount for this contractual period. In a variable annuity, the amount of the payment depends on the performance of the underlying investments held within the annuity structure, which can include stocks, bonds and mutual funds. In the case of an offshore variable annuity, these investments will often consist of non-U.S. securities that may not otherwise be available to an U.S. investor due to restrictions in U.S. securities laws.
Most offshore variable annuities give you very little choice about how these funds are invested. But in the Swiss Strategy Portfolio Annuity, your Swiss asset manager will select from a wide range of stocks, bonds and offshore funds to be held in the annuity. In practice, what happens is that the Liechtenstein insurance company opens an account with a Swiss private bank and provides the investment manager with the legal authority to buy and sell securities held within the annuity structure. At all times, the value of the annuity is precisely the value of the assets held within it.
More Privacy
The famous Swiss banking secrecy laws forbid banks from disclosing any information about their depositors except in connection with a criminal investigation. That's the case with any Swiss bank account, but there's a second layer of confidentiality when an insurance company opens the account, in its name.
In Liechtenstein, a separate insurance secrecy law protects the privacy of policy owners. This law subjects not only persons affiliated with or acting on behalf of insurance undertakings to professional secrecy, but also representatives of public agencies. Insurance companies are not obliged to report the names of policyholders, even if authorities request the information. Further, the contract's existence is not reflected in any public record in Liechtenstein. As in Switzerland, the only time that secrecy may be lifted is in the event of a criminal investigation and all necessary legal steps have been taken to acquire information.
Finally, offshore insurance policies are effectively the only way U.S. persons can maintain a sizeable foreign investment without triggering the reporting requirements for "foreign bank, financial or 'other' financial accounts." While we recommend checking with your personal tax advisor to verify our interpretation of U.S. law, not being forced to make this annual disclosure is a substantial privacy advantage. However, U.S. law does require a onetime acknowledgement to the IRS of the purchase of a foreign insurance contract and payment of a 1% excise tax on IRS Form 720.
More Asset Protection
One of the most significant benefits of a Liechtenstein variable annuity is asset protection. When you purchase a Liechtenstein insurance policy and designate your spouse as the beneficiary, or another person as an irrevocable beneficiary, the policy is protected against any debt collection procedures instituted by your creditors. Even where a foreign judgment or court order expressly decrees the seizure of the policy, or its inclusion in the estate in bankruptcy, the insurance policy may not be seized.
Indeed, if you are forced into bankruptcy, protection is guaranteed because ownership of the insurance policy is automatically transferred to your beneficiary(ies) and you no longer have legal authority to redeem the policy.
It is important to establish the policy before bankruptcy or other collection procedures have commenced. Liechtenstein fraudulent conveyance laws may apply if the policy was established within one year before bankruptcy or seizure, or if the policy was established with the intent to damage creditors. In that case, a creditor can bring an action before a Liechtenstein court to collect from the policy.
However, penetrating a Liechtenstein variable annuity requires negotiating a legal minefield that even the most sue-happy lawyers are reluctant to enter.
Obstacle Course for Creditors
Creditors seeking to attach an annuity from a Liechtenstein insurance company must overcome the following nine obstacles:
- Creditor must know that an annuity
policy exists in Liechtenstein and which company is the contractual partner.
- Creditor must come to Liechtenstein, hire a local
attorney, who works on an hourly fee only (average
US$250 per hour), and make an initial deposit of
US$1,000 for his services.
- A local lawyer must accept the mandate and try to
obtain an attachment order.
- Creditor must have a specific claim, based on an
enforceable judgment on recognition of debt.
- The national authority must order the attachment of the
policy.
- Creditor must deposit funds for court costs.
- If the policyowner files a protest within 10 days the creditor
must file a civil suit against the policy owner.
- The creditor must proof that fraudulent conveyance is involved.
- The Liechtenstein courts must declare the policy invalid.
And, even if all of these requirements are met, a Liechtenstein court will generally order only that a creditor recover actual damages. "Punitive" damages are almost never awarded.
More Potential for Gains
While the Swiss Strategy Portfolio Annuity is a new product with no performance history, it will be managed in accordance with the Weber Hartmann Vrijhof & Partners Ltd. model portfolio, which has been in place since 1991.
One objective of this portfolio is to convert U.S. dollars into foreign currencies, primarily the Swiss franc, Euro, Australian dollar, New Zealand dollar and Hungarian forint. Therefore the strength or weakness of the U.S. dollar plays an important role in performance. Vrijhof and his partners believe -and we agree - that a further weakening of the U.S. dollar against major currencies lies ahead.
While each portfolio will differ depending on your specific objectives, in general terms it will consist of up to 60% in AA or AAA-rated short-term bonds and denominated in Australian dollars, New Zealand dollars, Hungarian forint and Euros. Up to 30% of the portfolio consists of non-U.S. stocks focusing on the commodity and precious metal sectors as well as a few strong blue chips. Up to 20% of the portfolio is invested in precious metals, especially gold and silver bullion.
With this very conservative approach, Vrijhof and partners have produced excellent results for its U.S.-based clients; 12% in 2003, about 6% in 2004, plus currency gains as high as 30% in the case of Euros over the last two years. Thus, a U.S. dollar based investor, with an annuity paid in Euros, would have therefore earned an impressive rate of return on the currency appreciation alone, when converted back into dollars.
More Tax Benefits
Under U.S. tax rules, income earned within an variable annuity is tax deferred until the contract is cashed out or annuity payments begin. Because of tax deferral, the funds have the chance to grow more quickly than they would in a taxable investment. The income, when taxed, is subject to the rates for ordinary income. There is an extra tax of 10% on withdrawals from an annuity contract before you reach age 59-1/2.
In addition, the annuity policy is an asset of your estate. With a joint and survivor annuity, if the joint annuitant is your spouse, the value of the annuity will not be taxed until both you and your spouse die. Otherwise, it is taxed at your death. However, customized solutions are available to avoid having the annuity become part of your estate if this is an important tax planning consideration for you.
In Liechtenstein and Switzerland, no inheritance, withholding or stamp taxes are due on the Swiss Strategy Portfolio Annuity.
Benefit from 35 Years of "Professionals Experience”
The individuals behind this concept are well-known to long-time members of The Sovereign Society.
Marc-Andre Sola is the former CEO of an international and U.S.-registered investment advisory firm. After receiving his law degree at the University of Zurich, Mr. Sola advised high net worth Swiss clients in domestic financial planning. An expert on the insurance laws of Switzerland and Liechtenstein, Mr. Sola is a managing partner of NMG International Financial Services Ltd., a subsidiary of the worldwide NMG Group, incorporated in Singapore, with offices in 16 countries.
Robert Vrijhof is President and Senior Partner of Weber Hartmann Vrijhof & Partners Ltd. Rob's banking career began in 1978 with Union Bank of Switzerland, where he worked in the international securities trading department. Later, with Credit Suisse, he was a senior manager in the foreign stock exchange trading section. In 1987, he began a career as a portfolio manager at Foreign Commerce Bank, where he became head of the bank's portfolio management group. In 1991, Vrijhof founded his own portfolio management company, and today, his firm manages approximately US$120 million from clients all over the world.
Together, Sola and Vrijhof have designed an innovative financial product that provides truly state-of-the-art benefits.
What More Do You Want?
If you have US$250,000 or more to invest, you qualify for your own Swiss Strategy Portfolio Annuity. Invest your funds abroad in a conservatively-managed multi-currency portfolio and achieve ironclad asset protection along with tax deferral.
To learn more about the Swiss Strategy Portfolio Annuity, go to http://www.nmg-ifs.com/client_questionnaire.htm to receive detailed information and a proposal. All information is kept strictly confidential and proposals are provided without any obligation.
(NMG International Financial Services Ltd., Goethestrasse 22, 8001 Zurich, Switzerland. Tel: +(41) 44 266 21 41. Fax: +(41) 44 266 21 49. E-mail: info@nmg-ifs.com. Link: http://www.nmg-ifs.com or of course you can contact WHVP directly.
Mark Nestmann is editorial director of The Sovereign Society. He is the author of numerous books on privacy, asset protection and taxation.
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