          
          
                  ASSET PROTECTION USING SWISS ANNUITIES
          
               Growing the wealth is important, but so is
          protecting it from false claimants, and Switzerland
          excels at this.  Almost anybody with wealth in the U.S.
          is at risk, as discussed in the early sections of
          this report.  With everything that can happen to
          savings, it is nice to know that there is something,
          somewhere, nobody can touch.
          
               According to Swiss law, insurance policies --
          including annuity contracts -- cannot be seized by
          creditors.  They also cannot be included in a Swiss
          bankruptcy procedure.  Even if an American court
          expressly orders the seizure of a Swiss annuity account
          or its inclusion in a bankruptcy estate, the account
          will not be seized by Swiss authorities, provided that
          it has been structured the right way.
          
               There are two requirements: A U. S. resident who
          buys a life insurance policy from a Swiss insurance
          company must designate his or her spouse or
          descendants, or a third party (if done so irrevocably)
          as beneficiaries.  Also, to avoid suspicion of making a
          fraudulent conveyance to avoid a specific judgment,
          under Swiss law, the person must have purchased the
          policy or designated the beneficiaries not less than
          six months before any bankruptcy decree or collection
          process.
          
               The policyholder can also protect the policy by
          converting a designation of spouse or children into an
          irrevocable designation when he becomes aware of the
          fact that his creditors will seize his assets and that
          a court might compel him to repatriate the funds in the
          insurance policy.  If he is subsequently ordered to
          revoke the designation of the beneficiary and to
          liquidate the policy he will not be able to do so as
          the insurance company will not accept his instructions
          because of the irrevocable designation of the
          beneficiaries.
          
               Article 81 of the Swiss insurance law provides
          that if a policyholder has made a revocable designation
          of spouse or children as beneficiaries, they
          automatically become policyholders and acquire all
          rights if the policyholder is declared bankrupt.  In
          such a case the original policyholder therefore
          automatically loses control over the policy and also
          his right to demand the liquidation of the policy and
          the repatriation of funds.  A court therefore cannot
          compel the policyholder to liquidate the policy or
          otherwise repatriate his funds.  If the spouse or
          children notify the insurance company of the
          bankruptcy, the insurance company will note that in its
          records.  Even if the original policyholder sends
          instructions because a court has ordered him to do so,
          the insurance company will ignore those instructions.
          It is important that the company be notified promptly
          of the bankruptcy, so that they do not inadvertently
          follow the original policyholder's instructions because
          they weren't told of the bankruptcy.
          
               If the policyholder has designated his spouse or
          his children as beneficiaries of the insurance policy,
          the insurance policy is protected from his creditors
          regardless of whether the designation is revocable or
          irrevocable.  The policyholder may therefore designate
          his spouse or children as beneficiaries on a revocable
          basis and revoke this designation before the policy
          expires if at such time there is no threat from any
          creditors.
          
               These laws are part of fundamental Swiss law.
          They were not created to make Switzerland an asset
          protection haven.  There is a current fad of various
          offshore islands passing special legislation allowing
          the creation of asset protection trusts for foreigners.
          Since they are not part of the fundamental legal
          structure of the country concerned, local legislators
          really don't care if they work or not.  And since most
          of these trusts are simply used as a convenient legal
          title to assets that are left in the U.S., such as
          brokerage accounts, houses, or office buildings, it is
          very easy for an American court to simply call the
          trust a sham to defraud creditors and ignore its legal
          title -- seizing the assets that are within the
          physical jurisdiction of the court.
          
               Such flimsy structures, providing only a thin
          legal screen to the title to American property, are
          quite different from real assets being solely under the
          control of a rock-solid insurance company in a major
          industrialized country.  A defendant trying to convince
          an American court that his local brokerage account is
          really owned by a trust represented by a brass-plate
          under a palm tree on a faraway island is not likely to
          be successful -- more likely the court will simply
          seize the asset.
          
               But with the Swiss annuity, the insurance policy
          is not being protected by the Swiss courts and
          government because of any especial concern for the
          American investor, but because the principle of
          protection of insurance policies is a fundamental part
          of Swiss law -- for the protection of the Swiss
          themselves.  Insurance is for the family, not something
          to be taken by creditors or other claimants.  No Swiss
          lawyer would even waste his time bringing such a case.
          
               Swiss annuities minimize the risk posed by U. S.
          annuities.  They are heavily regulated, unlike in the
          U.S., to avoid any potential funding problem.  They
          denominate accounts in the strong Swiss franc, compared
          to the weakening dollar.  And the annuity payout is
          guaranteed.
          
               Swiss annuities are exempt from the famous 35%
          withholding tax imposed by Switzerland on bank account
          interest received by foreigners.  Annuities do not have
          to be reported to Swiss or U.S. tax authorities.
          
               A U.S. purchaser of an annuity is required to pay
          a 1% U.S. federal excise tax on the purchase of any
          policy from a foreign company.  This is much like the
          sales tax rule that says that if a person shops in a
          different state, with a lower sales tax than their home
          state, when they get home they are required to mail a
          check to their home state's sales tax department for
          the difference in sales tax rates.
          
               The U.S. federal excise tax form (IRS Form 720)
          does not ask for details of the policy bought or who it
          was bought from -- it merely asks for a calculation of
          1% tax of any foreign policies purchased.  This is a
          one time tax at the time of purchase; it is not an
          ongoing tax.  It is the responsibility of the U. S.
          taxpayer, to report the Swiss annuity or other foreign
          insurance policy.  Swiss insurance companies do not
          report anything to any government agency, Swiss or
          American -- not the initial purchase of the policy, nor
          the payments into it, nor interest and dividends
          earned.
          
          Special Advantages of Swiss Annuities
               * They Pay Competitive Dividends and Interest.
               * No foreign reporting requirements.  A swiss
          franc annuity is not a "foreign bank account," subject
          to the reporting requirements on the IRS Form 1040 or
          the special U. S. Treasury form for reporting foreign
          accounts.  Transfers of funds by check or wire are not
          reportable under U. S. law by individuals -- the
          reporting requirements apply only to cash and "cash
          equivalents" -- such as money orders, cashier's checks,
          and travellers' checks.
               * No forced repatriation of funds.  If America
          were to eventually institute exchange controls, the
          government might require that most overseas investments
          be repatriated to America.  This has been a common
          requirement by most governments that have imposed
          exchange controls.  Insurance policies, however, would
          likely escape any forced repatriation under future
          exchange controls, because they are a pending contract
          between the investor and the insurance company.  Swiss
          bank accounts would probably not escape such controls.
          (To the bureaucrats writing such regulations, an
          insurance policy is a commodity already bought, rather
          than an investment.)
               * Instant liquidity.  With the Swiss Plus plan,
          described later, an investor can liquidate up to 100%
          of the account without penalty (except for a SFr500
          charge during the first year.)
               * Swiss safety.  As already discussed, Switzerland
          has the world's strongest insurance industry, with no
          failures in 130 years.
               * No Swiss tax.  If an investor accumulates Swiss
          francs through standard investments, he will be subject
          to the 35% withholding tax on interest or dividends
          earned in Switzerland.  Swiss franc annuities are free
          of this tax.  In the U. S., insurance proceeds are not
          taxed.  And earnings on annuities during the deferral
          period are not taxable until income is paid, or when
          they are liquidated.
               * Convenience.  Sending deposits to Switzerland is
          no more difficult than mailing an insurance premium in
          the United States.  A personal check in U. S. dollars
          is written and sent overseas (50› postage instead of
          29›).  Funds can also be transferred by bank wire.
               * Qualified for U.S. Pension Plans.  Swiss
          annuities can be placed in a U. S. tax-sheltered
          pension plans, such as IRA, Keogh, or corporate plans,
          or such a plan can be rolled over into a Swiss-annuity.
          (To put a Swiss annuity in a U.S. pension plan, all
          that is required is a U.S. trustee, such as a bank or
          other institution, and that the annuity contract be
          held in the U.S. by that trustee.  Many banks offer
          "self-directed" pension plans for a very small annual
          administration fee, and these plans can easily be used
          for this purpose.)
               * No Load Fees. Investment in Swiss annuities is
          on a "no load" basis, front-end or back-end.  The
          investments can be canceled at any time, without a loss
          of principal, and with all principal, interest and
          dividends payable if canceled after one year.  (If
          canceled in the first year, there is a small penalty of
          about 500 Swiss francs, plus loss of interest.)
          
          Swiss Plus
               A new Swiss annuity product (first offered in
          1991), SWISS PLUS, brings together the benefits of
          Swiss bank accounts and Swiss deferred annuities,
          without the drawbacks -- presenting the best Swiss
          investment advantages for American investors.
          
               SWISS PLUS, is a convertible annuity account,
          offered only by Elvia Life of Geneva.  Elvia Life is a
          $2 billion strong company, serving 220,000 clients, of
          which 57% are living in Switzerland and 43% abroad.
          The account can be denominated in the Swiss franc, the
          U.S. dollar, the German mark, or the ECU (European
          Currency Unit), and the investor can switch at any time
          from one to another.   Or an investor can diversify the
          account by investing in more than one currency, and
          still change the currency at any time during the
          accumulation period -- up until beginning to receive
          income or withdrawing the capital.
          
               Although called an annuity, SWISS PLUS acts more
          like a savings account than a deferred annuity.  But it
          is operated under an insurance company's umbrella, so
          that it conforms to the IRS' definition of an annuity,
          and as such, compounds tax-free until it is liquidated
          or converted into an income annuity later on.
          
               SWISS PLUS accounts earn approximately the same
          return as long-term government bonds in the same
          currency the account is denominated in (European
          Community bonds in the case of the ECU), less a half-
          percent management fee.
          
               Interest and dividend income are guaranteed by a
          Swiss insurance company.  Swiss government regulations
          protect investors against either under-performance or
          overcharging.
          
               SWISS PLUS offers instant liquidity, a rarity in
          annuities.  All capital, plus all accumulated interest
          and dividends, can be freely accessible after the first
          year.  During the first year 100% of the principal is
          freely accessible, less a SFr500 fee, and loss of the
          interest.  So if all funds are needed quickly, either
          for an emergency or for another investment, there is no
          "lock-in" period as there is with most American
          annuities.
          
               Upon maturity of the account, the investor can
          choose between a lump sum payout (paying capital gains
          tax on accumulated earnings only), rolling the funds
          into an income annuity (paying capital gains taxes only
          as future income payments are received, and then only
          on the portion representing accumulated earnings), or
          extend the scheduled term by giving notice in advance
          of the originally scheduled date (and continue to defer
          tax on accumulated earnings).
          
          Contact Information
               The only way for North Americans to get
          information on Swiss annuities is to send a letter to a
          Swiss insurance broker. This is because very few
          transactions can be concluded directly by foreigners
          either with a Swiss insurance company or with regular
          Swiss insurance agents.
          
               When you contact a Swiss insurance broker, be sure
          to include, in addition to your name, address, and
          telephone number, your date of birth, marital status,
          citizenship, number of children and their ages, name of
          spouse, a clear definition of your financial objectives
          (possibly on what dollar amount you would like to
          invest), and whether the information is for a
          corporation or an individual, or both.
          
               So far one firm specializes in dealing with
          English speaking investors, and everybody in the firm
          speaks excellent English.  They are also familiar with
          U. S. laws affecting the purchase of Swiss annuities.
          
               Contact:
          
                    Mr. Jurg Lattmann.
                    JML Swiss Investment Counsellors AG, Dept. 212,
                    Germaniastrasse 55
                    8031 Zurich
                    Switzerland
                         telephone (41-1) 363-2510
                         fax: (41-1) 361-074, attn: Dept. 212
          
               A Swiss annuity for a portion of your assets can
          add a useful pillar to your overall protection plan,
          because it is something completely separate from your
          structure of family limited partnerships and living
          trusts, and has its own independent set of protective
          rules.  It also adds an extremely important
          diversification into a "hard money" asset.
          
          
