Swiss Annuities Tower the American Funds

September 16, 2008
Roccy DeFrancesco

Physician's Money Digest, June30 2003, Volume 10, Issue 12

An interesting option that canhelp in asset protection is aSwiss annuity fund. A Swissvariable annuity is basically a Swissbank account wrapped in an annuitycontract. Because the money goinginto a Swiss annuity grows withouttax consequences, funds are essentiallyinvested in foreign stocks/mutualfunds in a tax-friendly environment.

An investor will typically invest alump sum of money into a Swissannuity, from which they disbursethe money into various subaccounts.Each subaccount can have adifferent investment strategy. Swissannuities are variable annuities that,similar to mutual funds, have noguarantee on investments.


Yet, unlike mutual funds thatmay incur capital gains and investmentincome taxes each year, variableannuities are sheltered fromincome and capital gains taxes duringthe accumulation phase, andpartially sheltered from incometaxes during the payout phase.

Many investors like the concept ofannuities, but are not interested inpaying all the fees. Traditional annuitiestend to charge 2% on average forannual fees, or more than 40% higherthan the fees on the average mutualfund. Some Swiss variable annuitiescome with maximum annualcharges of only 0.6%, or less than halfof those for the average mutual fund.

With some Swiss annuities, thesurrender charge lasts only 1 year.Traditional US annuities chargehefty surrender fees on the balanceof the annuity if you want to withdrawthe money from your annuitybefore the 7th to 10th year. TheSwiss annuity functions more like aliquid brokerage account after thefirst year than a traditional annuity.


As a physician, you know howimportant asset protection is in anestate plan. While some states protectannuities via state statutes, most donot. If properly structured, a Swissannuity can be 100% asset-protectedfrom creditors or legal settlements, nomatter what state you live in.

As most people are aware,Switzerland is famous for its privacylaws. A Swiss annuity is not reportableas a foreign financialaccount, and, unlike other foreignannuities, no US excise taxes areincurred. The annuity informationwill not be released unless you havecommitted a crime under Swiss lawor evaded taxes.

Most experts agree that investorsshould have a segment of theirmoney in foreign markets to ensureagainst a huge downturn in the USmarkets. Depending on the investmentmanager you use, that numbermight be 10% to 40% of your portfolio.The Swiss annuity may be avaluable foreign investing option foryour portfolio. Consult with yourfinancial advisor to see how youcould benefit from these funds.

Roccy DeFrancesco is an attorney and author of "The Doctor's Wealth Preservation

Guide." He has run a medical practice and lectured for many state and national medical

associations. For a free asset protection, income, and estate tax reduction CD, or for

questions or comments, call 269-469-0537 or e-mail