The universe of offshore tax planning and asset protection is large and complex. There are no "magic bullet" structures; instead there is a myriad of choices. The hallmark of a savvy practitioner is not only knowing of all the available options but also knowing when to use which option for a particular client. Swiss annuities should be considered by all practitioners looking to confer significant tax and asset protection benefits on their clients.
For tax purposes, variable Swiss annuities allow for a complete deferral of the value build-up within the policy (similar to domestic annuities that the reader is familiar with). If a trust is named as the beneficiary of the policy, the trust should be a grantor trust for income tax purposes. It should be noted that fixed annuities do not enjoy the advantage of income tax deferral, as they are deemed original issue discount instruments for U.S. tax purposes. To maintain the tax benefits the policy owner should not be able to direct how the annuity is invested but should be able to appoint a third-party investment adviser to make the investment decisions.