Benefits of Annuities
Asset Protection

Asset protection is not a strategy designed to avoid paying those who you legitimately owe money. Rather it is a strategy that will enable assets to be protected from those who would use the legal system to unfairly target your assets. Asset and wealth protection is a crucial strategy for doctors, surgeons, lawyers, accountants, entrepreneurs, company executives, investors and any one else potentially at risk of a lawsuit. The crucial part of any asset protection strategy is to plan early. If you try and implement a strategy once creditors/legal challenges are already at the door it is like trying to get toothpaste back in the tube.

When an investor (the policy owner) purchases an insurance policy in Liechtenstein or Switzerland via a lump sum investment (also known as a one off premium) and irrevocably nominates a beneficiary (other than the owner) or nominates a spouse/descendant as revocable beneficiaries, the policy can not be included in the owner's estate for bankruptcy as it is no longer considered the owner's asset.

Should the policy owner become bankrupt, ownership of the policy is, by law, automatically transferred to the revocable beneficiaries (provided they are spouse or descendants) or to the irrevocably nominated beneficiary. Liechtenstein also recognises un-married partners in same sex couples. Hence, in bankruptcy the policy (and its underlying assets) is fully protected because only the beneficiaries, being the new owners, can give instructions to the insurance company. The original policy owner no longer has legal authority to redeem the policy.

Within Liechtenstein and Swiss law there are also anti-duress provisions that provide additional protection if a policy owner is forced by a court to revoke a beneficiary designation or cancel a policy. If the insurance company receives a letter/request from a policy owner revoking the beneficiary designation or cancelling a policy to comply with an order from a foreign court, the insurance company may come to the conclusion that the instructions do not express the owner's true intent as they were coerced by legal process. Under the law, the insurance company cannot follow the owner's instructions.

Company directors can purchase a variable annuity policy, naming spouse/descendants or a family trust (irrevocably) as beneficiaries, using company funds. In the event of bankruptcy, ownership of the policy is transferred to the beneficiaries.

Please also note that the asset protection benefits are not available in criminal cases.

Using a Swiss or Liechtenstein annuity will provide iron clad protection after 12 months, unlike the five to seven years in Australia. The key is still to plan ahead – put in place an asset protection strategy when you do not need it so that you can sleep soundly when you do.