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Designation of Beneficiaries for Asset Protection in Switzerland |
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Under Swiss laws, designation of beneficiaries in life insurance policies and annuities provide various levels of protecting the asset. With designations, we refer to revocable and irrevocable designations as indicated by the owner under the contracts.
Contracts with revocable beneficiaries enjoy asset protection to a certain extent. This only applies to beneficiaries who are descendants or spouses of the owner. Protection is afforded to the owner since ownership is transferred to the beneficiaries in cases of bankruptcies instead of favoring collection agencies despite the presence of a court order and similar tools.
Should the owner wish to choose a beneficiary other than the spouse and descendants, it would be advisable to designate that person as irrevocable. What the owner must do is execute and provide a written waiver of rights to take back the designation to the insurance company. The same policy must be physically delivered to the beneficiary to complete this process. In case of foreign order on this annuity contract, the court would normally order the owner to revoke the designation assigned to the beneficiary and transfer such rights to the bankruptcy trustee instead. However, Switzerland’s laws will prevent the insurance company from complying with the court order if the original beneficiary was designated irrevocable under anti-duress.
Now, should the owner name an estate planning trust as a beneficiary, separate conditions apply if the designation is revocable or irrevocable. Better protection is afforded if the trust is given an irrevocable designation under the Switzerland legislation. Annuities though have a separate provision where perception of an owners’ financial capacity could pose a concern in terms of asset protection. Estate planning concerns can be sidetracked in this case by assigning a trust as irrevocable beneficiary. If control of the trust is an issue, the trust can be subject to an individual assigned a special power of appointment to do the trick.
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