Protect Yourself from the Greatest 'Wealth Transfer' of All Time
By Frank Suess - January 14, 2012

"To be satisfied with what one has; that is wealth." ~ Mark Twain

In these, the early weeks of the New Year, the crystal ball game is in full swing. I´ll refrain from going down that path today. First of all, to some degree, we already discussed our outlook for the New Year when we presented our BFI´s Big Picture Scenarios for 2012 in December. Secondly, I don´t need to unnecessarily add more gloom and doom to your daily dose of news. There is enough of that out there already.

Instead, today, and over the coming weeks, I have decided to focus on some very practical guidance and to share with you a variety of useful offshore wealth planning tools and investment solutions that will help you protect and keep your wealth. In the current economic and geo-political context, I believe you should be at least as concerned about properly protecting your wealth, in a safe and compliant manner, as you should be about your choice of investments.

These days, in view of the accelerating "wealth transfer game" in all the deeply indebted and increasingly insolvent countries around the world, your focus needs to be on PROTECTING AND KEEPING YOUR WEALTH. In other words, wealth planning is required that first and foremost ensures you can preserve what you have earned. Only after this risk management angle has been thoroughly considered and secured, the next step of asset allocation and investment follows.

Affluent investors, high income professionals and 'world citizens´ have vastly different needs than most others. You have much more to lose – to a variety of risks such as taxes, lawsuits, or faulty planning. You have a present and continuous need for sophisticated compliant strategies – strategies which incorporate and integrate tax savings, asset protection, estate, and business planning, so as to save and make money.

There are a variety of wealth planning motivations and needs: inheritance, business succession, taking care of one´s family, goals for education, successful retirement and future self-reliance, to name just a few. Tailoring a suitable structure and investment strategy to those objectives and needs is what we do at BFI.

In our approach to wealth management at BFI, in combination with international investments, we put a lot of emphasis on a proper asset protection and tax structure. Generally, the rules you are subjected to will not change merely by taking your assets overseas. Your domestic tax and reporting rules continue to apply abroad, only now in an international context. Therefore, good professional advice that understands both international AND domestic rules is crucial.

We provide this kind of planning to clients from several international jurisdictions, including the UK, the United States and Germany. It is no coincidence that residents from these countries, in particular, need proper risk management and wealth management solutions…

With this in mind, today, let me tell you first about a concept that, employed properly, will help you "Accelerate Your Offshore Wealth Preservation Plan.

Particularly for Americans who are increasingly plagued by tax and securities regulations that make it difficult and confusing for them to diversify their wealth internationally, the wealth planning vehicle discussed below, is worth thorough consideration. Many of our clients have benefited from this in the past. Personally, I consider it one of the last true bastions of solid offshore wealth management and tax planning.

Mark Twain says: "To be satisfied with what one has; that is wealth." I tend to agree. However, one needs to add that, today, keeping it is a big part of having it. Wishing you prudent planning and adequate precautionary steps for the challenges of 2012!


What would a solid offshore wealth management solution look like? What would you, in an ideal world, expect from your investment set-up overseas? Try to imagine what your priorities – what your 'wish list´ – would look like.

What if…

… you had the opportunity to flexibly and easily invest in the best investments available globally.

… you could choose from a selection of the best asset managers and the safest institutions in the safest jurisdictions.

… your assets were legally protected. They could not be touched by any creditor or plaintiff. They would be safe from forced repatriation or government confiscation.

… your strategy would generate an attractive compounded annual return. And ALL of the earnings would be yours — TAX-FREE…

… you could do all this privately AND within the ambit of the law.

Too good to be true? Not at all.

Would you be interested in this type of investment? Too good to be true? Well, this is the kind of wealth management solution we strive for at BFI. And, we have used the planning tools and our international network to implement and maintain precisely this kind of solution for our clients over the past 20 years.

These are the elements of what we consider a solid offshore strategy, one that combines all the elements that are required for a cutting edge wealth preservation and asset protection solution, tailored to your specific needs and objectives.

Elements of a Solid Wealth Preservation Plan

• LEGAL TAX BENEFITS – take advantage of the benefits your country´s tax code affords to life insurance policies and annuities, namely deferral or elimination of taxes

•SOLID ASSET PROTECTION – protect your wealth from creditors, frivolous lawsuits and government confiscation

•PRIVACY – the first critical step toward asset protection is to keep your financial affairs private and conduct them confidentially

•GLOBAL INVESTMENT FLEXIBILITY – obtain and maintain ready access to all asset classes on a global scale – true international diversification capability is critical

•SAFETY – choose institutions, advisors, jurisdictions and legal systems of only the highest quality

It should be obvious to all that a well-crafted long-term wealth preservation strategy must provide the highest levels of safety, legal asset protection, and confidentiality. On top of that, it should provide for sustainable tax benefits based on compliance with the tax code of your domicile. And finally, in view of the volatility and uncertainty we face in markets, possibly the most important feature of a cutting edge wealth preservation plan is a structure that allows for total investment flexibility, one that ensures an easily and rapidly adjustable asset allocation of a global scope.

No matter how bullish or bearish you are about current markets, no matter how strong your convictions are one way or the other, you must ensure that your portfolio adjusts promptly to the changes in markets and your personal needs, without having to alter its legal structure and protective shield.

Private Placement Life Insurance

This is where I may lose your attention. Yes, life insurance is like an instant sleeping pill to most. However, in most jurisdictions, and certainly for Americans and Germans, private placement life insurance (PPLI) – personally tailored life insurance and annuity policies with underlying assets managed according to your personally specified investment strategy – afford one of the last bastions of solid offshore wealth management today. So, stay tuned!

In general, these solutions are based on or involve some kind of variable insurance policy. In the past, life insurance products were generally employed for the insurance of risks related to death or physical impairment. Today, affluent investors have discovered that a life insurance policy can serve other purposes as well. The multitude of advantages afforded to life insurance products in most jurisdictions around the world creates an incredible variety of financial planning opportunities.

Tax savings – or elimination

Most jurisdictions afford a tax-preferred status to contracts that qualify as life insurance policies. The different kinds of life insurance policies available are manifold, as are the ways in which different jurisdictions treat such policies. In general, one will find that annuity policies will enjoy income tax deferability. In other words, withdrawals, surrenders or annuity payments will be taxed in some way or another.

Life insurance policies, such as term policies, whole life policies or so-called universal life policies can eliminate taxation altogether, not only during the lifetime of the insured but after death as well. This is the case, for example, in the United States, Canada or the United Kingdom.

Protection from confiscation, frivolous lawsuits and creditors

Some jurisdictions, such as Switzerland and Liechtenstein, have laws that ensure the highest level of legal protection of the assets underlying the insurance policies issued by the local insurance carriers. For instance, Swiss law ensures that creditors cannot seize insurance policies, including annuities. Moreover, such policies cannot be included in a Swiss bankruptcy procedure.

Thus, the investor enjoys protection from foreign governments in the matter of bankruptcy as well. An American court may expressly order the seizure or the inclusion of a Swiss annuity account in a bankruptcy proceeding. However, provided that the account has been structured in the proper way, Swiss authorities will not seize it. That explains why many of our clients are doctors who want to shelter their "nest egg" from the dangers of a potential malpractice suit.

Privacy and Confidentiality

What ensures the confidentiality and privacy of such policies is, on the one hand, such secrecy laws as employed in the two aforementioned countries. On the other hand, life insurance contracts are private contracts that do not need to be registered with any government agencies. Being private contracts, they are portable without any restrictions. Moreover, since in many cases life insurance policies are exempt from income taxes, they are not reportable on an annual basis.

Global investment flexibility

As you will easily conceive, the features listed above create a powerful wealth preservation and asset protection device. However, the icing on the cake is added by the fact that a small selection of state-of-the-art solutions allows for an incredible level of investment flexibility.

You can select a professional asset manager to invest the funds for you. And, when properly structured, stocks, bonds, mutual funds, real estate and precious metals investments available around the world are at your disposal!

Similar to the structural capabilities known from foundations and trusts, the top of the line policies allow for inclusion of legal entities, even operational companies. They also allow for premiums in kind, which means that existing assets and property can be brought into the policies without prior liquidation.

Therefore, as an example, a client may choose to bring his private equity or real estate under the protection of a properly structured policy in order to shield its appreciation from tax consequences.


Last but not least, the safety of any such investment strategy is paramount. Particularly in view of today´s economic and systematic risks, you do not want to spend sleepless nights worrying about the soundness of the institutions you work with. We do recommend employing only the soundest companies in the most economically and politically stable jurisdictions. However, the structure of these solutions is such that even in a case of a custodian´s insolvency, your assets are segregated from the assets of the institution and therefore are not subject to any bankruptcy proceedings. In other words, even if the insurance company and banks you work with go belly up, your assets will not be affected.


In conclusion, without any doubt in my mind, PPLI solutions are among the best wealth preservation planning vehicles you will find today. As a caveat, however, as with any offshore planning endeavor, you need proper advice and guidance. Depending on your tax residency, the policies and parameters will differ.