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What's All the Buzz about Swiss Trust Companies?

Updated on November 18, 2010

Switzerland as a Financial Center

Switzerland is consistently ranked as having one of the most competitive economies in the world. This tiny landlocked country with a population of less than 8 million has been successfully competing in favor of Direct Foreign Investment for seemingly countless years. With a long standing history of neutrality – it has not been in a state of war since 1815 – an iconic banking infrastructure has been developed. Even through the recent global economic crisis not one Swiss bank approached failure. There can be little doubt that the stability of the Swiss banking system and its financial institutions have contributed mightily to this country’s success. Controversies aside, the Swiss have become the world’s banker with a standing estimate that one third of all current wealth resides here.

Swiss Trust Companies Defined

In a major financial center like Switzerland quality corporate structures that provide business owners and investors appropriate benefits and protection are a necessity. For the last 15 years, none have gained more popularity than the celebrated Swiss Trust Company. It may also be said that no other business entity is more misunderstood.

A Swiss Trust Company is not a bank or an asset protection trust but a privileged corporate entity with exceptional capabilities. Owning a Swiss Trust Company offers the opportunity to open new avenues of profit with a European beachhead, protect sensitive business dealings from competitors by enhancing privacy or provide both corporate and personal asset protection for ownership from frivolous lawsuits. In today's world, successful entrepreneurs frequently find that their business and personal interests are intertwined. The current turbulent economic times often see these individuals looking to Switzerland not for tax reasons, but to secure a nest egg far away from contemporary fiscal struggles and political uncertainty. Further, the litigation explosion in the United States has forced professionals and small business owners to focus on strategies to protect their accumulated assets. Asset protection is of vital importance since there is simply no greater threat to wealth. Therefore, a properly structured Swiss Trust Company with the assistance of an accomplished administrative firm has become the vehicle of choice to implement the 3 P strategies – Profit, Privacy and Protection.

Sample Authorities of a Swiss Trust Company

A Swiss Trust Company is working corporate entity and unlike an asset protection trust; it is able to offer a broad range of financial services to its shareholders, related subsidiaries and clients. This may also result in it being an effective alternative to captive bank ownership because it is much less expensive and time consuming.

The following business activities are authorized:

• The power to loan money.

• The power to open any bank accounts, including trust and escrow accounts in any bank domiciled in the United States and/ or any bank domiciled in any international location.

• The power to offer and service a complete range of world wide fiduciary services.

• The power to participate in life insurance fixed or variable annuity or life settlement policy, credit insurance.

• The power to acquire, develop, hold, sell, trade, exchange, dispose, mortgage of real property, precious metals, natural resources.

• It may engage in the general leasing business, franchising, money funds, mutual funds, formation of general limited partnerships, real estate investment trust.

• Acts as a holding company for banks, savings and loans, insurance companies small business investments corporations and stock brokerage firms.

• The Power of Trustee

• The Power to Act as Investment Advisor

• The Power to Sell Annuities

Drawbacks

One major drawback to acquiring ownership of a Trust Company in Switzerland is expense. The cost range of Swiss Trust Companies is $55,000 to $250,000. This required initial investment outlay varies according the age of the structure. As a rule of thumb, the older Trust Companies are more appropriate for business owners who wish to make it a working Non-Banking Financial entity. The age assists with establishing corresponding banking relationships, going public with an IPO or acquiring a SWIFT membership. In all of these cases the older the better. If the individual, however, is looking to benefit from owning a Swiss Trust Company solely for asset protection a younger company would be more appropriate and thus require a smaller investment.

Conclusion

Switzerland is universally recognized as a premier financial center. A number of factors contribute to this relatively small nation’s ability to compete on the global scale:

• Social peace and political stability

• A leading economy with currency and price stability

• Highly professional international banks that focus on privacy

• First-rate infrastructure

• High productivity combined with high product and service quality

• First-class and world-renowned universities and technical institutes

Should the strategy of owning a Swiss Trust Company be intriguing to you and a possible fit to your needs, the use of good business sense will go a long way. Implementation of a captive strategy is not the place to attempt to do something on the cheap. If you take ownership of a Trust Company that is too young or incorrectly registered the tactic will not work and will be a waste of money. This is one area where the experience really does pay dividends.

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