          
          
          
                            OFFSHORE ANNUITIES
          
               A better way to get international diversification
          with less-complicated tax consequences could be an
          annuity from an offshore insurance company.  We are not
          talking about fly-by-night, shell companies that might
          take your money and disappear (though there are many of
          those available if you are interested).  We are talking
          about annuities sold by Swiss insurers who have been in
          business for many years.
               Unlike many of their U.S. counterparts, offshore
          insurance companies are financially sound.  In 130
          years not a single Swiss insurance company has failed,
          which is a claim that the United States cannot make. 
          So safety definitely is available in offshore insurance
          policies.
               Offshore annuities (and whole life insurance) have
          essentially the same advantages of their U.S.
          counterparts.  You get tax-deferred compounding of
          income until withdrawals from the policy begin.  The
          annuity payments are taxed the same as payments from a
          U.S. annuity policy.  Just be sure that the insurance
          company selling the annuity has an opinion letter from
          a U.S. tax lawyer stating that the annuity meets the
          tax-deferral requirements of U.S. tax law.  If the
          company is not willing to provide an opinion letter or
          does not have one, it probably has little experience
          working with Americans and you will want to find
          another insurance company.
               Annuities also offer offshore tax advantages. 
          Switzerland, for example, encourages the purchase of
          annuities.  A nonresident will not pay income taxes,
          capital gains, or inheritance taxes on the annuity.  In
          addition, insurance contracts are exempt from the 35%
          Swiss withholding tax on interest payments.
               Offshore annuities offer some non-tax advantages
          as well:
               International diversification.  Some will let you
          select the currency in which the annuity is
          denominated; others, however, offer only one currency,
          so you gain or lose depending on currency swings.
               Privacy.  True annuities are not be reportable as
          foreign bank accounts on your tax return.
               Protection from legal judgments.  U.S. creditors
          will find it difficult or impossible to first locate
          your annuity and then try to collect against it. 
          Again, ask for a legal opinion.
               Some advisers say that the offshore annuity offers
          little asset protection.  When a creditor asks for a
          list of your assets, you must list the annuity or you
          will be guilty of perjury.  Though the U.S. court
          system doesn't have jurisdiction to seize the annuity
          or order the insurer to transfer the assets to a
          creditor, some lawyers say that the court could order
          you to liquidate the annuity and give the assets to
          your creditors.  The likelihood of this will vary from
          state to state and from contract to contract.  A few
          states fully protect annuities from creditors; others
          give annuities little or no special protection.  Swiss
          annuities have covered this by protecting annuities
          when an irrevocable beneficiary has been named, so no
          U.S. court order can have any effect, and you cannot be
          ordered to repatriate the annuity. 
               High returns.  Returns vary between policies, of
          course, and you should compare several of them.  But
          you should be able to get an offshore annuity that
          credits your account with income based on market
          returns.
               The main problem with the offshore annuity will be
          the currency risk.  If you are planning to retire in
          the country in which you bought the annuity, that
          probably is not a problem.  Otherwise you might want to
          hedge the currency risk with an offsetting investment
          in a U.S. annuity, for example.
               Until recently many Swiss annuities were not a
          particularly good deal, with some high initial charges. 
          That is no longer the case, and there are now some
          superb products available to American investors.  
               A new Swiss annuity product (first offered in
          1991), Swiss Plus, brings together the benefits of
          Swiss bank accounts and Swiss deferred annuities,
          without the drawbacks -- presenting the best Swiss
          investment advantages for American investors.
               Swiss Plus, is a convertible annuity account,
          offered only by Elvia Life of Geneva.  Elvia Life is a
          $2 billion strong company, serving 220,000 clients, of
          which 57% are living in Switzerland and 43% abroad. 
          The account can be denominated in the Swiss franc, the
          U.S. dollar, the German mark, or the ECU, and the
          investor can switch at any time from one to another.  
          Or an investor can diversify the account by investing
          in more than one currency, and still change the
          currency at any time during the accumulation period --
          up until beginning to receive income or withdrawing the
          capital. 
               Swiss Plus offers instant liquidity, a rarity in
          annuities.  All capital, plus all accumulated interest
          and dividends, can be freely accessible after the first
          year.  During the first year 100% of the principal is
          freely accessible, less a SFr 500 fee, and loss of the
          interest.  So if all funds are needed quickly, either
          for an emergency or for another investment, there is no
          "lock-in" period as there is with most American
          annuities.
               Although called an annuity, Swiss Plus acts more
          like a savings account than a deferred annuity.  But it
          is operated under an insurance company's umbrella, so
          that it conforms to the IRS' definition of an annuity,
          and as such, compounds tax-free.
               Swiss Plus accounts earn approximately the same
          return as long-term government bonds in the same
          currency the account is denominated in (European Union
          bonds in the case of the ECU), less a half-percent
          management fee.
               According to Swiss law, insurance policies --
          including annuity contracts -- cannot be seized by
          creditors.  They also cannot be included in a Swiss
          bankruptcy procedure.  Even if an American court
          expressly orders the seizure of a Swiss annuity account
          or its inclusion in a bankruptcy estate, the account
          will not be seized by Swiss authorities, provided that
          it has been structured the right way.
               There are two requirements: A U. S. resident who
          buys a life insurance policy from a Swiss insurance
          company must designate his or her spouse or
          descendants, or a third party (if done so irrevocably)
          as beneficiaries.  Also, to avoid suspicion of making a
          fraudulent conveyance to avoid a specific judgment,
          under Swiss law, the person must have purchased the
          policy or designated the beneficiaries not less than
          six months before any bankruptcy decree or collection
          process.
               Some Swiss insurance companies do have major U.S.
          investments, so there is some possibility of the U.S.
          government attempting to freeze those assets to enforce
          a judgment, just as has occasionally happened with
          Swiss bank assets in the U.S.  But the insurance
          companies do not operate branches in the U.S., while
          the Swiss banks whose assets were seized did have
          branches here.  This would not usually be a concern to
          the ordinary policyholder, but if you are stashing a
          couple of million in allegedly stolen assets (or
          insider trading profits) it might be a problem.
               JML Swiss Investment Counsellors is an independent
          group of financial advisors.  Since 1974 they have
          specialized in Swiss franc insurance, gold and selected
          Swiss bank managed investments for overseas and
          European clients.  To date the group is servicing
          nearly 16,000 clients worldwide with investments
          through JML of more than 1 billion Swiss francs.  Their
          services are free of charge to you because they are
          paid by the renowned companies with which you invest
          your money.  Their commissions and fees are standard,
          and all transactions are subject to strict regulation
          by the Swiss authorities.  All of their staff are
          fluent in English, and understand the special concerns
          of the international investor.  They know about all the
          many little details that are critical to you as a non-
          Swiss investor, and have answers to your tax questions
          and other legalities.  Contact:
               Jurg Lattmann 
               JML Swiss Investment Counsellors
               Germaniastrasse 55, Dept. 212
               8033 Zurich, Switzerland
          
               telephone (41-1) 363-2510 
               fax: (41-1) 361-4074, attn: Dept. 212.
          
          
          
          
