Some of my clients come into my office with tips and tricks they have learned themselves which they believe will protect assets. People think that they can protect cash simply by depositing the money in an offshore account; Swiss bank accounts are the most popular. As I have written previously, I have been told that it has become very difficult for individuals to open accounts at Swiss banks because of pressure applied by US antiterrorism and taxing agencies. Nevertheless, one of my clients this week explained that they had previously traveled to Switzerland, walked into a bank without appointment or introduction, and opened an account with a substantial cash deposit. I told them I was surprised they were able to open the account so easily. This is their explanation.
When my clients had researched procedure for Swiss accounts they learned that the US political pressure had been exerted against the larger, multinational Swiss banks. Smaller Swiss banks were unaffected, afraid, and were still very receptive to US customers. According to these clients, a US citizen can seek out a small Swiss bank and open a Swiss bank account “just like to old days.”
I do not favor Swiss accounts as an asset protection tool. Swiss accounts used to be secret. Today, IRS regulation requiring filing informational forms disclosing all foreign bank accounts with significant deposits, and the there are serious penalties for non-compliance. Also, a creditor will ask any debtor under oath to disclose all bank accounts. Maintaining secrecy of a Swiss account has serious risk. Offshore bank accounts, if disclosed, probably increases a creditor’s and judge’s suspicions of undisclosed assets.
It may be difficult for a US creditor to garnish a foreign account, but I think there are better asset protection tools to protect cash.