Continued Fallout from UBS

The UBS scandal may have had a more profound impact on asset protection planning than previously suspected.

While no one was surprised that UBS caved to the IRS summons, few expected that other Swiss banks will significantly change their business operations. They have.

We are getting information from many of our Swiss banking contacts that they are, or soon will be, revising their practices on working with U.S. clients. Some banks have indicated that they simply no longer want accounts with U.S. beneficial owners, while others indicated that if there is a U.S. beneficial owner on the account, the account must be held in the name of the owner.

This means that trusts and LLCs can no longer be used to own accounts at these banks. From an asset protection standpoint, we cannot have a Swiss account owned by our client directly. To achieve asset protection, the account must be in the name of an LLC or a trust. We are now re-examining our banking relationships in Switzerland.

This is a typical case of overreacting and should reverse itself in due course. For now, talk to your Swiss banker to find out what kind of information they will require from you, and if there is talk of introducing any changes in the near future. The majority of Swiss private banks are retaining their traditional practices and will be happy to set up accounts for offshore trusts and LLCs with U.S. beneficial owners.