The end of IBKR + VT: a cheaper, safer, less US-dependent alternative

[Mirager]

Isn’t “10 cases/year” sufficient testimonial that it can and does happen? Not sure what you’re asking, the laws are the laws, going under the radar is probably possible for a smalltime investor in CH, but many aren’t comfortable with that. I opened the article, didn’t register to read in full but even the title “the long arm of American taxes” is ominous enough to suggest it to be a reality.

In the end, as mentioned above, it’s your decision if the costs to you (not you personally, anyone opting for US ETFs + broker) now outweigh the potential pain of others, down the line.

I suspect most reasonable people who invest have made some provisions that their funds can be readily accessed by the right people after their timely or untimely demise. I certainly have! I’ve also seen families torn apart over inheritance, needing to sell assets to pay taxes because of bad inheritance planning, prime real estate abandoned to rot because heirs can’t agree on who owns which flowerpot (edit here’s one from my neighbourhood in Athens, we know from grapevine gossip that the heirs fell out >20 years ago and the property has been rotting ever since; a property half the size, and in similar poor condition across the street was on the market for 3mn EUR) - that’s destruction of family wealth in my opinion.

[San_Francisco]

@gaijin

Based on the articles of MP and the Poor Swiss I assume these two are planning to submit the IRS forms and have the assets be available within a reasonable time frame and not pay for a lawyer. If they saw a high probability of spending CHF 10k for a lawyer, they would probably include it in the total calculation of their choice for VT+IB.

I assume that, rather than planning for their untimely demise, both plan on staying alive, enjoying IBKR’s lower fees in the accumulation (and early retirement) phase - and then pivot later in live as their passing away becomes more and more probable.

In other words: They prefer not to think about death too much.

[gaijin]

@Mirager

Isn’t “10 cases/year” sufficient testimonial that it can and does happen?

No it’s not. My understanding of a testimonial is a report with some level of detail of the actual situation, giving me a chance to assess if I am in a similar situation as the person from the testimonial.

I don’t doubt that it can and that it does happen, like everything in life But I’m still unclear about the impact for a typical VT + chill investor (Swiss resident, with a total wealth between 60k and 11 Mio).
What is not clear from the 10 cases:

• What was their wealth? If you are above 11 Mio the situation becomes more complex, resulting in a higher need for a lawyer
• How much did they pay for the lawyer?
• Was it a simple task that they chose not to do themselves. Or did it involve more complex aspects that the average VT + chill investor would not be able to do her-/himself?

[leman]

@Strabor

Interactive Brokers forces investors to pay 40% U.S. inheritance tax

That was a fascinating read, thank you

@gaijin

I actually calculated with around CHF 350/hour for a lawyer. (Wrongly?) assuming that it would be an easy task

I can only confirm that good lawyers cost good money.

No idea about other cantons, but in Geneva, reputable firms with US tax knowledge will assign you a senior associate for Fr. 600/hour. May you reign forever, but if you die tomorrow, that might be a good solid 15k for your 115k portfolio. Looks like a sizeable cost, given the questionable nature of hypothetical excess returns.

That being said, the best lesson life taught me so far is that good lawyers (and good doctors) are worth every penny.

@gaijin

Based on the articles of MP and the Poor Swiss
If they saw a high probability of spending CHF 10k for a lawyer, they would probably include it in the total calculation of their choice for VT+IB.

Learning is a lifelong process. I remember MP’s blog articles being rewritten after comments or remarks from this community.

MP/TPS learned with us along the way, and are still learning. If the topic of US unreliability continues gaining traction in our society (which is likely, it’s in the news every day, including today) and in this forum, you will probably see blog articles on this matter sooner or later.

Guy Parmelin gives in to Washington without obtaining anything in return. The President of the Swiss Confederation commits to removing tariffs on American products, while punitive duties remain in place, sparking criticism in parliament.

@qwertzuiop

Seems a bit ridiculous how people are fighting each other tooth and nail about this topic here. The advantages and disadvantages are clear. You can feel comfortable with this one way or another, also depending on your individual situation, and both is perfectly fine.

I agree but it’s maybe in the nature of this community: disproportionate amounts of energy are put into saving small amounts of money, for example by comparing credit card and bank account setups to maybe save a couple hundreds per year. I believe MP spent time changing his bank and/or credit card setup (and writing about it) several times in recent years. Just look at the success of credit card cashback conversations.

Plus, it is a mostly English-speaking forum where many come from abroad, including from cultures where Mustachian carefulness about small amounts is more common than in Switzerland.

While MP&TPS may make Fr. 50 with each credit card referral, I assume that many blog readers [trying to save a couple hundreds on credit card fees] don’t have the amount of wealth that would justify bothering with the IRS and/or Lenz & Staehelin, but the conversation is interesting anyway.

[leman]

@DRPF

Having traded professionally through 2007/8 etc. There was always smoke before the fire.

Could you please elaborate? I feel that you have some highly interesting knowledge on this matter
https://www.investing.com/news/stock-market-news/why-is-flatexdegiro-stock-sliding-today-93CH-4762204

@Peppa

Now I just had a moment of smartness and solved the problem here:
We are all investing nerds here. Some, maybe most of us, would be able to deal with this kind of crap. But our spouse we do not know.
So lets just talk about it with her/him, I am pretty sure we will know what to do then.

You are right and this really is an important consideration. We also make all these efforts so that our loved ones stay safe. Death doesn’t care about 15 bps.

@Peppa

Back in my wild days in crypto I had a few Ks in Celsius Network, which went bankrupt. I never worried and it was ok, the amount was small and part of the casino allocation, but also not a few bucks, so i did the entire process to recover part of my fund- and when you get a legal document with 50 sides, you just ask yourself wtf you just read - summary: i learned a lot from it, but i would have gone crazy if the amount of money at stake was real.

Did you write about your experience somewhere? I would be interested in learning about it, if you don’t mind.

@Ardius

I am hesitating between WEBN and ALLW.

If you choose Amundi, as far as I know, the accumulating WEBN is not traded in CHF, while the distributing WEBG is - in case you want to simplify by removing the currency exchange matter (and fees). It is also more liquid.

@San_Francisco

I assume that, rather than planning for their untimely demise, both plan on staying alive, enjoying IBKR’s lower fees in the accumulation (and early retirement) phase - and then pivot later in live as their passing away becomes more and more probable.

In other words: They prefer not to think about death too much.

You, my lord, are the voice of reason. Thank you for a stark reminder.

@evertruelife

But if you do the transfer together with your spouse, 1 hour before dying, then it should not be illegal.

I am a good audience, I spat my coffee
Thanks for the laugh!

[nabalzbhf]

@Mirager

Isn’t “10 cases/year” sufficient testimonial that it can and does happen?

That seems low to me, I thought blue chip US stocks investment were fairly popular for the previous generations.

[afstand]

@Strabor

Yes, in the end it is your choice, your responsability and yours to carry any and all consequences, if any.

When I was summing up the arguments for choosing VT vs. UCITS, these were the main ones:

• My partner does not want to be involved. She’s all for cost reduction, but delegates it 100% to me. She has never looked at a brokerage screen and has no idea which lawyers would need to be consulted in the event of my sudden death. She also strongly does not want to do anything illegal to avoid the paperwork with the IRS.
• She would require very specialized tax consultants. From what I found, their fees start at around €5,000, but you cannot simply sign a contract with them just in case.
• Getting an estate tax closing letter (or estate release certificate) from the IRS may take unpredictably long time.
• I don’t want to monitor every piece of news coming from the US. The Big Beautiful Bill? Section 899? Something else? Has the estate tax treaty changed? The list goes on.
• I want simplicity, and I’m not a big fan of buying VT through option trades (the Swiss are spared only this issue).

Against all this: a few percent more capital later in life.
Edit: there is actually one other benefit of VT: SIPC protection if you hold it on IBKR, UCITS seems not to be covered by the SIPC

[gaijin]

@leman

you will probably see blog articles on this matter sooner or later.

MP/TPS both quote IB as the best broker. MP increased VT to 100% last year. Can you point me to any quote that would suggest that either MP or TPS are considering reducing their US exposure?

[leman]

I am under the impression that you consider TPS/MP blogs like having some form of expert authority, correct?

[nabalzbhf]

Btw Germany is exempt of this (iirc they don’t even need to file).

[Mirager]

This is me when IBKR/Trump/some other yank rugpulls “mustachians”

Dumb and Dumber - Lloyd’s laugh

Edit: of course incurring so many costs from “expensive” brokers means I will ride the same moped

[Brndete]

The whole thread from top to bottom reads like an adult investor’s version “who’s afraid of the Black Man?” with some arguing about the best broker sprinkled in

[Helix]

@DRPF

Having traded professionally through 2007/8 etc. There was always smoke before the fire.

Which means that you were not only lucky when your leveraged shorts made you a multimillionaire back then? What was the CAGR and Sharpe of your short strategy?

[mabi]

@gaijin

MP/TPS both quote IB as the best broker.

They both earn $$$ commission each time someone opens an account with IB though their referral link.

[leman]

I believe it is possible to only delete the messages that reveal too much about you. Can you please stay, or maybe come back with a new account? I am very much interested in what you have to say.

[gaijin]

@leman

I am under the impression that you consider TPS/MP blogs like having some form of expert authority, correct?

You mentioned that MP rewrote some blog articles based on input from this forum. I therefore assumed that you had some evidence that MP is reconsidering his love for US based brokers and ETFs.

As for your question, I wrote previously that I consider the articles of MP and TPS well researched and well written. To me as a non-expert, they are logically coherent and understandable. I feel comfortable applying many of their suggestions to my situation.

I’m very open to listen and trying to understand alternative investment perspectives. At this point I have not yet found similarly logical and trustworthy arguments that would make me move away from US investments products and brokers.

[San_Francisco]

@gaijin

As for your question, I wrote previously that I consider the articles of MP and TPS well researched and well written. To me as a non-expert, they are logically coherent and understandable.

Their cases for IBKR are sound in theory, as well as, arguably, practice.

They just, as their authors, lack the practical, hands-on experience of either having passed away themselves – or inheriting a large IBKR account from someone else and going through the paperwork.

I have little doubt that the paperwork will get messy and/or expensive in case of unexpected death. And cost thousands of CHF rather than hundreds.

Me personally, I remain unconcerned for the time being, since I believe that my potential heirs would contact someone from awell-renowned law firm in Switzerland, and any inheritance would be a “bonus” for them, not a financial necessity, because I’m completely debt-free and don’t have any dependent family or relatives. Also, I have only a part of my liquid net worth on IBKR.

[Yanikuza]

@gaijin

Thanks for putting the numbers straight. I actually calculated with around CHF 350/hour for a lawyer. (Wrongly?) assuming that it would be an easy task (filling out the IRS form mentioned by @Peppa does not seem to be such a work intensive task) a lawyer would maybe spend 5-7 hours on such a case of an average Swiss VT-and chill inheritance. As for the definition of average, I would take the situation of MP and the poor Swiss as average.

The rate of 350 CHF per hour is the one small canton like Fribourg or Neuchatel, if you live in that canton. In wealthier cantons like Geneva or Zurich, this rate can easily rise to 600–1,000 CHF per hour.

A tax attorney won’t simply fill out a form to send to the IRS. They’ll need to conduct legal research with their team, request documents from your surviving spouse, understand any potential issues that might arise with the IRS, seek advice from a U.S. attorney if necessary, and so on. These details can take time and resources, and they must also handle any unforeseen circumstances and emergencies. All of this means the final bill can quickly become very steep…

@ach

For a consensual divorce (but with kids, shared property, pension funds outside Switzerland and a few other quirks), we ended up paying 9k each (in 2021, Geneva)

Wow… According to my internship supervisor, a consensual divorce costs around 2,500 to 5,000 CHF in total (not per person…). I agree that some divorces—even consensual ones—can be more complex to handle than others. I don’t know your situation, but I think 9,000 CHF per spouse is an exorbitant price for an consensual divorce…

[ma0]

AIT Services GmbH, Rheinfelden, Switzerland

I wonder if it’s the same for non-expats and inheritance law..

Also again a doc about the IRC
https://www.wengervieli.ch/getattachment/cb7eb7c9-6a3a-4293-8d0a-6676110b059d/GUIDELINE_US-Estate-and-Gift-Taxes_2026.pdf.aspx

@Yanikuza

A tax attorney won’t simply fill out a form to send to the IRS.

AI says that can be true, but if you ask a firm specialized in US taxes they can ask for a flat fee. Which at the end is probably a 10 hour hourly fee or so.
“Counduct legal research” sounds like what they would tell you if they never worked with the IRS.

[leman]

That’s so interesting. Thank you for the many contributions, it starts looking like a no-brainer for me.

I compared two very similar funds and the difference is again negligible.

	US ETF	UCITS ETF
Name	iShares Core S&P 500 ETF	iShares S&P 500 Swap UCITS ETF USD Dist
Provider	Blackrock	Blackrock
Ticker	IVV	I50D
ISIN	US4642872000	IE000D3BWBR2
Index	S&P 500	S&P 500
Exchange	NYSE Arca	Euronext Amsterdam
Currency	USD	USD
Replication	Physical	Synthetic
Profit	Distributing	Distributing
Expense Ratio	0.03%	0.05%
1-Year Return	15.24%	15.10%
3-Year Annualised	18.65%	18.55%
5-Year Annualised	14.91%	14.85%
YTD Return (2026)	9.85%	9.75%

I look forward to seeing more volume pouring into ultra-low-cost UCITS funds from European providers