There is a liquidity strategy that the wealthiest families in Europe have used for generations, one that allows them to access capital without selling assets, without triggering taxable events, and without disrupting the protective structure that keeps their wealth safe from creditors.
It is called a Lombard credit facility, and it is one of the most powerful tools available through Swiss private banking, yet almost entirely absent from the U.S. wealth management conversation.
The concept is simple: borrow against your own portfolio instead of selling it. The execution, when structured correctly within a Cook Islands Trust and international LLC framework, is both sophisticated and remarkably efficient.
How the Lombard Facility Works
A Lombard loan is a credit facility extended by a private bank, secured by the assets held in the borrower’s account. Unlike a mortgage, which is secured by real property, or a margin loan, which is secured by publicly traded securities in a domestic brokerage, a Lombard facility at a Swiss private bank can be secured by a diversified portfolio that includes equities, fixed income, alternative investments, physical precious metals, and select digital assets.
The mechanics are straightforward. The client maintains a portfolio at the Swiss private bank, held in the name of the Cook Islands LLC. The bank extends a credit line, typically representing sixty to eighty percent of the portfolio’s eligible value. The client draws on that credit line when liquidity is needed — for a real estate acquisition, a business investment, a family obligation, or any other purpose — and repays it on a flexible schedule.
The cost of the facility is typically as low as two percent per annum on the drawn balance, reflecting the self-collateralized nature of the arrangement and the institutional relationship between the client and the bank.
Why This Outperforms Domestic Alternatives
The domestic alternatives to a Lombard facility are margin loans and home equity lines of credit. Each has meaningful disadvantages that the Lombard structure avoids.
Margin loans are subject to margin calls. If the securities securing the loan decline in value, the broker can demand immediate repayment or liquidate positions to cover the shortfall. This creates exactly the forced selling at depressed prices that sophisticated investors work to avoid. Swiss Lombard facilities are structured differently, with more conservative loan-to-value ratios and covenant structures designed to avoid forced liquidation.
Home equity lines are secured by real property and subject to U.S. lien enforcement. They are visible in public records, subject to domestic court orders, and provide no asset protection benefit.
Lombard lending against a Swiss portfolio combines competitive rates, flexible terms, no margin call risk under standard covenant structures, full privacy, and the maintenance of the underlying asset protection architecture. The assets remain in the Cook Islands LLC, owned by the trust, held at a Swiss institution that operates under FINMA regulation and Swiss law.
What Swiss Private Banks Can Hold
One of the most significant advantages of the Swiss private banking relationship is the breadth of assets that can be held directly in the client’s account, and therefore included in the Lombard collateral base.
Equities and fixed income are standard. Global equity portfolios, sovereign and corporate bonds, structured products, and investment funds are all held and managed directly.
Alternative investments including private equity, hedge fund interests, and real assets can be held and custodied depending on the specific institution and account structure.
Physical precious metals are a defining feature of Swiss private banking that has no meaningful domestic equivalent. Gold, silver, platinum, and palladium can be held in allocated form in Swiss vaults, meaning the client owns specific, identified bars or coins rather than a paper claim on a pool of metal. This is direct ownership, fully segregated from the bank’s balance sheet, held in one of the most stable and secure jurisdictions in the world. It can serve as Lombard collateral, enhancing the client’s liquidity options without requiring sale.
Select digital assets including Bitcoin and Ethereum are now available through qualified custodial platforms at a number of Swiss private banks, held directly in the client’s name with institutional-grade security. This is not an ETF or a futures contract. It is direct ownership of the underlying asset, held within the protective structure of the Cook Islands LLC, custodied by a regulated Swiss institution.
The combination of these asset classes within a single account, managed by a sophisticated private bank and secured within an offshore trust structure, creates a level of portfolio flexibility, protection, and liquidity access that domestic wealth management simply cannot replicate.
The Tax Efficiency of Borrowing
Every time a U.S. investor sells an appreciated asset, they create a taxable event. Long-term capital gains rates, which range from fifteen to twenty percent at the federal level plus applicable state taxes and the net investment income surtax under IRC Section 1411, can consume a meaningful portion of every realized gain.
The Lombard facility eliminates this friction entirely. A borrowing is not a sale. Drawing on a credit line secured by appreciated assets does not trigger capital gains recognition. The assets continue to compound. The unrealized gains continue to grow. The client has liquidity without the tax cost of realization.
For clients with highly appreciated positions, whether a concentrated stock holding, a long-held real estate interest, or a portfolio of precious metals accumulated over decades, this distinction is not marginal. It is transformative.
The interest paid on the Lombard facility is a cost of the arrangement, and depending on the use of proceeds, may or may not be deductible under applicable U.S. tax rules. Your tax counsel should advise on deductibility in your specific circumstances.
How This Integrates With the Cook Islands Trust Structure
The Lombard facility does not exist in isolation. It is an integrated feature of a complete structure.
The Cook Islands Trust owns the holding LLC. The LLC holds the Swiss bank account and all assets within it. The client serves as the LLC manager, directing investments and draws on the Lombard facility. The trustee holds legal title to the trust, subject to Cook Islands law.
When the client draws on the Lombard facility, the proceeds flow to the client’s personal account for deployment. The collateral remains in the LLC’s Swiss account, within the protective architecture of the trust. A U.S. creditor with a judgment against the client cannot reach the Swiss account, cannot compel the trustee to liquidate positions, and cannot intercept the loan proceeds without a separate domestic claim on assets that have already left the protected structure.
This is the practical meaning of integrated planning: every component of the structure reinforces every other component, and the whole provides protections that no single element could achieve alone.
Who Benefits Most
The Lombard facility is particularly valuable for three categories of clients.
Business owners approaching or following a sale. Proceeds from a business sale are at maximum exposure the moment they arrive in a domestic account. Moving them into the Cook Islands LLC structure and accessing liquidity through a Lombard facility rather than direct distribution keeps the protective architecture intact.
Investors with concentrated or highly appreciated positions. Rather than selling to diversify or generate liquidity, a Lombard facility allows access to capital while maintaining the position and deferring the tax event indefinitely.
Clients who hold physical precious metals or digital assets. These asset classes, often held outside traditional financial accounts, can be brought within the protective structure and contribute to the Lombard collateral base, turning non-yielding assets into productive components of a liquidity strategy.
A Confidential Conversation Costs Nothing
If you have accumulated significant wealth and you are currently accessing liquidity through asset sales, margin borrowing, or domestic credit facilities, there is a more efficient structure worth understanding.
Bespoke Wealth Solutions works with a limited number of clients each year. Every engagement is handled personally by Peter A. Ryan, J.D., a Dallas attorney with direct relationships with the most credentialed Cook Islands trustees and Swiss wealth management partners available to American clients.
To request a confidential consultation, contact Bespoke Wealth Solutions here.
This article is provided for informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. Consult qualified legal counsel before implementing any planning strategy.