When it comes to protecting your assets, there’s no shortage of available options. However, some are better than others, and the specific vehicle that’s right for you will depend on various circumstances, including the level of asset protection you’re looking for, your privacy needs, tax considerations, formation costs, and reporting requirements.
For many savvy investors and attorneys, a Nevis LLC is a popular choice. If you’re unfamiliar with what a Nevis LLC is, it’s a limited liability company formed on the island of Nevis, which is in the Caribbean. Keep reading to learn about the benefits of a Nevis LLC and when it could be beneficial to establish one.
Increased Difficulty for Creditors to Seize Assets
By definition, an LLC (limited liability company) is its own separate legal entity. The effect of this is to legally separate its identity and assets from the owners, which may be referred to as members or managers depending on the type of LLC.
Assuming an LLC is established correctly, it will provide limited liability protection to its members. In other words, the LLC creates a protective barrier between personal assets that can be challenging for a creditor to breach.
If a creditor does happen to obtain a judgment against an LLC member, they can’t directly seize the assets like they could from an individual without this layer of protection. Instead, they must first obtain a charging order to receive the member’s share of distributions from the LLC.
This is where one of the key benefits of a Nevis LLC comes into play. The court system in Nevis does not recognize a charging order that’s been issued by foreign courts, including those in the United States. This means that any creditors looking to seize your assets must file a separate action in Nevis. To date, no creditor has been successful in obtaining such an order.
Lawsuit Bond Requirements
Further, if a creditor wants to attach an asset, there is a current lawsuit bond requirement of $100,000. This amount is designed to ensure that the plaintiff creditor can pay the legal costs if they lose the case.
While $100,000 is the minimum threshold for a lawsuit bond, Nevis courts are free to increase this amount at their discretion, making it risky and somewhat more difficult for creditors to attempt to reach into a Nevis LLC. Added to this hurdle is that Nevis requires the plaintiff to prove beyond a reasonable doubt, and not merely by a preponderance of the evidence, that the member or manager conveyed assets into an LLC to thwart creditors’ attempts to collect.
Privacy and Confidentiality of Nevis LLC Ownership
One of the most significant advantages of an LLC is privacy protection. The reason is that the government of Nevis will not share the names of the members and managers of the LLC in public records. This non-disclosure of ownership serves to shield owner identities and protects your assets.
Because many high-net-worth individuals are vulnerable to lawsuits, scams, and prying eyes, being able to maintain assets privately in a Nevis LLC can provide peace of mind.
Enhanced Protection for Vulnerable Retirement Accounts
Traditional retirement accounts, including 401(k)s and IRAs, may have a certain degree of legal protection, but they’re also vulnerable to several risks, including the following:
- Creditor claims: Retirement accounts may be vulnerable to creditor claims, especially in bankruptcy
- Divorce settlements: Depending on the state in which you live, retirement assets may be divided upon divorce.
- Market volatility: Traditional retirement accounts can be adversely affected by a bear market and other market risks.
Because of the limited safeguards available in these types of traditional plans, a Nevis LLC may be a preferred choice because of the potential for a heightened degree of security. Notably, a Nevis LLC can shield retirement assets from creditors and lawsuits.
Further, the inherent structure of an LLC provides investors with better management and control over their own assets, allowing them to make investment decisions and enjoy a greater degree of flexibility.
Nevis LLC as an Investment Vehicle
Choosing a Nevis LLC, as opposed to an LLC in the United States or another offshore LLC, can provide unique investment advantages.
Most notably, investors have been flocking to Nevis LLCs because the island’s robust asset protection laws and its reputation for having a financial hub with a stable legal system can encourage the pursuit of a variety of international investments and transactions that might not otherwise be available.
For example, cross-border ventures in real estate, intellectual property, specific business interests, bank accounts, and more non-conventional asset classes can allow one to take advantage of investment opportunities that might not otherwise be available. Opening an investment account in the LLC’s name creates a tax-compliant and asset-protected structure for holding stocks, bonds, and other passive assets.
Individual investors can use Nevis LLCs to hold diversified portfolios of stocks, bonds, and other investments. But Nevis LLCs also act as smart investment vehicles for groups of investors who want to open a joint venture investment. These vehicles can act as Limited Partnerships but provide additional liability protection.
In addition to having the potential to invest in additional asset classes and advanced diversification strategies, a Nevis LLC can also provide for increased flexibility in managing savings. Because of the high levels of privacy and confidentiality, ownership information is private, meaning neither the names of the members are disclosed, nor the assets held. This may provide additional freedom to do with one’s savings as one wishes.
Those considering a Nevis LLC will also appreciate that Nevis’s status as a tax-neutral jurisdiction for non-residents equates to no income taxes, capital gains taxes, or estate taxes on any investments held by the LLC. This, in turn, can result in being able to retain more of the income generated by the assets in the LLC.
Control of Assets Under Trust With a Nevis LLC
One of the most compelling benefits of a trust is the separation of ownership and control that comes with it. As a reminder, with a trust the trustee has legal title to the assets, and the beneficiary holds equitable title. According to how the terms of the trust are outlined, this typically means the trustee has control over the assets but is separate from the person who receives the benefit of ownership.
From a legal standpoint, this can protect the beneficiary owner from having the asset seized by creditors or to satisfy lawsuits or other debts. The protection provided by a trust can be incredibly robust, but that’s merely the tip of the iceberg. Having a higher degree of control over how the assets are managed is also possible by incorporating a trust with a Nevis LLC.
Essentially, having assets under trust with a Nevis LLC allows the trustee to exercise a strong degree of control of the assets, which can be beneficial if the trustee is also the settlor (the person who creates the trust). In situations like these, the settlor may establish himself as the trustee or appoint a trustee with specific instructions on how to control and distribute the assets in the trust.
Enhanced flexibility in trust management is a distinct advantage because trustees can appoint professional managers or investment advisors to oversee the trust assets. This degree of specialization can ensure that assets are managed in line with the goals of the trust as well as the beneficiaries’ and membership interests.
Business Ownership and Asset Protection With a Nevis LLC
A Nevis LLC can benefit individuals as well as business entities. For business owners interested in shielding business assets from creditors and lawsuits, an LLC in this region of the world may be a top choice.
As a business owner, one can take advantage of Nevis’s strong asset protection laws and place a variety of assets into a Nevis LLC, including:
- Cash
- Stocks
- Bonds
- Real estate
- Intellectual property rights
- Precious metals
- Investment portfolios
- Cryptocurrency
Again, the high level of privacy and confidentiality is desirable because it allows business owners to remain anonymous. This not only shields businesses from the prying eyes of creditors, but it can also shield sensitive information from competitors or the critical public eye.
Another compelling advantage of forming a Nevis LLC as a business owner is that it provides added operational flexibility. For example, the LLC may be able to engage in transactions that might not be possible locally, including participating in certain commercial activities, being able to hold limited investments, or engaging in international trade. As a Nevis LLC, the business may be protected from the laws of other jurisdictions and be able to adapt to changing market conditions and regulatory environments.
There are, of course, the significant tax advantages that come with offshore LLCs, particularly a Nevis LLC. As a tax-neutral jurisdiction, Nevis LLCs may be able to avoid paying income taxes, capital gains taxes, and estate taxes on some or all of the assets in the LLC. There is also the potential to avoid taxation on non-Nevis-based assets.
As income grows from the assets owned by the LLC, both members and managers can continue to reap the benefits of this appreciation.
Consult an Experienced Asset Protection Attorney
A Nevis LLC comes with a long list of compelling advantages, including robust asset protection, enhanced privacy, and speed of formation. Thanks to the stable political environment and business-friendly climate, capital is flowing freely to this island. While there are several offshore LLC options to consider, a Nevis LLC continues to be a popular choice.
To discuss which option is most appropriate for your financial objectives, contact Blake Harris Law.
