Establishing an LLC entity in an offshore jurisdiction gives another layer of asset protection. The Island of Nevis, in particular, has enacted favorable LLC laws. Most important, Nevis, like Florida, permits a single-member limited liability company, and Nevis law also establishes a charging lien as a creditor抯 exclusive remedy to attack a debtor抯 LLC ownership interest. A transfer of assets by a U.S. citizen to an offshore single-member LLC does not have any adverse tax consequences otherwise associated with transfer of assets to other offshore entities. To attack a Nevis LLC interest, the creditor has to apply in a Nevis court for issuance of the charging lien. It is unclear whether a Nevis court would even recognize a Florida judgment giving rise to a creditor抯 request for a charging order. Officials in Nevis have told me they know of no instance where a U.S. creditor has obtained a charging lien in Nevis to enforce a U.S. judgment. Under Nevis law, the manager of the LLC does not have to be a Nevis resident or a Nevis business organization. A Nevis LLC抯 manager may be the debtor/member himself or any other individual located either in the United States or a different foreign jurisdiction. A debtor serving as LLC manager has substantial control over the Nevis LLC and to physically maintain assets anywhere in the world. A Nevis LLC can own assets in the United States, Nevis, or anywhere else in the world. For example, a Nevis LLC may have a Florida bank account, or if appropriate, it may open an offshore account in Nevis or another popular banking center such as Switzerland. A debtor serving as manager of his own Nevis LLC maintains control over LLC assets, but he does not have the best asset protection. A Nevis LLC provides it optimal protection if the debtor appoints as either initial or successor manager an individual or company outside of the United States. No U.S court has jurisdiction over a foreign manager. The foreign manager will have control over all Nevis LLC assets. An effective LLC operating agreements provides that the foreign manager cannot be removed by the debtor/member. It is critical that the U.S. debtor be willing to trust a foreign LLC manager if an aggressive creditor threatens to attack a Nevis LLC. Some debtors have friends or relative live in foreign jurisdictions whom they appoint as successor managers. Other U.S. debtors must exercise their own due diligence to investigate and interview offshore companies that provide LLC manager services. There are many reputable companies, but each person needs to take the time to interview companies in which they may trust control over assets transferred to the Nevis LLC. You should not rely solely on referrals from your friends or your professional advisors is selecting an offshore manager for a Nevis LLC. A Nevis LLC may require filing of additional tax forms with the IRS. For example, a single member Nevis LLC must file IRS Form 8832 to be a "disregarded entity" although domestice LLCs are "disregarded for tax purposes by default. Although a Nevis LLC should have no effect on U.S. income tax, people should consult their CPA regarding the filing tax reporting forms after setting up a Nevis LLC. |
