The Nevis LLC

The LLC is a fantastic legal tool for integrating assets and businesses into a full estate and asset protection plan.  It is a relative newcomer to the legal scene and for a full discussion of the history and benefits of the LLC, I encourage you to see the post: Understanding the Asset Protection Benefits of the LLC.  This article is specific to taking a look at one of the newest and most aggressive LLC jurisdictions in the world – Nevis.

Where is Nevis?

Nevis is a small Caribbean Islands which is part of Nevis-St. Kitts.  It was one of the first countries to follow the Cook Islands in enacting strong asset protection statutes allowing for an Asset Protection Trust.  Building on the strength of their Trust Act, Nevis also enacted an LLC statute in 1995, and amended it again in 2015 to make it even stronger.  Nevis has worked hard to become one of the top international asset protection jurisdictions and continues to show commitment to asset protection.

The Nevis LLC

Like the traditional LLC, a Nevis LLC is a pass-through tax entity, which is basically treated just like a normal U.S. based LLC for tax purposes.  However, when it comes to asset protection, Nevis has really stepped it up.  Some of the benefits of a Nevis LLC are:

1. The Charging Order is the exclusive remedy against a member of an LLC in Nevis – By Statute!
2. If a judgement is recognized against a member of a Nevis LLC (not an easy task itself), then a Charging Order can be applied for once, and is good for 3 years.  After that it expires and is non-renewable.
3. Under Nevis law the transfer of assets into an LLC for receipt of the membership interest is by definition NOT a fraudulent conveyance.
4. A Nevis single member LLC has all the protections of a multi-member LLC.
5. A plaintiff attempting to sue an LLC must post a $100,000 (EC Dollars which is about $37,000 U.S.) bond prior to starting the action.
6. The prevailing party in the lawsuit is entitled to legal fees of from the loser.
7. You may appoint a Protector in a Nevis LLC and utilize strong spendthrift and anti-alienation clauses.
8. Managers and Directors of a Nevis LLC are immune from company liability.
9. Members and Managers of the LLC are private and are not published or listed anywhere.
10. There is no local tax imposed and no annual financial reporting requirements in Nevis.
11. The LLC may be owned by an individual, corporation or your Bridge Trust®.

Basically, its all the benefits of the best U.S. jurisdictions combined, with the added advantage that Nevis is an offshore asset protection jurisdiction which makes it very difficult for an assailant to successful win a judgement.

When to use a Nevis LLC

As with any offshore planning, its important to differentiate the tool from the strategy.  The Nevis LLC is an excellent tool; however, it’s not always appropriate, or even beneficial.  There are two situation when using a Nevis LLC is of particularly high value:

1. As an investment vehicle for a U.S. based Qualified Retirement Plan.  Since qualified plans have varying degrees of protection, if you have assets in a plan, like an IRA, which is not clearly protected, then investing those assets first into a Nevis LLC would have the effect of significantly increasing the protection.  The LLC could then also open an offfshore account for even more protection, making a traditional IRA into a solidly protected entity while keeping all the tax-deferral benefits.  For a more detailed discussion of this Click Here.
2. When the assets being held by the LLC are themselves easy to locate offshore, or are already receiving benefits of Internationalization.  An example of this would be an intellectual property  portfolio which is being licensed both within the U.S. as well as in foreign jurisdictions.

When not to use a Nevis LLC

One of the primary uses for the LLC in asset protection is to hold real estate.  If this is the goal, and your real estate is located inside of the U.S., then adding the additional expense of a Nevis LLC does not really increase your protection.  Since real estate is non-movable, having an offshore entity directly owning U.S. based real estate doesn’t guarantee access to the benefits of the Nevis LLC law.

A better strategy is for your U.S. real estate to be owned by a U.S. LLC and in turn to have that LLC connected to your full asset protection plan, including your Bridge Trust®.

Summary

The use of a Nevis LLC should be strategic and work well with a full asset protection structure.  It is very important to focus on strategy first, and tools second.  The biggest mistake I see people make is to get excited about the benefits of a particular tool, like the Nevis LLC, and try to implement it without a full plan.  You will save time and money, as well as better achieve your goals by focusing on the results.  The best way I know of to do this is to consult an asset protection attorney who can use their experience in applying it to your unique situation to design a customized plan for achieving your particular goals.