A few months ago, a reader sent me a question: “What’s to stop a judge from forcing me to turn over my LLC?”
He was talking about a single member LLC. Single member LLCs have fewer protections from potential creditors and predatory attorneys.
I wrote more on the topic of turnover orders.
How can you avoid a judge forcing you to turnover your ownership interest in an LLC?
Easy…don’t own an LLC. Instead, be the beneficiary of an LLC.
The Nevis Multiform Foundation
Ok, you can’t be the beneficiary of an LLC. But you can be the beneficiary of an offshore foundation administered like an LLC.
Also, I’m not talking about a charitable foundation as is common in the USA. An offshore foundation is a different type of entity in other parts of the world.
These types of foundations don’t exist in the US.
What is an offshore foundation?
An offshore foundation is a hybrid entity. It is a mix between a company and a trust. Like a company it is a separate legal entity and administered with a management board. An offshore foundation does not have owners or shareholders. Instead, like a trust, an offshore foundation has beneficiaries.
What is a Nevis Multiform Foundation?
A Nevis Multiform Foundation is a unique type of offshore foundation. Like an offshore foundation it is a separate legal entity with beneficiaries. Also, the founder elects whether to run the multiform foundation like a company, LLC, or a trust. This makes the Nevis Multiform Foundation resemble entities found in the USA.
Other Nevis Multiform Foundation benefits include:
- can conduct an active business
- no recognition of foreign judgments for asset protection
- no taxes in Nevis
- privacy and also confidentiality from public records
- the founder (person who sets it up) can manage foundation, unless (or until) involved with a lawsuit
- a “supervisor” can step in to manage the foundation if the manager is involved in a lawsuit
- disregarded entity status available for pass-through IRS taxation
- finally, minimal offshore reporting requirements for single member LLC foundation
How is a Nevis Multiform Foundation a better single member LLC?
A Nevis LLC Foundation can help you if you worry a judge will make you give away your single member LLC interests. It can happen.
You, as the founder, do not own the LLC Foundation. Therefore, if you have no ownership interest, you have nothing to give away.
As a discretionary beneficiary of the LLC Foundation, you have increased asset protection. If a lawyer targets you for frivolous litigation, you could even be removed as a beneficiary until the lawsuit goes away.
Does your business or real estate portfolio rely upon the protection of a single member LLC?
Will a judge make you turn over your LLC interests to a creditor? If you rely on “charging order” protection for your single member LLC, you might not get them.
Maybe you will. Maybe you won’t.
That’s unfortunately how our legal system works.
So if you think a little more protection could help you worry a little less, please schedule a time for us to talk. You can schedule an initial call online at livemorecarefree.com.
Colin Ley is an asset protection attorney and the co-founder of LayRoots (along with with partner in life & business – Shreya Ley)
Let’s talk about your asset protection strategy: book a free initial consult