May 3, 2017:
Over the recent years, Nevis has added barriers to those creditors who seek to seize assets from targeted debtors. For starters, in order for a creditor to lay claim to assets in a Nevis LLC, the creditor must prove beyond a reasonable doubt (a very tough hurdle to overcome in a Nevis court) that the debtor, at the time he transferred the assets to the Nevis LLC, (1) intended to defraud that creditor and (2) was rendered insolvent by the transfer to the LLC, considering all of his assets including the full fair market value of the LLC interest.
In addition, before a creditor can pursue the LLC assets, the creditor must post a significant bond. Also, if a creditor does succeed in getting a charging order against a Nevis LLC, the order expires in 3 years and cannot be renewed. This eliminates the concern that a creditor can stalemate a debtor by forever locking up funds in the LLC, which would never be accessible to the debtor without first being subject to the creditor’s claim.
The charging order remedy is the sole remedy that a creditor can seek, whether the LLC has only one owner or multiple owners.
The Nevis laws do not stop there. Nevis law also forbids any fines, penalties or punitive damages that could otherwise be assessed in these actions. Lastly, there is only a two-year period in which a creditor can challenge such transfers (as opposed to the later of the (i) four years or (ii) six months after discovery, rules that exist in jurisdictions in the U.S.).
The above demonstrates how Nevis has been very proactive in enhancing available tools to ensure safety of assets you hold dear. As a bonus, the LLC is much like U.S. LLCs in that they can allow the taxable income earned in the LLC to flow through to you. This way, there is no added taxable event at the LLC level. Instead, the income retains any preferential tax treatment that is available due to the income being comprised of capital gains and dividends that pass through to you and are reported directly only on your personal tax return.
By: Edward D. Brown, Esq., LLM. CPA