Nevis LLC Asset Protection Setup and Benefits

What Is a Nevis LLC?

A Nevis LLC is an offshore limited liability company formed under the laws of Nevis, a Caribbean island known for strong asset protection. U.S. residents commonly use Nevis LLCs to protect assets from creditors. Nevis law limits creditor remedies to a charging lien against a debtor’s membership interest, which expires after three years and cannot be renewed.

Charging Orders Against a Nevis LLC

U.S. courts can issue charging orders against LLC interests, but Nevis courts do not recognize these foreign judgments. Creditors must apply for a new charging order in Nevis—a process that is rarely successful.

Some U.S. courts have ruled that a creditor can foreclose a debtor’s membership interest if the LLC interest is considered intangible personal property located in the U.S. However, other courts have held that enforcement must happen where the LLC is registered. This conflict underscores the importance of using properly structured Nevis LLCs for asset protection.

For example, in 2015, one Florida court held that a creditor could foreclose a debtor’s interest in a single-member Nevis LLC through Florida court proceedings. The court held that LLC interests are intangible personal property subject to the jurisdiction of courts where the debtor resides and holds their LLC interest, in this case, Florida.

Because of this, I now recommend combining a Nevis LLC with an offshore trust for enhanced protection. The offshore trust structure removes legal ownership from the debtor and creates an additional layer of defense that makes it more difficult for creditors to reach protected assets.

Advantages of Setting Up a Nevis LLC

Nevis LLCs provide some of the strongest asset protection available anywhere in the world. A Nevis LLC shields assets from creditors by limiting their remedy to a charging order, which is difficult and expensive to obtain in Nevis courts. In addition to asset protection, a Nevis LLC offers a high degree of privacy. Member and manager identities are protected under Nevis law and do not need to be publicly disclosed.

Setting up a Nevis LLC is relatively fast, often taking only a few weeks. Once formed, non-resident owners benefit from favorable tax treatment because Nevis does not impose local income, capital gains, or corporate taxes on foreign-owned LLCs. Nevis LLCs are also flexible to manage, allowing the manager and members to reside anywhere in the world without needing to be physically present in Nevis.

Drawbacks of Using a Nevis LLC

Despite their benefits, Nevis LLCs are not the right solution for every situation. Forming and maintaining a Nevis LLC costs more than setting up a typical domestic LLC. Annual registered agent fees, government renewal fees, and compliance costs must be considered.

U.S. owners must also be diligent about meeting IRS reporting requirements. Offshore LLC ownership often requires filing IRS Forms 5471, 8938, or other disclosures depending on the entity’s classification and financial activity. Failure to comply can result in significant penalties.

Another limitation is that Nevis LLCs are primarily designed for asset protection rather than for operating a business. If you plan to use the LLC for ongoing business activity, other jurisdictions might be more appropriate. Offshore structures may also attract greater scrutiny from banks, creditors, and courts. Finally, proper formation and maintenance require the help of attorneys experienced in offshore law, which adds another layer of cost and complexity.

How a Nevis LLC Protects Assets

A Nevis LLC protects assets by making it extremely difficult for creditors to reach ownership interests. Unlike a U.S. LLC interest, which courts can sometimes foreclose or force a turnover of, a Nevis LLC interest can only be encumbered by a charging order issued by a Nevis court. Obtaining a Nevis charging order requires the creditor to post a cost bond with no maximum limit and to pursue a case under Nevis law.

Even if a creditor obtains a charging order, Nevis law offers additional protections. Other members of the LLC have the right to redeem the charged membership interest. Capital calls can be used to offset distributions to the creditor, and Nevis imposes a high burden of proof—beyond a reasonable doubt—for fraudulent transfer claims. Additionally, fraudulent transfer claims must be brought within a strict two-year limitation period.

Debtors can further enhance protection by issuing certificated interests for a single-member Nevis LLC. This means ownership is tied to a physical certificate, making the interest harder to classify as intangible personal property that could be seized under U.S. law.

Nevis Offshore Company Formation

A Nevis offshore company can be formed by working with a U.S. entity or law firm to act as an interface between the U.S. person and an offshore formation company that serves as (1) a registered agent and (2) the forming entity of the Nevis LLC. The offshore company can be formed without ever having to leave the United States.

Nevis LLC Manager

A Nevis LLC manager does not need to live in Nevis. The manager can be the debtor, a family member, a trusted friend, or a third-party professional located anywhere. Debtors who act as managers retain control over the LLC’s assets, which can be held in Nevis, the U.S., or other jurisdictions.

A debtor serving as manager of their own Nevis LLC does not have the best asset protection. A Nevis LLC provides better protection if the debtor appoints as either the initial or successor manager an individual or company outside of the United States. A U.S court would not have jurisdiction over a foreign manager. An effective LLC operating agreement provides that the debtor/member cannot remove the foreign manager. The U.S. debtor must be willing to trust a foreign LLC manager if an aggressive creditor threatens to attack the Nevis LLC.

Background Check

U.S. debtors must exercise due diligence to investigate and interview offshore companies that provide LLC management services. There are many reputable LLC management companies, but each person should interview companies and persons who will control their assets transferred to the Nevis LLC. People should do more than rely on their professional advisers’ suggestions to select an offshore manager for their Nevis LLC.

Often, people are surprised that offshore managers do a thorough investigation and due diligence about prospective customers. Offshore management companies are careful about whom they do business with, and they are subject to “know your customer” regulations. For example, offshore managers are reluctant to become associated with U.S. individuals who are involved in disputes with a federal or state government agency or individuals involved in contentious divorce litigation.

Asset Management

An offshore manager of a Nevis LLC may have discretion over the management of assets transferred to the LLC. Asset management within a Nevis LLC is similar to discretionary financial accounts offered by most U.S. financial institutions. A Nevis management company typically hires a financial institution outside the U.S to invest the member’s money in securities throughout the world, including U.S. securities.

As is the case in U.S. discretionary accounts, the Nevis LLC member can direct the LLC’s investment policy and goals. The member can instruct the LLC’s money manager about risk tolerance and asset allocation between bonds or equity and between U.S. or international markets. The money manager of the Nevis LLC normally sends the LLC member monthly statements and trade confirmations if requested.

Some Nevis management companies are receptive to the appointment of a U.S. person as asset manager. The U.S. person is appointed as a co-manager with the authority to make investment decisions regarding LLC financial assets.

Nevis LLC vs. Cook Islands LLC

The Cook Islands also has favorable LLC statutes. Cook Islands law has similar asset protection benefits and barriers to collection. Nevis, however, has an important practical advantage. The Cook Islands are physically situated in the South Pacific Ocean near New Zealand. Travel to the Cook Islands is long and expensive. Nevis is situated in the Caribbean Ocean and can be reached by a short plane ride from Puerto Rico. It is easier and less expensive for a U.S. person to visit Nevis to interview prospective offshore management companies that will have control of LLC assets.

Nevis LLC FAQs