Financial transparency has reached new heights in the United States, and so has the ease of access to your personal data. Yet, there is a way you can legally lower your wealth profile and energize your portfolio at the same time. And, best of all, implementing this simple strategy could cost you less than a weekend getaway.

This strategy could be the answer to quick, affordable and flexible asset protection…let me explain.

Build Your Personal Money Vault in a Three Easy Steps

1. Set up the offshore LLC. You can establish a valid LLC using only yourself as the one member.
However, having two members to the LLC gives you stronger protection. For example, if you were sued for assets in the LLC, you’d only have legal access to 50% of them, even if you were 100% accountable for funding the LLC at inception.

2. Choose a jurisdiction for the creation of the offshore LLC. My recommendation would be to use a Nevis LLC. Nevis offers affordable, yet iron-clad, asset protection. You can set up a Nevis LLC from anywhere between US$1,500 and US$4,500. The fees vary depending on whether you work with an attorney or company formation specialist.

3. Open an offshore bank account in the name of the newly created LLC. Once the LLC is established, you can open an account anywhere in the world in the name of the LLC. This offers you additional privacy since your name will not appear as well as asset protection again any claims.

Note: Offshore banks are required to know the beneficial owner of the LLC, so you will need to disclose it.

In addition, it is not advisable to hold any offshore mutual funds in your corporate bank account due to negative U.S. tax consequences for Americans. Speak to a licensed tax professional before making any investments.

I often speak with members who want to control their assets, yet still desire “courtroom-proof” asset protection. Typically, investment control and asset protection do not go hand in hand. To protect your assets, you usually have to give up legal ownership of your assets to an entity, like a trust. But, control freaks aren’t well suited to working with trustees. This usually means something has to give…but not necessarily.

Keep Tax Reporting Simple
You can elect to have your offshore LLC flow through you for tax purposes which means you won’t have to file a corporate tax return. Register your LLC as a disregarded entity with the IRS using Form 8832. This step only needs to be done once and then all the proceeds of the LLC can be reported on your 1040.

Asset Protection Without Giving up Control
By combining two of the most basic offshore vehicles — an offshore bank account and an offshore limited liability company (LL C) you can control your investment assets while benefiting from substantial asset protection.

As you’ve read here many times, offshore bank accounts are by far one of the best ways to access the international markets and diversify outside of your home currency. Not to mention, having some money outside of the U.S. is a good way to recession-proof your assets. However, in many cases, offshore accounts only offer an illusion of asset protection. Here’s why.

Let’s assume for a moment, that you have an offshore account in your name. If you lose a lawsuit, no matter how frivolous, and your creditors have a U.S. court order to attach your assets, this court order would be presented to your offshore bank. It is then up to the bank to decide if they want to comply with the U.S. request or if they want to send your creditor packing. Depending on the court order, it’s more than likely they’ll comply, simply to get rid of the problem.

But, you can take the decision out of their hands and back into your own. By establishing an offshore limited liability company (LL C), you could very easily open your offshore bank account in the name of your new LL C. In this case, you are immediately afforded substantially more asset protection. Under a typical LL C statute, the owners — which are referred to as members — are shielded from the LL C’s debts. The members are only liable if they affirmatively take responsibility for debt, such as by giving a guarantee to a lender.

You see, an offshore limited liability company is similar to a domestic limited liability company except that it is based offshore. LLCs are typically in a jurisdiction that provides maximum flexibility and asset protection, such Nevis or Panama.

Twice the Headaches with Fewer Guarantees for your Creditors
Nevis in particular, is one of our preferred jurisdictions for offshore LL Cs. The government on the island of Nevis has enacted state of the art limited liability company legislation.

“Implementing this simple strategy could cost you less than a weekend getaway.”

From an asset protection perspective, the Nevis LLC assets are protected from its members’ creditors because these creditors have only one option to go after the assets: a charging order. Under Nevis law, the charging order is the exclusive remedy available to a creditor attacking the assets in a Nevis LLC.

If you set up your Nevis LLC with a Nevis manager, it is virtually impossible for a U.S. creditor to obtain jurisdiction over the manager. And, even if a U.S. court orders the repatriation of assets in the Nevis LL C, the Nevis manager would not be forced to comply. The only option for the creditor is to attempt to re-litigate the claim in the Nevis court, and Nevis is one of the most unfavorable jurisdictions in the world for frivolous litigation.

Take this and add to the fact that the creditor would need to post a bond in Nevis and hire local counsel just to have their argument heard. As you can imagine, the sheer cost and headache would encourage a creditor to seek a settlement out of court…or they might give up altogether!

The Best of Both Worlds
The real appeal of this partnership between the LL C and the bank account is that you can control your investment decisions while still having asset protection from lawsuit-happy foes. Plus, by opening your account in the name of the LL C, your name is never the name of record on the account. This gives you a layer of privacy to boot.

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