Nevada unlike other states, allows LLC’s to be established for non-business purposes. This provides an opportunity that is not allowed by other states to asset protect the personal property of Nevada and non-Nevada residents.
- Protecting Personal Property-Basic Concepts
Your personal property is essentially any item that you own besides real estate. Your car, your boat and your bank account are examples of personal property. A record of the owner of some personal property assets is typically maintained such as the title to your car, stock certificates or title to intellectual property, while there is no record of the owner of other assets like your household furniture or your personal effects. From an asset protection standpoint, some assets are more attractive to creditors than others. Naturally, those assets that are most valuable are of particular interest. However, the liquidity of the assets is also an important factor considered by creditors that are determining which of your assets to target to satisfy the judgment or lien they have against you or your business.
- LLCs Popularity as Asset Protection Vehcles
Over the past 10 – 15 years, the limited liability company (“LLC”) has become the entity of choice for entrepreneurs and business owners for a number of reasons. Most people do not think of utilizing an LLC as a holding company, but they should. For many of the same reasons that the LLC has become the most popular entity for business owners, LLCs can be effectively used to hold/shelter your valuable personal property.
- Nevada LLC’s–a Different Perspective
Nevada law provides that an LLC may be operated solely for the purpose of holding investments and managing assets. This quality sets the Nevada LLC apart from those of most other states, because in other states an LLC is required to have a business purpose. In other words, the LLC must be utilized to operate a restaurant, nail salon or conduct some other business activity. That is not to say that using a Nevada LLC to hold personal property in another state is a cure-all for asset protection purposes. Nonetheless, with careful planning and drafting such protection is available to residents of states other than Nevada. Once the LLC is set-up with the Nevada Secretary of State and the organizational documents are in place, assets that are transferred into to the LLC receive the same asset protection that a business would. The likelihood of the LLC actually getting sued is minimal because the LLC is not likely doing anything that would expose it to liability. In the more likely circumstance that the owner (member) of the LLC gets sued personally, and a creditor seeks to satisfy the judgment with the assets of the LLC, the only remedy available to such creditors would be a charging order. The charging order does not entitle the creditor to anything except distributions from the LLC, and the LLC can be structured/managed such that distributions will not likely be immediately forthcoming.
- Creating a Nevada Investment Holding LLC
A relatively small amount of money can go a long way toward protecting your assets, and the time to put this firewall in place is now – not when the creditors are knocking on the door. Contact the attorneys at Nevantage Law Group to discuss how a Nevada Investment Holding LLC can protect your personal property.