You would go international whenever you question whether your domestic plan will adequately protect you. An instance would be when a present creditor might ignore the charging order remedy and attempt to set aside an asset transfer to a domestic limited partnership, LLC or domestic trust. It’s poor planning if your creditor can argue that your transfer was fraudulent. You are then safer with transfers to a Nevis LLC because Nevis expressly deems these transfers not fraudulent. In this respect, a properly structured Nevis LLC is more protective than the international trust – particularly when you already have creditors. Transfers to the trust could be a fraudulent conveyance and contestable in the trust’s jurisdiction, although practical obstacles may still prevent creditor recovery. This deserves repeating. If a Nevis LLC member has an existing creditor, Nevis LLC laws allow the member to transfer his or her assets to the LLC without it beinga fraudulent conveyance if the debtor-member’s interest is proportionate to his share of the contributed capital. This transfer is considered a fair value exchange and not fraudulent. Interestingly, a promise of a future investment in the Nevis LLC by a present or incoming LLC member can be used to measure this proportionality. A debtor-member can then own a minority interest, subject to the charging order, though the debtor-member contributed all or most of the LLC’s present assets – provided the majority member contractually promised to pay its larger proportional share later. This dilution strategy can effectively discourage creditors whose charging order recourse is then only against only a small minority interest in the LLC. This feature is unique to the Nevis LLC. It’s only one example of how we can achieve safer results internationally.
When would someone use an international entity - such as a Nevis LLC - rather than a domestic or U.S. entity?