Picking the Right State for Your LLC

Posted on April 29, 2011 by Ken Laino

Limited liability company laws vary significantly from state to state.  Depending on your particular circumstances, one state could have significant advantages or disadvantages over another.

First of all, states have specific requirements when you form a limited liability company.  For example, New York requires a newspaper publication notice.  It also allows a manager-managed limited liability company only if this is specified in the Articles of Organization.  Most other states have no such requirements.  In Ohio, forming an LLC is relatively easy and very little information needs to be provided.  The same is true, for example, in Delaware.  But even in states where formation is relatively simple, trying to form an LLC without the help of an attorney could turn out to be a costly mistake in the long run.

So called charging order protection can also vary substantially from state to state.  A recent Florida Supreme Court decision held that a charging order was not the exclusive remedy for a creditor against a membership interest in a Florida LLC.  Delaware, on the other hand, has a specific statutory provision that makes a charging order an exclusive remedy.

As I mentioned in a recent post, offshore LLC statutes also provide varying degrees of asset protection.  It seems that Nevis is currently a good choice for an offshore LLC.

It is also important to periodically review your LLC arrangement after it is formed.  Statutes and case law can change quickly.

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More Changes to Swiss Banking Rules

Posted on April 28, 2011 by Ken Laino

According to Matthew Saltmarsh writing in the Thursday, April 21, 2011 New York Times -- Switzerland will probably sign new treaties by the summer with Germany and Britain under which their citizens will pay taxes on most of their undeclared assets in Swiss banks.  It appears that France and Italy will sign similar treaties with Switzerland.  The arrangements will likely involve payment of a flat rate withholding tax, which will be deducted by the Swiss bank.  Client anonymity would be preserved.  But citizens of European countries like France, Great Britain and Germany will no longer be able to completely avoid taxes on undeclared assets in Swiss bank accounts.

While the proposals would preserve Switzerland's banking secrecy, the New York Times reports that they are likely to accelerate a shift away from banks relying on undeclared assets. These changes could result in more consolidation and down-sizing among Swiss private banks.

It is very important to keep in mind that Swiss banks can offer more than secrecy.  The country has traditionally offered political and economic stability; a strong currency; and quite a bit of banking and investment expertise.  Moreover, from a pure asset protection standpoint, protecting one's assets does not equal hiding those assets.  In the United States, the best asset protection plans essentially involve holding assets where they are not hidden, but having them lawfully titled in such a way that they are better protected from creditors.

Holding assets in a Swiss account could be a very legitimate part of a lawful and reasonable asset protection plan for a United States citizen -- as long as there is no attempt to unlawfully avoid applicable U.S. taxes.

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