Nevada
corporations and LLCs are aggressively marketed
as asset protection vehicles.
The pitch is that because of Nevada's secrecy
laws and lack of an information-sharing treaty
with the IRS, that it is more difficult to get
information on a Nevada corporation or LLC than
those of other states. Thus, Nevada corporations
and LLCs are promoted as means to avoid both
federal and state taxes, and to keep assets
secret from creditors.
While Nevada corporations and LLCs may provide
some degree of asset protection for those
actually living in Nevada or having assets
there, the truth is that Nevada corporations and
LLCs provide no significant asset protection
advantages over similar entities in other
states.
Nevada's secrecy laws are of absolutely no value
outside of Nevada, since the courts of other
states are not required to respect them. Thus,
if you are subpoenaed to appear at a deposition,
you cannot defend or refuse to answer questions
on the basis of Nevada law. Ditto for your
Nevada resident agent or whoever sells you the
Nevada entity -- they can be forced to testify
under subpoena also.
You cannot use a Nevada corporation or LLC to
hold title to real estate outside Nevada unless
the Nevada entity first qualifies to do business
in the state where the real estate is located.
To qualify, the entity will have to pay fees and
submit itself to local jurisdiction as if it
were formed there in the first place, meaning
that all you have really accomplished is to
double your fees.
These days many judges view Nevada entities with
great skepticism, meaning that a Nevada
corporation or LLC could actually make you look
worse to the court than if you had done nothing.
Likewise, the IRS audits a higher percentage of
Nevada entities because of the potential for
abuse.
More information on Nevada corporations and LLCs
Buy Asset Protection: Concepts & Strategies
(McGraw-Hill 2004) from
Amazon.com or buy from
Barnes & Noble
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