Setting up an LLC for asset protection or financial planning in the tiny Caribbean country of Belize has shown to be a powerful weapon against lawsuits and judgment creditors. This article will discuss the breadth and scope of the efficacy of the LLC laws in Belize. There are few sets of LLC legislation in other countries can surpass or equal the asset protection statutes in Belize at the current time. Placing hard-earned assets into this unique legal tool – the Belize LLC, with a Belize bank account – can provide financial security surpassing that offered in many other jurisdictions. The information will explain why so many people seek Belize company formation with bank account opening in this formidable location.
Belize LLC Laws
Ironclad. This is the first word that comes to mind when talking about Belize LLC laws. To be certain, there is no asset protection instrument that is 100 percent impenetrable. However, the Belize International Limited Liability Companies (LLC) Act of 2011 is a formidable legislation with features that set it apart from similar laws in other jurisdictions. Although the Belize International LLC Act is based on certain provisions contained in U.S. LLC law, in fact and in practice, it has shown to offer more effective asset protection as demonstrated by its case law history.
Related: Belize LLC Formation
Setting up an offshore LLC in Belize is relatively easy and not as daunting or complicated as it may seem at first blush. And Belize, a country sitting just below Mexico and nestled between lush, verdant forests and the blue waters of the Caribbean, does make it remarkably simple. It recently established LLC laws that are designed not only protect your assets, but to ensure that your plans for the use and disposition of your assets are followed to the letter.
There are several reasons why you should consider placing your assets into a Belize LLC. Below are six of these reasons.
Important Note: In order to enjoy maximum protection of assets, the Belize LLC should be owned 100% by a Belize asset protection trust, or an international trust in another protective jurisdiction. A results-oriented judge in your country could compel you to repatriate assets, even if inside of the Belize LLC. However, if the LLC is owned by an offshore trust, the foreign trustee, who is not subject to your local court orders, can step in to protect you.
Belize LLC Law – Limited Remediation
The only remedy that the Belize International LLC Act recognizes against a Belize LLC is a charging order. A charging order gives a creditor the right to extract distribution or payment from an LLC (or some other business entity) in which the debtor has an interest or membership. In other words, if a debtor has no personal asset or means to settle a successful suit against him or her, a charging order gives the creditor the right to ‘go after’ a company or some other financial instrument (such as stocks or funds) in which the debtor has a stake.
However, the Belize International LLC Act severely limits the scope of a charging order. The creditor has a right only to distributions that would normally have gone to the debtor – if any. A charging order does not give the creditor the right to seek payment from the income or interest arising from the other assets included in a Belize LLC in which the debtor holds membership. Even if a charging order is enforced against a member-debtor, the other assets in the LLC are beyond a creditor’s reach. Setting up a trust in Belize that owns an LLC is akin to locking up your assets in Fort Knox, heavily guarded and protected by the strong arm of Belize LLC and trust laws.
Belize Protection Against Fraudulent Transfer
Sometimes, creditors try to go after a debtor’s assets by bringing a case directly against the LLC where the debtor holds a membership. This can be done by claiming that the debtor fraudulently transferred assets to the LLC in an attempt to conceal it from the court to prevent the creditor from gaining access to it. Therefore, a creditor can claim that the assets held by the LLC can rightfully be attached as distribution by a creditor who has won a judgment in court against the member-debtor.
To address this situation (should it arise), Belize LLC laws define fraudulent transfers very narrowly. To begin with, the creditor must prove that the LLC member-debtor knowingly and willfully transferred assets to the LLC in an attempt to specifically defraud him or her. Proving this specific intent is nearly impossible under ordinary circumstances, let alone in a court of law where incontrovertible evidence must be presented to secure a judgment in your favor. By enforcing a limited definition of fraudulent transfers, Belize LLC laws provide a level of asset protection that is hard to match.
However, if this rigid interpretation is still not enough to protect your assets in a Belize LLC against a fraudulent transfer charge, the Belize International LLC Act goes even farther. The laws clearly states that any transfer of assets made in exchange for a capital interest in an LLC is protected from a fraudulent transfer charge at the time of the establishment of the LLC or at any future date thereafter. The simple truth of the matter is this: under current Belize LLC laws, there is little to zero chance that a creditor can make a fraudulent transfer claim stick.
Belize Statute of Limitations
Another way that the Belize LLC Act protects your assets is by imposing a strict statute of limitations on claims that can be brought against a Belize LLC. For a claim to be even given any consideration in a Belize court, a creditor must file a fraudulent transfer claim within two years from the date of the asset transfer or one year from the date of the establishment of the LLC (whichever is earlier). A claim brought against a Belize LLC outside of these restrictive dates is doomed from the start. Taken together with the series of rules and regulations above, the statute of limitations provides your assets in a Belize LLC an added layer of protection against frivolous or unjust claims.
Plaintiff Deposit Requirement
Before a claim against a Belize LLC can be heard in a Belize court, the claimant must show proof that he or she has a deposit in the amount greater than 50 percent of the amount claimed, or $50,000 – whichever is greater. If the stipulations and conditions mentioned earlier are not sufficient to deter a determined creditor, this may just be the requirement that will prove to be a deal breaker. After all, if a creditor already has more than half of what she or she is going after, is it really worth the effort and expense of mounting a lawsuit, which in all likelihood will be a costly and lengthy undertaking?
It’s true – and patently clear – that Belize LLC laws are drafted primarily to protect the assets held in a Belize LLC. But they can serve another purpose. Hopefully, they compel a claimant not only to present a timely and an airtight case, but, more importantly, to examine his or her reason for filing a claim in the first place. A fight for justice or honor may well be worth pursuing against all odds, but the trust laws of this tiny Caribbean nation will stop any action taken against a Belize LLC that is brazenly motivated by little else than greed or revenge.
Belize LLC Immediate Asset Protection
When you set up a Belize LLC, your assets are immediately protected from any fraudulent transfer charges. Other countries or states in America have a mandatory grace period (no matter how brief) or a period of limitation when proceedings for fraudulent transfers may be initiated against the trust or LLC. Belize gets rid of this ‘window of opportunity’ (at least, as far as your legal enemies are concerned) and allows for immediate asset protection from the moment your LLC is established. In other words, there is no period when the assets in your LLC are open to an attack.
All international Belize LLCs are required to file a written formation certificate and official registration with the registrar in Belize. The names of the owners are not displayed in the public records. If a random member of the public asks the registrar for details about your Belize LLC, your ownership will remain confidential. Aside from government criminal investigations, outside parties will not be able to access the information without your explicit permission.
The asset protection and benefits that you enjoy under Belize LLC laws are comprehensive, encompassing, and yes, the word ironclad comes to mind.