Investment Protection with an LLC: What You Need to Know
An LLC (Limited Liability Company) can help protect your investments, but there is an important detail: it will only be effective if it is a multi-member LLC, not a single-member LLC.
An LLC is not a catch-all solution. It will not protect you from inheritance tax.
Whether you invest personally or through an LLC, the regulator will treat it the same way. In the event of death, assets exceeding USD 60,000 will be subject to an inheritance tax that can range between 40% and 70%. Although you might try to withdraw funds before the tax authority detects it, the taxable event will have already occurred. That’s why it is crucial to consult a lawyer to explore your options.
The Solution: An Offshore Company
One way to protect your assets is to set up another foreign company as the owner of your LLC, known as an offshore company. This strategy has an initial cost of approximately USD 2,000 and an annual maintenance fee of around USD 1,500. It may seem costly, but it represents a valuable solution to safeguard your wealth.
Cash Flow vs. Asset Stock?
From the start, I’ve mentioned the difference between cash flow and stock. An LLC is excellent for managing the cash flow of funds, which is positive. But it will not provide coverage for the stock — that is, the assets you already own. Whether held personally or through an LLC, you remain exposed to inheritance tax in the event of the owner’s death.
