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DESCRIPTION

The Wyoming corporation and limited liability company are explained as vehicles to protect assets.

OBJECTIVES

This manual discusses the following issues:

  1. Protect income and assets beyond the limitations of liability insurance.
  2. Increase awareness of the risks inherent in keeping assets exposed.
  3. Disassociate assets from name, address and social security number.
  4. Decrease the probability of IRS audit by forming an LLC.
  5. Increase awareness of private investigators to the nature of certain business transactions that increase client private in financial counter-intelligence.

ADVISORY

All of the strategies contained in this report enable a businessperson to increase awareness about asset protection arguments. There are no offshore structures involved in any of this discussion.

Please be advised that the use of offshore trusts, International Business Corporations and other entities may run afoul of U.S. laws. Please advise a competent tax professional and legal counsel before implementation of any of these strategies.

 

FORMING THE CORPORATION: DELAWARE, NEVADA OR WYOMING?

Where you form and operate the corporation is determined by the following criteria:

1.  Business friendly environment

2.  The availability of professional management is important. This is what makes the corporate presence possible in another state, if needed.

Delaware

Delaware is the best state to incorporate a business when the intent is to trade its stock on an exchange (go public). It’s best suited for large and publicly traded companies. Delaware has maintained its lead, in the number of total corporations formed, due to effective marketing by the incorporators in that state and by the state of Delaware. Therefore, if your business is destined to grow into another Fortune 500 company, then Delaware is for you.

Wyoming and Nevada Qualify As Options

The Nevada Revised Statutes and the Wyoming Business Corporation Act offer similar flexibility in the ownership of the stock certificates, stock votes, the indemnification of corporate officers, and reporting information to their respective Secretary Of State.

A comparison chart is provided on the next page to compare the cost and benefits of a Nevada and Wyoming corporations, respectively.

There are two basic differences between Nevada and Wyoming:

  1. Wyoming corporations are less expensive to form and maintain than those formed in Nevada. Save about 33% to 50% in the formation and administration expenses.

    For example, Nevada requires that the corporation file an Annual List Of Officers ($125 state fee) and the business license fee ($100), after incurring the cost of incorporating and paying the registered agent. In comparison, Wyoming doesn’t require such a filing, fees or a business license, unless engaged in certain professions.

  2. Nevada is better at marketing their corporations and they possess more marketers of incorporation services than in Wyoming. As a result, Nevada enjoys more popularity than Wyoming for incorporation and nominee officer services. Popularity doesn’t equal effectiveness.

    An Example of Nevada Marketing: Incorporators of Nevada entities continue to promote that Nevada has no information sharing agreement with the IRS. This issue is more symbolic than real. The most important information is provided to the IRS when interacting with the federal government and financial institutions. This means that how you apply for the Employer Identification Number and how you conduct the corporation’s banking, and the identity of the signer on the accounts is more important in terms of disclosure. Banks, even in Nevada, are subject to federal reporting requirements. As you see, this is an effective marketing strategy for Nevada since most people really don’t think it through. Besides, the Nevada Secretary Of State publishes their corporation database online. Employees at the IRS know how to find the Secretary Of State website.

    Wyoming enjoys a pro-business atmosphere, respect for property rights and privacy, and an attractive venue because it lacks a state income tax for those businesses located in those states. As for the state income tax, it isn't important if the corporation's tax nexus is outside Wyoming. If the business is structured that sales are approved in Louisiana, then register the business in LA.

    California LLC's have no real limited liability protection. Wyoming respects property rights and the LLC's are the most stable in the country.

     

  3. There are more professional managers in Nevada than Wyoming. These professional managers carry a marketing term, "Nominee Officers", who will provide a base of operations for the corporation in another state. Wyoming has grown in these services and we provide an extremely competitive solution that integrates administrative and marketing services, as needed. Legal services are available through referral.
  WYOMING CORP NEVADA CORP
Collects corporate income tax No No
File as a foreign corporation if you're operating the company out of your home state.
Information sharing agreement with IRS Yes, but this information is not collected. No information sharing agreement. This is more symbolic than real in benefit.
Directors, officers, employees & agents are indemnified from liability by statute Yes Yes
Bearer Certificates Bearer shares not discriminated against, Bearer scrip (partial shares in bearer form) is explicitly permitted Not Disallowed
Stockholders revealed to the state No No
Nominee shareholders permitted Yes Yes
One person can hold position of Director, President, Vice President, Treasurer & Secretary Yes Yes
Capital requirement minimums No No
Tax on corporate shares No No
Franchise Tax No No
Initial Filing Fees $100 $75
Annual Fees $50 $125 Annual List Of Officers

$100 Business License Fee
Meetings can be held anywhere Yes Yes
Initial List of Officers filed within 60 days No Yes
Unlimited Stock, no par value Yes No
Shares need not be certificated Yes Yes
Continuance, to adopt a corporation formed in another jurisdiction Yes No
Unlimited Shares, no par value Yes No
Aged Shelf Corporations 2/3 cost of NV Expensive
Resident/Registered Agents $50 per year $85-300 per year

STEPS FOR IMPLEMENTATION:

  1. Form a new entity or purchase a shelf entity.

    New entities are only $170. Shelf entities cost more but provide a marketing advantage. The age of a Shelf Corporation or LLC allows for a business owner to say that the business was incorporated one, two or even three years prior. It's a marketing decision that provides a perception of business stability when credibility is part of the sales process.

  2. Consider using a Contract Corporate Officer /Nominee Officer

    This is a corporate officer that serves the stockholders by signing agreements, contracts, and annual reports with the Secretary of State. This service offers substantial benefit when the stockholders prefer to remain off public record. This is appropriate in a myriad of circumstances. Perhaps the stockholders don't want to provide information to the public about critical asset acquisition, or a stockholder was recently divorced, or came across a windfall of profits. Financial jealousy, competitive intelligence, competitive bidding, technological advantage, and protection from litigation are all legitimate intentions for this service. Fraud is not. Income tax evasion is not acceptable. Call for more information, 484.256.4563.

  3. Establish The Corporate Presence

    The corporate presence is its nexus. The mailing address, street address and phone number must exist where the sales are approved. Therefore, a properly formed Wyoming corporation has a Wyoming mailing address and a Wyoming phone number. The corporate officer must be available through these points of contact for the corporation.  Check with your tax advisor about requirements to file the corporation in another state if that's where sales are approved.

  4. Maintain Control With Customers & The Corporate Officer

Corporate Presence = Phone + Fax + Address + Corporate Officer + Banking + Sales

Phone: For those business people who receive calls from prospective clients and customers, a phone number is installed at the Qwest phone company (Qwest.com). This market expansion line is call-forwarded to any U.S. number. Therefore, a person can receive calls with a (307) Wyoming area code and do business from anywhere in the country, or even Canada. This is a great service if you're constantly on the go and work from a cell phone.

Vonage.com This is another telephone option. The apparatus attaches to your cable modem and facilitates national and international toll calls at the fraction of the rate of regular telephone service. Save money and stay in contact with prospective clients with Vonage.

Fax: We suggest that you obtain a fax number through Efax.com. Faxes are automatically forwarded to the email account of your choice. Retrieve the fax as an email attachment from anywhere in the world.

Address: The corporate presence numbers are separate than the numbers just described above. The purpose is to validate the existence of the corporation in Wyoming. An office package is available from Gusta, Inc. for only $350 per year. It includes a PO Box and business street address in a business building in Casper, WY, a Wyoming fax number and a Wyoming phone number answered by a live receptionist. The phone is answered in the name of the corporate officer representing your corporation. Call Gusta, Inc., at 307.237.2580, for more information.

If you're intending to do business out of Wyoming, consider an upgrade to a full office package. Do business out of Wyoming with an immediate staff at your fingertips.

 

Banking: For many years, the Nevada resident agents promoted Nevada bank accounts to "solidify" the corporate presence in Nevada. This was true years ago. With the advent of the internet and the proliferation of online banking, it’s no longer necessary to bank where you do business. Internet banks in Virginia (Etrade.com), Georgia (Netbank.com) and in many other states, is making hometown banking completely unnecessary.

An  important rules of banking:

  • For those person concerned with privacy, don’t bank in Wyoming if you’re a Wyoming corporation. The annual report must detail all business assets held in the state of Wyoming. This information is not reportable if the asset is outside the jurisdiction of Wyoming. This is important when dealing with a hostile creditor or divorce situation.

    •

    Sales: An independent contractor or affiliate can sell products and/or services for your corporation and receive a commission. The independent contractor, must pay any applicable state and federal income tax for income paid.

    DECREASE LIABILITY WITH TWO CORPORATIONS

    FACT: Many people incorporate to limit legal liability, and the legal industry has done well over the years using fear-driven marketing to convince people to form a corporation or limited-liability company.

    STRATEGY: Business owners learn to separate businesses using two or more corporations to protect one from the other, in case there's litigation. Examples:

    • A taxi association runs 100 taxis. They place 2 taxis in each corporation. There are 50 corporations controlling 100 taxis. If taxi number 57 runs someone over, the 98 other taxis won't be involved in any potential litigation.
    • A pizza guru owns two companies; a delivery operation and a sit-in restaurant. A lawsuit involving one of the delivery vehicles can affect the restaurant. The owner separates them into separate businesses.
    • A mail order business sells Internet products from one corporation and consulting services from another. If one of the consultants makes a serious mistake, it won’t drag the Internet company into the lawsuit.

    HOW TO USE TWO OR MORE CORPORATIONS

    Method #1: Two Separate Corporations Offer Different Products & Services

    Two corporations are run separately and are taxed individually.

    This method is simple in spreading income between two corporations; however, assets remain exposed to risk from customer liability. This can also lead to confusion on behalf of the customer, unless co-branding is effectively used. This strategy works as long as the businesses are run separately.

    Method #2: LLC Used With Two Corporations

    Income from LLC is split between two members, which are corporations.

    The income passes through the LLC (taxed as partnership) to the members, Corporation 1 and Corporation 2. Income is split between two corporations, according to their respective interest in the LLC.

     

    ASSET PROTECTION: WHY?

     A hostile creditor is a person or other legal entity that seeks to involuntarily extract income or assets from you by any legal means to include litigation, divorce or unfair debt collection. In this discussion, anyone with a business or valuable assets is a target.

    Litigators accept cases contingent on the probability of winning the case, obtaining a settlement amount and upon the defendant’s ability to pay. Attorneys assess the defendant’s ability to pay after conducting an asset search using key information, such as the defendant’s name, address, social security number and date of birth. Even when no assets are found, a professional may be automatically targeted due to their capacity to earn income.

    Assets that are linked to the name, address, date of birth and social security number of the owner are increasingly subject to collection and confiscation. An effective asset protection plan can disassociate the owner from the assets without losing control of how those assets are used, stored or invested. This critical link must be removed for effective financial privacy and asset protection.

    THERE ARE TWO BASIC STRATEGIES:

    Control assets without owning them in your own name. An effective asset protection plan enables a person to control assets without linking them to identifiers, such as a name or social security number, that give away the location and ownership of the assets. The C Corporation is used to achieve this objective.

    Make the assets unattractive to the hostile creditor. You can make financial holdings, real estate, and other assets unattractive to the creditor. The creditor liable for federal income taxes on income not yet received? Learn about the "charging order" protection and how it can be combined with financial privacy for effective asset protection.

    ASSET PROTECTION: WHEN?

    Implement an asset protection plan before financial or legal difficulty is encountered.

    Asset transfers can be challenged and reversed under the fraudulent conveyance laws if it can be shown that the transfer was done to unfairly frustrate a legitimate creditor.

    An effective asset transfer must be completed well in advance of an economic or litigious threat. For example, gifting assets to family members shortly after receiving notice of litigation may result in the undoing of the asset transfer. The hostile creditor could argue that the debtor intended to unfairly frustrate the creditor because of the timing of the asset transfer. Therefore, the timing of the asset transfer is critical to protecting assets from hostile creditors. To prevent such a risk, transfer assets into the assert protection structure prior to possible claims from hostile creditors.

    The asset transfer must also have the following additional attributes:

      1. Solvency hasn’t changed after the asset transfer.
      2. The litigation wasn’t foreseeable.
      3. The debtor did not abscond after the asset transfer.
      4. The assets weren’t transferred to a family member or friend.
      5. Assets were transferred for at least 70% of market value.

    Procrastination As A Risk Factor

    Procrastination is a major threat to any asset protection plan. Time works to the advantage of the property owner when an asset protection plan is implemented well in advance of financial or legal difficulties. It demonstrates a lack of intent to frustrate creditors or commit fraud.

    Procrastination and haste are two key threats to any attempt to protect assets from abusive and hostile creditors. Haste typically accompanies procrastination because the property owner usually makes serious mistakes in the rush to protect assets, especially when feeling the immediate heat of litigation.

    Solvency As A Risk Factor

    Insolvency cannot follow asset transfers into any entity, as a means of protecting those assets. This immediately unravels any legitimate attempt to protect assets. It raises red flags and it provides a competent litigator with an argument that the asset transfer caused the insolvency. This is highly suspect when litigation, or other creditor threat, is concerned. For this reason, insolvency must not take place for at least one year after any substantive asset transfer, as a precaution from a potential fraudulent conveyance claim.

     

    FRAUDULENT CONVEYANCE

    A creditor can claim fraudulent conveyance if you deliberately frustrated, delayed, hindered or defrauded the recovery of assets to pay for a legitimate debt. "Gifting" assets to family or a business associate to avoid paying a debt is an example of fraudulent conveyance. The creditor can ask the court to undo the "gift", or asset transfer, and place the asset back in your hands. The creditor then takes your control of that asset to satisfy the debt. That’s a simplified explanation of fraudulent conveyance.

    Transactions intended to protect assets don't run afoul of fraudulent conveyance issues if structured correctly.  Consider these examples:

    1. An asset is placed into the LLC for the member interest in the LLC.  This is considered a "for value" exchange.
    2. A privately controlled corporation serves as a supplier to your current business operation or as a friendly creditor. This is fine as long as related party transactions and controlled groups don't apply. All transactions must be arms-length.

    To avoid a possible fraudulent conveyance claim, consider the following issues:

    1. Timing
      2. : Move the asset before the threat. Transfer the asset to the corporation or LLC before the threat is even foreseeable. As time passes, the timing of the asset transfer increases credibility of the transaction.
    • The biggest threat to asset protection is procrastination.
    • In cases where the threat exists and you’re left vulnerable, transfer the threatened assets to an LLC immediately, to take advantage of the charging order protection.
    • Plan when the financial and legal seas are calm. If turbulence already exists, call 484.256.4563, immediately to discuss your options.
    • Involved legal and tax counsel with your plans to protect assets.

    • Solvency:
      • It’s critical that you’re able to meet your financial obligations after the asset transfer. In other words, you can’t instantly accumulate thousands in unsecured and other debt, and immediately run off with the money.

    • Communication:
      • Keep quiet about your holdings and how they are controlled. Many times, it’s a best friend, a jealous ex-lover, hostile spouse or frustrated business associate that turns on the debtor and points a finger.

    • Fair Market Value:
      • You can’t sell a $100,000 real estate property to a sibling for $10,000. It’s suspicious. Transactions must make sense and follow standard business procedure, reasoning, and documentation. Follow the 70% rule. When transferring assets, make certain it’s for at least 70% of its fair market value.
    • Appearance & Intent:
      •  If it walks, acts and quacks like a duck, it’s not a goose. Transactions must look reasonable from all directions. Ask yourself these questions with legal counsel:

      • Did the debtor know, or tell anyone, he was going to be sued?
      • Were financial difficulties or legal problems readily or easily foreseeable?
      • Was the asset transferred to the trust or corporation?
      • Does the plaintiff have an interest in the property?
      • Does the asset transfer or the debtor fall within the statute of limitations of the Bankruptcy code, UFCA or UFTA?
      • Did the debtor intend to delay, hinder or defraud a creditor?
      • Did the debtor lack adequate financial means to meet his debts after the asset transfer?
      • How secret was the transaction?
      • How did the debtor's financial situation change before and after the transfer of assets to the trust or corporation?
      • What does the timing or sequence of financial events indicate or imply?
      • What is the cumulative effect of these transfers?
      • Are parties in the transactions close friends or family?
      • Did the debtor flee after he conveyed the property?
      • Did the asset transfer make up most or all of the assets?
      • Did he become insolvent after he conveyed the property?
      • Did he intentionally incur debt that he could not pay?

      ASSET PROTECTION USING THE LIMITED LIABILITY COMPANY (L.L.C.)

      In 1977, Wyoming was the first state to pass a Limited Liability Act. This was the first time the Limited Liability Company (LLC) was introduced to American business. Once the IRS recognized the LLC can be taxed as a partnership (that is, as a pass-through entity), all 50 states passed statutes creating their own version of the LLC.

      LLC Taxation:

      (1) Single Member LLCs

      Generally, when an LLC has only one member, the fact that it is an LLC is ignored or "disregarded" for tax purposes. If the single member is an individual, the single member is essentially treated as a sole proprietor for tax purposes and the LLC income and expenses are reported on the individual’s Form 1040. If, however, the single member is a corporation, the LLC income and expenses are reported on the corporations’ return, usually Form 1120 or Form 1120S.

      (2) Multi-Member LLCs

      Most multiple member LLCs are treated as a partnership and file a Partnership Tax Return Form 1065.

      Partnerships & Taxation

      Partnerships are "pass-through" entities for tax purposes. This means that partnership income, deductions and other items passes through the partnership directly to the partners. Accordingly, each partner takes into account his or her share of partnership income, deductions and other items in determining the partner’s individual tax liability.

      Partnerships have partners. Limited liability companies have members. The ownership in the LLC is called the "member interest."

      If a judgment is awarded against the LLC itself, it may be levied, and LLC’s property seized or sold in payment. If, however, a judgment is awarded against a member, to the extent that the operating agreement so states, distribution usually cannot be compelled to satisfy a member’s judgment debt. Creditors have to satisfy themselves with a "charging order." This gives them the rights to any distributions made by the LLC to that particular member, but little else.

      The Limited Liability Of A Corporation

      When a hostile creditor sues the corporation, normally, it can only take the assets of the corporation. The stockholders are generally not liable for the debts, liabilities and acts of the corporation. This is called "limited liability." This is very different from a partnership, where all partners are liable jointly and severally for everything chargeable to the partnership.

      Corporations have stockholders. Limited liability companies have members.

      The LLC has the limited liability of a corporation.

      The Limited Liability Company (LLC) Is A Hybrid Entity

      The LLC offers the pass-through taxation of a partnership and the limited liability of a corporation.

      CORPORATION LIMITED LIABILITY COMPANY
      A Corporation can have one or more Directors and Officers. An LLC can have one or more Managers.
      The hostile creditor can take your stock, if he can prove that you own it. The hostile creditor can ONLY go after a member’s economic interest in the LLC through the courts. This is called obtaining a "charging order."

      Once the charging order is obtained, the hostile creditor is now first line for any future distributions that are usually paid out to the member(s).

      Wyoming Statute 17-15-145.  Rights of creditor.

      "…The charging order is the exclusive remedy by which a judgment creditor of the member or transferee may satisfy a judgment against the member's interest in a limited liability company."

      The Assets Are Made Unattractive To The Creditor

      The manager of the LLC can refuse to distribute the earnings. (If the operating agreement so allows.) What is the advantage of withholding the distribution from the hostile creditor?

      This means that the creditor is now liable for income taxes on those LLC earnings, whether or not they’re distributed. The hostile creditor is now liable for taxes on earnings not yet received or for what is typically referred to as "phantom income." This places the member in a stronger position to negotiate a favorable settlement. Hostile creditors don’t want to pay taxes on earned income that’s out of reach.

      For this charging order protection to be most effective, the LLC must

        • Have at least two (2) members [Important!]

      Managers can be people or another business.
        • Be taxed as a partnership
        • Be managed by a manager, not the members. [Important!]

      ASSET PROTECTION USING THE "C" CORPORATION

      Separate assets according to risk level.

      For increased protection, separate assets according to their relative level of liability exposure. High-risk assets such as a medical practice or a restaurant are best separated from brokerage accounts and low-risk real estate investments. A risk-producing asset such as an apartment building should be contained in a separate entity from a residence. This separation takes place by placing the assets into separate entities.

      The assets are splintered into separate corporations to contain the impact of litigation and to protect the other assets.

      Examples:

        1. A taxi company places two taxi cars in each corporation. This means that there are twelve corporations for twenty-four taxis. If one taxi accidentally hits a pedestrian, the loss is only two taxis and the freedom of one taxi driver.
        2. A restaurant owner places his brokerage account and his real estate in separate and privately controlled corporations. If a patron falls on a wet floor and chokes on a chicken bone at the same time, the real estate and the brokerage account are safe from the lawsuit.
        3. A consultant provides services using one corporation that absorbs all the liability and risk. Another corporation holds title to the most valuable assets and is under his private control. The consultant's hostile spouse won’t know about the assets in the second corporation when filing for a divorce.
        4. Separate corporations own a crane and dump truck. The sign manufacturer is installing a heavy placard that reads "I LOVE THE USA" on top of a tall building. There’s an ungrateful Iraqi burning the US flag at entrance to the structure. The sign "unfortunately" falls on top of the protestor and squishes him like a bug. The lawsuit only affects the corporation holding the crane and its operator. The dump truck, that’s contained in another corporation, is left unscathed.

       

      THE NOMINEE OFFICER / CORPORATE OFFICER

      You control the corporation and the corporation owns the assets. You’re in charge. The nominee officer works for you in the capacity of Director, President, Vice President, Treasurer and Secretary. This enables you to stay off state records and off the records of database resellers.

      Many nominee officers are only willing to serve for the initial sixty (60) days. They only intend to provide minimum service in order to satisfy reporting requirements by the Secretary of State of Nevada or Wyoming. We don't believe this is legitimate. We offer extensive nominee officer services that include corporate coaching and year-around access to the corporate officer and the necessary services to run the corporation.

      The role of the nominee officer should be as a functional corporate officer that helps you run the corporation throughout the year. This corporate officer may sign other necessary filings, documents, contracts and leases, as long as a personal guarantee is not required.

      Asset Profile, Inc. offers a comprehensive nominee officer service for $300 to $500 per year. Call 484.256.4563 or visit http://www.assetprofile.com for more information.

      What are the key areas where a nominee officer is needed to secure initial and continuous privacy for the stockholders? Consider the list below as the major points of coverage for effective privacy:

        1. Filing of Articles Of Incorporation with the Secretary of State
        2. Initial List Of Officers Filing (Nevada)
        3. Annual Filings with the Secretary of State (Nevada and Wyoming)
        4. SS-4 Application for an Employer Identification Number, when appropriate
        5. Application to open a corporate bank account or brokerage account
        6. Signer on corporate financial account
        7. Signer on corporate resolutions
        8. Signer on business license application (if any)
        9. Signer on income tax returns
        10. Foreign corporation filings
        11. Filings for a Doing Business As (DBA)

      The duty of the nominee officer is to fill the role of the Director, President, Treasurer and Secretary without revealing the name of the stockholders, and to provide effective business administration. The nominee officer fills this role without owning the corporation or its assets.

      Attorney-Client Privilege For Optimal Privacy

      For the highest level of protection, the nominee officer should not know the identity of the stockholders. To make this arrangement a reality, the nominee officer should be hired through an attorney. Therefore, the attorney should be the only individual who can identify the stockholder by name or by any other means. Below is a diagram, which illustrates the proper communication channel between the stockholder and the nominee officer, to protect the stockholder’s privacy. This is only effective when the corporation is used to park assets temporarily, conversion into another assets, or for long-term investment.

      Always communicate through the attorney to secure this privilege. We provide a password access to the nominee officer in order to secure the attorney-client privilege and maintain the convenience of direct access via phone, fax or email.

      NOMINEE STOCKHOLDERS

      Nominee. 1. A person who is proposed for an office, position, or duty. 2. A person designated to act in a place of another, usu. in a very limited way. 3. A party who holds bare legal title for the benefit of others or who receives and distributes funds for the benefit of others.

      Black’s Law Dictionary, 7th Edition

      The use of nominee stockholders is actually written into the Wyoming Business Corporation Act. This is a strong statement from the Wyoming legislature respecting the privacy of others. In Wyoming, a share may be registered in the name of the shareholder or a nominee of that shareholder.

      17-16-140.  Definitions. (xxii)  "Shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation;

      The corporation may establish the procedure in determining who is the rightful owner of those shares.

          1. Shares held by nominees.
      1. A corporation may establish a procedure by which the beneficial owner of shares that are registered in the name of a nominee is recognized by the corporation as the shareholder.  The extent of this recognition may be determined in the procedure.
      2. The procedure may set forth:

      (i)  The types of nominees to which it applies;

      (ii)  The rights or privileges that the corporation recognizes in a beneficial owner;

      (iii)  The manner in which the procedure is selected by the nominee;

      (iv)  The information that shall be provided when the procedure is selected;

      (v)  The period for which selection of the procedure is effective; and

      (vi)

        Other aspects of the rights and duties created.

      One share equals one vote. Control of the share, or possession of it, means that you have control of that vote. The share and the vote are separated when a person signs a proxy agreement. A proxy agreement transfers the vote of a share from one person to another. An irrevocable proxy agreement transfers the stock vote to another person for a period of time.

      Example: Mike formed ABC, Inc. He wants someone else to be known as the shareholder but doesn’t want to lose control of the stock votes. Shares are issued to the nominee shareholder. The nominee shareholder signs an irrevocable proxy agreement agreeing that the votes of those shares are irrevocably transferred to Mike. In this way, Mike remains in control and a nominee shareholder is listed on the corporate records.

      BENEFIT: Most hostile creditors don’t ask about nominee shareholders and irrevocable proxy agreements. Mike is able to maintain control without identifying himself as a shareholder. For utmost privacy, the votes or the shares are issued to Mike’s attorney. The attorney-client privilege provides a layer of anonymity that’s difficult to pierce unless the corporation or "Mike" has engaged in some fraudulent or illegal act.

      What if the person who owns the votes, "Mike" in the above example, wanted to dispute an issue with the corporation itself? A nominee may dissent on behalf of the beneficial owner of those shares, according to 17-16-1303. Nominee shareholders can also inspect the corporate records, upon the request of the beneficial owner, under 17-16-1602 (f). Seek legal counsel about the strategies reported in this report.

      Nominee Stockholders Vs. Bearer Shares

      Although bearer shares offer an advantage as far as anonymity and simplicity is concerned, it’s not as effective as the use of nominee stockholders, which enable for someone else to be pointed out as supposed owner. Nominee stockholders hold the advantage when faced with a well-financed creditor determined on piercing the corporate veil and the shield of privacy surrounding the corporation.

      In communication with the IRS, consider how the Constructive Ownership of Stock affects tax reporting. Always consult a tax adviser.

      The Location Of The Stock Ledger

      Wyoming is unusual in terms of the location of the stock ledger because of the following reasons:

        1. The stock ledger doesn't need to be in the possession of the registered agent.
        2. The registered agent must not know the location of the stock ledger.

      The registered agent must know the names and address of the Director(s) and Officer(s), as listed on the annual report with the Wyoming Secretary Of State. This information must be accurate sixty days (60) after filing the annual report.

      17-16-507. Duties of the registered agent.

      (a) The registered agent shall:

      (iv) Maintain at the registered office, the following information which shall be current within sixty (60) days of any change until the corporation’s first annual report is accepted for filing with the secretary of state:

      (A) Names and addresses of the corporation’s directors; and

      (B) Names and addresses of the corporation’s officers.

      Counter-productive for privacy

      Many states require that the stock ledger must be in the possession of the registered agent.

      Productive for privacy

      Nevada requires that the stock ledger be with the resident agent, or the address

      where it can be found.

      Excellent for privacy

      Wyoming doesn’t require that the registered agent know of the stock ledger’s location.

       

      BURDEN ASSETS WITH DEBT TO REMOVE VALUABLE EQUITY SOUGHT AFTER BY HOSTILE CREDITORS

      Ask yourself these questions from the standpoint of the creditor:

      • Does it make sense to take a debtor’s house if he owed more than what the house was worth?
      • Does it make sense to take a debtor’s car if there were more liens on the car than its fair market value?
      • Does it make sense to go after business assets that were so burdened with debt, that there was no way to recoup anything at all?

      The answer is NO. Why? You can’t get blood from a stone. Filing a lien is as simple as filing a piece of paper. And all liens look the same from the standpoint of an outsider, or creditor. The process of attaching friendly liens against your own assets is called equity stripping. This is how immovable assets, such as real estate and rental income, is protected from creditors.

      Creditors consider the following questions:

      1. What assets exist?
      2. What’s the fair market value of those assets?
      3. What attachments (liens) are filed against the assets and their amounts?
      4. How is the property going to appreciate, if at all, within the next few years?
      5. What is the total financial picture of the debtor?
      6. What are the chances that the debtor will choose bankruptcy if collection is executed against the debtor?

      Liens are liens. Hostile creditors look at whether they exist or not. And the order of those liens determines who gets paid and in what order. Creditors know this fact. There’s no reason for them to go after a real estate property if it’s more trouble than what it’s worth.

      Hostile creditors collect, or hire a professional to do so, depending upon the payoff, opportunity, and work involved. They move on to another debtor if there’s too much work involved. To professional debt collectors, there are too many debtors and so little time. They’ll wait if there aren’t enough assets or if the timing is not right. For those who engage in effective equity stripping, the timing is never right and it’s always better to go after some other debtor. And there’s always someone else with more vulnerable assets.

      First, you need a reason for the debt itself. Sign a promissory note that creates a debt.

      Second, the corporation files liens against assets to back up the debt. As any other creditor, the lien is used to support collection of the debt. This is normal business practice. Valuable assets are stripped from their equity through the use of liens. The Wyoming corporation holds these liens as collateral for the repayment of a loan, or some other obligation. Once the liens are filed, hostile creditors perceive the assets as void of equity and leave them alone. See legal counsel for the proper filing of a lien and the necessary documents to substantiate that debt.

      Real estate liens are filed with the Recorder Of Deeds office in your county.

      Liens against personal property are filed through a Uniform Commercial Code (UCC) filing such as a UCC-1.

      Third, maintain the corporation in good standing and the necessary services to secure financial privacy.

      Most people are assuming more debt every day. Our debt-laden society and bad spending habits are common. Therefore, such a social problem can be used to a wealthy person’s advantage because it appears so normal to incur so much debt.

      Below is an example of how the accumulation of this artificial debt results in the appearance of being less prosperous, as the control over that wealth remains unchanged:

      Before Equity Stripping:

      Assets Fair Market Value Liens Held By Corporation Creditor Perception
      House $200,000 -$0 $200,000
      Vehicles 30,000 - 0 30,000
      Business 100,000 - 0 100,000
      Total Assets $330,000 -$0 $330,000 Equity Before Asset Protection

      After Equity Stripping:

      Assets Fair Market Value Liens Held By Corporation Creditor Perception
      House $200,000 -$220,000 -$20,000
      Vehicles 30,000 - 30,000 0
      Business 100,000 - 130,000 - 30,000
      Total Assets $330,000 -$380,000 -$50,000

      Perceived Equity After Asset Protection

      The effect on perceived equity of the assets:

      $330,000 Equity – $380,000 in Liens = - 50,000 Total Equity Visible to Hostile Creditors

      The equity has shifted to a Wyoming corporation under your private control. The control of the assets has not changed even though the perceived equity has been reduced to less than zero.

       

      C CORPORATION OR LLC? FINANCIAL PRIVACY OR CHARGING ORDER?

      Attorneys and accountants commonly favor the LLC due to professional training. This may fly in the face of the goals of the client in several areas. Consider the following issues:

      1. Private Creditor vs Public Creditor:
        2.  Phantom income is an effective deterrent for private creditors. A public creditor, such as the Franchise Tax Board in California, isn’t affected by the charging order, since phantom income is not a issue. They’ll just wait for their money.

        The California Franchise Tax Board, or a regulatory body, has extreme difficulty finding, tracking, and confiscating assets that are not connected to your name, address and social security number. Financial privacy is best here.

      2. Divorce:
        3. The charging order protection of an LLC doesn’t apply to divorce. Your member interest also belongs to your spouse, unless you can argue that it’s separate property from the marital assets.

        The spouse cannot go after assets that he or she doesn’t know exist. Furthermore, using a C Corporation allows the opportunity to siphon assets from an existing business to another entity.

      3. Professional Bias:
        4. In many instances, the attorney and the accountant are nervous about providing asset protection services and products because they’re worried about the actions and intent of the client. For this reason, the LLC is most commonly recommended. Trading an asset for a member interest in the LLC is never fraudulent conveyance and places the professional at ease.

      Many qualified professionals don’t offer financial privacy solutions because they’re unfamiliar with the strategy and reliable providers of these services.

       

      IMPLEMENTATION

      Assemble The Team

      There are three critical team members that are necessary to put together an effective asset protection plan:

        1. Client
        2. Attorney
        1. Asset Protection Consultant

      Form The Corporation

      The corporation is formed through an attorney. This means that the attorney is paid the full amount to purchase the asset protection structure and its services, plus the legal fees to facilitate the process. This prevents the use of the stockholder’s name, address, social security number and date of birth on any of the corporate or bank records. All materials are sent directly to the attorney and forwarded to you, as the stockholder.

      File Liens Against Property

      If required, the nominee officer can serve throughout the year signing certain contracts and leases, filing liens against property as requested by the attorney. The stockholder remains in complete control behind the scenes as the nominee officer provides the human face for the corporation.

      Maintain The Corporation

      Maintain the corporation and its records to reinforce the corporation’s presence and appropriate adherence to federal, state and local laws. The nominee officer fulfills requests in the administration of the corporation. All directives are sent directly through legal counsel.

      CALL G.D. JALIL AT 484.256.4563 FOR MORE INFORMATION

       

       

      ASSET PROTECTION DISCLAIMER

      • Always seek legal counsel and advice from a competent tax advisor.
      • Avoid complications as they relate to controlled groups of corporations and related party transactions.  Speak with a tax adviser on how owning stock in two or more corporations can trigger penalties if they do business with one another and the same persons own the stock of both corporations.  Interpretation of the tax code is subjective and difficult.
      • Consider the Constructive Ownership of Stock rules when owning bearer shares.
      • Don't use a corporate presence in Wyoming or Nevada when the product or service is sold intra-state; in another state.
      • Fully document all promissory notes.
      • File income taxes on time and pay in full.
      • Don't send funds offshore and expect to get off the tax hook.  Americans are taxed on their worldwide income.
      • The role of the nominee officer is simply to advise the stockholders and be listed on public records to increase personal security. 
      • The attorney-client privilege won't protect you if you're engaged in civil or criminal fraud.
      • If you're not certain about the tax consequences, seek legal and tax help.
      • "Asset Profile" and "Asset Protection From Divorce" are based on dialogues between fictional characters.
      • Our manuals are often purchased by professionals involved in personal security, executive protection, private investigation, law and the tax profession.  Seek adequate counsel in tracking and in the counter-intelligence of asset control.
      • We are not in the business of preparing tax returns or providing tax advise.  The examples explained give a superficial example of the strategies used by small business people.  Private investigators and legal counsel should take note of these strategies in the protection of their clients.
      • Pay state income tax in your own state if that is where the sale is approved.
      • Use the information on the website to assess how to increase your personal security and as a team effort with your private investigator, or legal counsel.
      • The author and the publisher are not engaged in rendering accounting, tax or legal advice. Always consult a tax attorney prior to implementing any suggestions written in this manual.
      • This material is not a substitute for legal or tax advice.
      • We don't provide tax advice, tax opinions, tax strategies or tax shelters.
      • Contact a licensed tax attorney in the state in which you reside if you need these products and services. Think twice if you're told not to consult with the IRS.

      LINKS

      Asset Protection For Physicians & Nominee Officers   Wyoming Virtual Office   Nevada Virtual Office   Asset Protection, Divorce & Nominee Officers   Divorce, Alimony, Asset Protection & Nominee Officers   Nevada Resident Agents   Asset Protection & Nominee Officers   Asset Protection Tutorial   Sandy Botkins, CPA   cash for gold  

       

       

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