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Note: This page is “under construction”. More examples are forthcoming.
Insulating Oneself from Automobile-related Liabilites
An automobile is another asset that comes bundled with obvious liability-creating potential. In the U.S. most states have minimum standards for insurance liability coverage that must be met before an automobile registration and license plates will be granted. No matter how much liability coverage is purchased, an accident involving a vehicle can create medical costs and property damage exceeding the liability coverage limits.
Consider Mr. John Smith, who has just arranged the purchase of an 8-cylinder SUV and who has twin teenage sons, who both recently obtained their driver’s licenses. Mr. Smith has taken W.I.L.’s educational materials to heart and disassociated himself from the ownership of the major assets supporting his lifestyle, and wants to implement this philosophy with the new vehicle. Mr. Smith has already purchased a (very expensive) auto insurance policy with high coverage limits, but does not want to take any chances.
A New Mexico LLC by the name of Humongous Auto, LLC is formed by International Holdings, Inc., a Panama Corporation, and Mr. Smith. International Holdings is the major owner, holding 99% of Humongous Auto, LLC’s membership interest. Mr. Smith holds a 1% interest. The auto’s title is encumbered by a lien equal to the amount of the vehicle’s value, which secures the loan made by International Holdings to Humongous Auto in order to effect the vehicle purchase. A third party offshore company is hired to be the Manager of Humongous Auto, LLC.
In the event of an accident that exhausts the vehicle’s insurance policy coverage, a liability creditor would likely seek recourse from the vehicle’s owner and manager, and from the residual value of the vehicle itself. If the driver were Mr. Smith himself, the creditor might attempt to attach Mr. Smith’s incidental assets from which he had not divested ownership. If the driver were one of his sons, the son’s personal assets (bank accounts, music and video game collections, etc.) would be at risk as well as Mr. Smith’s. Seeking recourse from the legal venue governing the entity exercising managerial authority over the use of the auto - the offshore Manager of the LLC - would be a difficult and expensive proposition. In a direct claim against the LLC’s assets, i.e., the auto itself, the creditor’s claim may or may not be deemed superior to that of the lien holder – depending on the vagaries of the legal system – but the lien would provide some protection in any case.
[Note: W.I.L. does not condone shirking any responsibility for making whole those whom one has damaged. We do promote protecting oneself against potential losses unrelated to the operation of universally understood and shared laws of justice, including those costs that get dumped on individuals rather than properly assigned to out-of-control government and legal systems.]
Why New Mexico?
The corporations and LLCs of other states such as Nevada, Delaware, and Wyoming are far more heavily promoted, but a New Mexico LLC offers the same or superior benefits to its better-known counterparts at a fraction of the price ($500 to set up using WIL). The superior benefits are the much lower profile New Mexico LLCs make possible. In New Mexico, only the following is required for the Articles of Organization:
New Mexico does not require that the names of the owners be included in any public records. The LLC Members’ and Managers’ names will not appear on any document other than your Private Operating Agreement. Other than a $100 annual fee for the Registered Agent, New Mexico LLCs incur no annual fees. There are also no annual reporting requirements, hence changes in ownership are not recorded publicly. States like California levy an $800 or more annual franchise tax!
We would like to point out that online “incorporation mills” do not preserve your anonymity or privacy, nor do they necessarily include the followup support. WIL’s New Mexico LLC provides you with exclusive operating agreements and proprietary support documents. These documents are specifically written with privacy and asset protection in mind.
New Mexico LLC’s can be purchased from W.I.L., starting here.
Contact Wealth International, Ltd. for information if you have additional questions that were not answered by this general information.
NOTE: This report is presented with the understanding that the publisher is not engaged in rendering legal or accounting services. Questions relevant to the specific tax, legal, and accounting needs of the reader should be addressed to practicing members of those professions. This information was gathered from sources believed to be reliable but it cannot be guaranteed insofar as it applies to any particular taxpayer. Wealth International, Limited specifically disclaims any liability, loss, or risk, personal or otherwise, incurred as a consequence directly or indirectly of the use and application of any of the techniques or contents of this report. No copies of this material may be made or redistributed without the express written consent of Wealth International, Ltd.
