Nevada vs. Wyoming LLC: Which State for an Asset Protection Company
When a client of ours wants a limited liability company primarily to protect assets rather than to run a local business, the entity is usually formed in Nevada or Wyoming. Both states have written their LLC statutes to make the charging order a creditor’s only remedy against a member’s interest, including a single-member company, and to bar foreclosure. Neither taxes individual income. Beyond that, they differ in cost, privacy, court experience, and practical convenience, and the choice between them is a matter of fit rather than a matter of one being right.
The out-of-state LLC is a tool with limits. It protects the owner’s interest in the company from the owner’s creditors; it does not protect the company’s assets from the company’s own liabilities, and it does not change the law that applies to real estate or a business located in the owner’s home state. Used correctly, as a holding company for investments and for the interests in home-state entities, it is a cost-effective protective layer. Formation alone, without appropriate assets, records, and administration, provides little protection.
Milvidskiy Law Group P.C. forms Nevada and Wyoming LLCs for clients in our three states, structures the holding arrangements that make them effective, and handles the foreign registrations, operating agreements, and trust ownership that complete the plan.
Key Takeaways:
- Nevada and Wyoming both make the charging order the exclusive remedy of a judgment creditor against an LLC member’s interest, expressly including single-member companies, and both bar foreclosure on the interest.
- Wyoming is generally the less expensive and more private choice; Nevada has a deeper body of business court decisions and is more familiar to some lenders and investors. For most passive holding structures we recommend Wyoming.
- An out-of-state LLC must still register in any state where it does business or owns property, and home-state law governs the assets located there. The protection comes from the structure as a whole, not from the certificate.
What the Two Statutes Say
Under Nevada’s limited liability company statute, a judgment creditor of a member may obtain a court order charging the member’s interest with payment of the judgment, and to that extent has only the rights of an assignee. The statute states that this is the exclusive remedy by which a judgment creditor may satisfy a judgment out of the member’s interest, whether the company has one member or more than one, and that no other remedy, including foreclosure on the interest or a court order for directions, accounts, and inquiries, is available or may be ordered. A trust established under Nevada’s spendthrift trust statute can be paired with the LLC for clients who want both layers.
Wyoming’s statute reaches the same result in similar words. A court may enter a charging order requiring the company to pay the creditor any distribution that would otherwise go to the debtor member. The section provides the exclusive remedy by which a person seeking to enforce a judgment against a judgment debtor, including a judgment debtor who may be the sole member, may satisfy the judgment from the debtor’s transferable interest or from the assets of the company, and other remedies, including foreclosure, are not available. The debtor can extinguish the order by paying the judgment, and the company or other members can pay the creditor and step into the creditor’s position.
The contrast with our home states is the reason clients consider these entities. New Jersey’s statute makes the charging order the exclusive remedy but expressly allows the court to foreclose the lien and sell the interest if distributions will not pay the judgment within a reasonable time. New York’s statute limits the creditor to an assignee’s rights and bars reaching company property, but does not declare the charging order exclusive. Connecticut’s LLC statute, by contrast, matches Wyoming and Nevada: the charging order is the exclusive remedy whether the company has one member or more, and attachment, garnishment, and foreclosure are barred, so a Connecticut resident’s home-state LLC already carries strong protection. Where the creditor can foreclose, as in New Jersey, the creditor can become the owner of the economic interest and, in a single-member company, argue for more.
Where Nevada and Wyoming Differ
Cost
Wyoming’s formation fee is modest and its annual report license tax is $60 or two-tenths of a mill on the company’s assets located in Wyoming, whichever is greater, so a holding company with no Wyoming assets pays the minimum. Nevada’s annual fees, which include a state business license and an annual list of managers or managing members, are higher, and the amounts are confirmed at formation. Neither state imposes a personal income tax; Nevada imposes a commerce tax on businesses with Nevada gross revenue above $4,000,000 a year, which does not affect a passive holding company, and Wyoming has no comparable tax.
Privacy
Wyoming’s public filings disclose less about who owns and manages the company than Nevada’s annual list, and Wyoming permits a registered agent to be the public point of contact. Neither state’s privacy is absolute: federal and state beneficial ownership reporting, lender due diligence, litigation discovery, and the registration of the company in a home state as a foreign entity all reveal ownership to the people who need to know. Privacy from casual searches is real; anonymity is not the goal and should not be expected.
Courts and familiarity
Nevada has a longer record of business litigation and a business court, and its charging order statute has been construed by its courts. Wyoming’s statute is clear on its face and has been tested less. Some lenders, title companies, and investors are more familiar with Nevada entities; others treat the two identically. For a passive holding company that will rarely be in court, the difference is small.
Trust pairing
Both states have asset protection trust statutes, so an LLC in either state can be owned by a domestic asset protection trust governed by the same state’s law and administered by a trustee there. Clients who want the trust layer usually choose the state for the trust first and form the LLC in the same state.
How the Structure Works for Our Clients
The typical arrangement is a Wyoming or Nevada holding LLC that owns investment accounts and the membership interests in home-state LLCs that hold real estate or operate a business. The home-state entities carry the liabilities of the property or the business; the holding company carries the owner’s interests in them and the portfolio assets. A creditor of the owner personally reaches only a charging order against the holding company under Wyoming or Nevada law; a creditor of a property reaches only that property’s LLC. The holding company may in turn be owned by an irrevocable trust or a domestic asset protection trust, which adds a further layer and addresses estate planning.
Three issues require particular attention:
- Foreign registration. A Wyoming or Nevada LLC that owns New York real estate directly or operates a New Jersey business directly must register in that state. The property or business remains subject to that state’s law and courts.
- Choice of law. A home-state court enforcing a judgment against a New York resident’s interest in a Wyoming LLC will usually apply Wyoming law to the company’s internal affairs. The result is not certain, so the plan should not depend solely on that position.
- Transfer restrictions. Transfers to the LLC remain subject to fraudulent transfer law. This planning addresses future creditors rather than existing claims.
An asset protection LLC, including a Wyoming LLC, should be coordinated with insurance and trusts as part of a broader asset protection plan.
Which One We Recommend
For a passive holding company owned by an individual or a trust in our states, we generally recommend Wyoming: the statute is as strong as Nevada’s, the cost is lower, and the filings are simpler and more private. We recommend Nevada when the client already has Nevada entities or a Nevada trust, when a lender or investor prefers it, when the company will do business in Nevada, or when the client values Nevada’s larger body of case law. Either state is a sound choice, and the structure around the entity matters more than the choice between them.
When Neither Is the Right Answer
An out-of-state LLC adds little when the only asset is home-state real estate that must be held by a home-state entity anyway, when the owner’s exposure is modest and insurance covers it, or when the owner will not maintain the formalities that keep the entity separate. It does not protect against an existing or threatened claim, and it does not protect the assets of a business from that business’s own liabilities. In those situations a home-state LLC, an umbrella policy, or no entity at all may be the better choice. We address these entity choices through business formation planning and, for property owners, asset protection for real estate investors.
What Our Service Includes
- Analysis of your assets, exposure, and home-state ties to decide whether an out-of-state LLC helps and which state fits.
- Formation in Wyoming or Nevada through a registered agent, with an operating agreement drafted for protection: transfer restrictions, distribution provisions, and manager structure that support the charging order.
- Foreign registration where required, and the home-state subsidiaries that hold real estate or operate businesses.
- Ownership by a trust where estate planning or a second protective layer calls for it.
- Beneficial ownership reporting, annual filings, and the record-keeping that keeps the entity respected, with review through our Client Care Program.
Discuss Your Entity Options
If you are weighing a Nevada or Wyoming LLC for investments, real estate holdings, or a professional practice’s excess assets, the decision deserves careful analysis before formation. Our attorneys practice in New York, New Jersey, and Connecticut. Contact Milvidskiy Law Group P.C. to schedule a consultation.
This page is provided for general informational purposes only and does not constitute legal advice. Laws differ by state and change over time. For advice about your situation, consult a qualified attorney.
Frequently Asked Questions
Why form an LLC in Nevada or Wyoming instead of my home state?
Because both states make the charging order the exclusive remedy of a judgment creditor against a member’s interest, expressly including single-member companies, and bar foreclosure on the interest. New Jersey permits foreclosure of a charged interest, and New York’s statute does not declare the charging order exclusive. Connecticut’s statute matches Wyoming and Nevada, so the out-of-state entity adds less for a Connecticut resident’s home-state assets. For a holding company that does not operate a local business, the formation state’s law generally governs creditor remedies against the owner’s interest.
What is a charging order?
A court order directing an LLC to pay a member’s creditor any distributions that would otherwise go to that member. The creditor receives the rights of an assignee, meaning distributions if and when they are made, and does not become a member, cannot vote, and cannot reach the company’s assets. In Nevada and Wyoming that is all the creditor can get.
Does a single-member LLC get charging order protection?
In Nevada and Wyoming, yes, by the express terms of each statute. In some other states courts have allowed creditors of a sole member to do more, on the theory that there are no other members to protect. That difference is one of the main reasons single owners choose these two states.
Which state is cheaper?
Wyoming, generally. Its annual report license tax is $60 or two-tenths of a mill on the company’s assets located in Wyoming, whichever is greater, so a holding company with no Wyoming assets pays the minimum. Nevada charges an annual state business license fee and an annual list filing that together cost more, and the amounts are confirmed at formation. Neither state taxes individual income; Nevada’s commerce tax applies only to businesses with Nevada gross revenue above $4,000,000 a year.
Which state offers more privacy?
Wyoming’s public filings disclose less about owners and managers than Nevada’s annual list. Neither offers anonymity: beneficial ownership reporting requirements, lenders, litigation discovery, and foreign registration in your home state all disclose ownership to those entitled to know. The benefit is privacy from casual searches, not concealment.
Can a Wyoming LLC own my New York or New Jersey real estate?
It can, but it must register as a foreign LLC in the state where the property is located, and that state’s law governs the property. The usual structure is a home-state LLC for each property, owned by the Wyoming or Nevada holding company, so that the property’s liabilities stay in the property’s entity and the owner’s interest is protected under the holding company’s law.
Will a New York or New Jersey court apply Wyoming law to my Wyoming LLC?
Usually, for the internal affairs of the company, including a creditor’s remedies against a member’s interest, courts apply the law of the state of formation. The result is not certain, particularly where the company has no real connection to Wyoming beyond its filing. The structure should be built with real substance so that it does not depend on that argument alone.
Does an out-of-state LLC protect against a claim I already have?
No. Transfers to an LLC are subject to fraudulent transfer law like any other transfer. Asset protection structures are for future, unknown creditors. Moving assets after a claim has arisen or is reasonably anticipated can be reversed and can create additional liability.
Can a trust own the Nevada or Wyoming LLC?
Yes, and it often should. Ownership by an irrevocable trust, including a domestic asset protection trust governed by the same state’s law, adds a second protective layer and integrates the entity with your estate plan. Both states have asset protection trust statutes, so the trust and the LLC can share a governing law and a trustee.
Which do you usually recommend?
Wyoming for most passive holding companies, because its statute is as strong as Nevada’s, its costs are lower, and its filings are simpler and more private. Nevada when the client already has Nevada entities or a Nevada trust, when a lender or investor prefers it, or when the client values Nevada’s larger body of court decisions.
