Why a Foreign LLC Does Not Protect Florida Residents

A Florida resident who forms an LLC in Wyoming, Nevada, Delaware, or Nevis does not gain additional asset protection from doing so. Florida courts apply Florida’s creditor remedies to a Florida debtor’s LLC membership interest regardless of where the LLC was organized. The interest is intangible personal property located where the owner resides, and the state of formation does not change that.

Four Florida court decisions between 2014 and 2022 tested every version of the out-of-state LLC strategy and rejected each one. Alper Law was directly involved in two of those cases.

Why Florida Residents Form Out-of-State LLCs

Florida does not provide charging order exclusivity for single-member LLCs. Florida’s Revised LLC Act, § 605.0503, allows a creditor to foreclose on a single-member LLC interest after first obtaining and attempting to enforce a charging order. The creditor who forecloses becomes the new owner of the LLC and can liquidate its assets.

Wyoming, Nevada, Delaware, and Nevis all provide charging order exclusivity for single-member LLCs by statute. A creditor in those jurisdictions can receive only a lien on future distributions, not ownership of the LLC itself. This is a meaningful difference—if the LLC’s local law actually applies.

Online formation services promote out-of-state formation as the fix for Florida’s single-member vulnerability. The theory: form the LLC in Wyoming (low fees, strong statute) or Nevis (offshore jurisdiction, no U.S. court access), and the LLC’s home-state law will govern creditor remedies. The problem is that this misunderstands how creditor collection works when the debtor lives in Florida.

The Membership Interest Follows the Owner

Florida courts have consistently held that an LLC membership interest is intangible personal property located where the owner resides. When a creditor obtains a judgment against a Florida resident and seeks to collect against that person’s LLC interest, the creditor files in Florida. The Florida court applies Florida law—not the law of Wyoming, Nevis, or wherever the LLC was organized.

The case that established this principle for foreign LLCs involved a Nevis-organized LLC. In Wells Fargo Bank v. Barber (M.D. Fla. 2015), a creditor holding a $62.5 million deficiency judgment sought to foreclose on the debtor’s interest in a single-member Nevis LLC. The debtor argued that Nevis law governed and limited the creditor to a charging order. The court rejected that argument, holding that the membership interest was intangible personal property located in Florida because the owner resided in Florida.

The court then applied Florida’s creditor remedies under § 608.433(6) and permitted foreclosure of the single-member LLC interest. The debtor lost the LLC and its assets despite having organized the entity in a jurisdiction with stronger statutory protections. The Nevis LLC Ordinance’s charging order exclusivity, bond requirements, and short statute of limitations were irrelevant because the Florida court never needed to apply Nevis law.

The Barber holding applies equally to domestic out-of-state LLCs. A Florida resident who forms a single-member LLC in Wyoming receives Wyoming’s statutory protections only if a Wyoming court handles the collection proceeding. When the creditor proceeds in Florida, which is where the debtor lives and where collection proceedings are filed, the Florida court applies Florida law.

The Certificated-Interest Workaround

After Barber, practitioners attempted a workaround: convert the LLC membership interest into a certificated security under UCC Article 8, issue a physical certificate, and store it outside Florida. A physical certificate located outside Florida would establish the situs of the interest in the foreign jurisdiction, forcing the creditor to proceed there, or so the theory went.

Under UCC Article 8, a certificated security is transferred by physical delivery of the certificate. If the certificate sits in Canada, a Florida court arguably has no in rem jurisdiction over it.

In Schanck v. Gayhart (Fla. 1st DCA 2018), the court rejected this strategy. The debtor had moved stock and LLC membership certificates to Canada. The creditor asked the Florida court to order cancellation of the existing certificates and reissuance of new certificates in Florida. The court held that Florida’s UCC § 678.1121(5) authorizes courts to aid creditors through any means allowed in law or equity, including ordering reissuance. Moving the certificates to a foreign jurisdiction did not prevent the Florida court from acting.

Alper Law served as co-counsel in Schanck. The decision eliminated the last procedural workaround for establishing foreign situs through certificated interests. Certificates remain useful for tenants by the entirety documentation and internal governance, but they do not create a jurisdictional shield.

Can Florida Courts Compel Action on Foreign Assets?

A 2014 decision from Florida’s Fourth District Court of Appeal temporarily supported the foreign-LLC strategy. In Sargeant v. Al-Saleh (Fla. 4th DCA 2014), the court held that it could not order the turnover of stock certificates in a foreign corporation because the court lacked in rem jurisdiction over property located outside Florida.

The Sargeant decision created a conflict between Florida’s appellate districts. The First DCA in Schanck had reached the opposite conclusion, that in personam jurisdiction over the debtor was sufficient. The Florida Supreme Court resolved the conflict in 2022.

In Shim v. Buechel (Fla. 2022), the debtor held a $4 million check in South Korea. The judgment creditor asked the trial court to compel the debtor to turn over the foreign asset. The trial court denied the motion, citing Sargeant and the lack of in rem jurisdiction over property in a foreign country.

The Florida Supreme Court reversed. The court held that § 56.29(6) authorizes trial courts to order a debtor to act on property outside the court’s jurisdiction, provided the court has in personam jurisdiction over the debtor. The court expressly disapproved Sargeant, eliminating the last legal basis for arguing that foreign assets are beyond a Florida court’s reach.

The Shim decision completed a sequence that began with Sargeant in 2014. Over eight years, every argument for why a foreign-organized entity could shield a Florida debtor’s assets was tested and rejected. Any asset in the debtor’s hands or under the debtor’s control is reachable through the debtor, regardless of where the asset sits.

Why Specific Jurisdictions Fail

Wyoming. Wyoming’s LLC statute provides charging order exclusivity for single-member LLCs and does not require the creditor to post a bond. These protections apply in Wyoming courts. They do not apply in Florida courts when the debtor is a Florida resident. A Florida LLC and a Wyoming LLC provide functionally identical protection for a Florida resident because the same Florida creditor remedies apply to both.

Nevada. Nevada’s charging order statute similarly protects single-member LLCs. For Florida residents, the same choice-of-law problem applies. A Nevada LLC also introduces an additional risk: Nevada does not recognize tenants by the entirety ownership of LLC interests. Married Florida residents who hold LLC interests as tenants by the entirety lose that protection if the LLC is organized in Nevada.

Nevis. A standalone Nevis LLC provides the strongest statutory protections of any LLC jurisdiction: charging order exclusivity, a three-year sunset on charging orders, a creditor bond requirement, a beyond-reasonable-doubt fraudulent transfer standard, and a two-year statute of limitations. None of these protections apply when a Florida court collects against the debtor’s membership interest under Florida law. The Barber case demonstrated this directly. A Nevis LLC has value as a holding entity within a broader offshore trust structure, but it does not protect a Florida resident as a standalone entity.

Delaware. Delaware’s LLC statute provides charging order exclusivity and some of the most developed entity case law in the country. For asset protection purposes, a Florida resident’s Delaware LLC interest receives the same treatment as any other out-of-state LLC interest. Florida law governs collection.

The Added Cost of a Strategy That Does Not Work

A Florida resident who forms an LLC outside Florida pays more to maintain the entity without gaining any legal advantage. The out-of-state LLC requires a registered agent in the formation state and annual report filings in both states. If the LLC owns Florida real estate or conducts business here, it must also register as a foreign LLC with the Florida Division of Corporations. That registration carries the same $138.75 annual report fee as a domestic Florida LLC, on top of whatever the formation state charges.

The total annual overhead for a Wyoming LLC used by a Florida resident typically runs $300–$500 per year more than a single Florida LLC, depending on registered agent fees and filing costs. That difference is modest in isolation, but it funds a structure that Florida courts treat identically to a domestic LLC for creditor collection purposes. A Florida resident’s LLC asset protection depends on how the entity is structured, not where it was formed.

What Works Instead

The foreign-LLC strategy fails because the debtor remains within the court’s jurisdiction. A Florida court can order a Florida debtor to do anything within the debtor’s legal power: repatriate assets, sign documents, cancel and reissue certificates, surrender property. Noncompliance is enforceable through contempt sanctions.

An offshore trust with an independent foreign trustee overcomes this problem. When a licensed trustee in the Cook Islands holds the assets, the court’s authority over the debtor does not translate into control over the trust. The trustee is not a party to the Florida proceeding, is not subject to the Florida court’s authority, and owes no duty to comply with a Florida order.

A multi-member Florida LLC provides effective domestic protection without the cost and complexity of an out-of-state formation. Under § 605.0503(3), the charging order is the exclusive remedy against a member’s interest in a multi-member LLC. Adding an irrevocable trust as a second member converts a vulnerable single-member LLC into a protected multi-member structure.

The difference between a foreign LLC and an offshore trust is not just jurisdictional—it is structural. A foreign LLC leaves the debtor in control of assets that a Florida court can reach through the debtor. An offshore trust removes the debtor from the chain of control entirely, placing management authority with an independent trustee in a jurisdiction that does not enforce U.S. civil judgments.