LLC

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Is Florida a Community Property State?

No, Florida is not a community property state. In a community property state, any assets acquired by either spouse during the marriage are considered marital property and therefore owned by both spouses. In some community property states, even income earned from pre-marital separate property is still considered community property. Instead, Florida is an equitable distribution…

Is a Single Member LLC in Florida Protected from Creditors?

Florida has enacted a statute specifically dealing with single member limited liability companies. The statute authorizes single member LLCs. The statute includes creditor remedies to collect a judgment from a debtor’s membership interest in the debtor’s single member LLC. Generally, a judgment creditor’s sole remedy against multi-member LLCs is limited to a charging order. The…

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Using a Foreign State’s Domestic Asset Protection Trust Law in Florida

Some states, not Florida, have statutes that encourage asset protection trusts. These states’ statutes provide that if a debtor establishes an irrevocable trusts for their own benefit the assets that the debtor conveys to his trust are protected from his creditors. The trustmaker must reside or have significant assets in the state where the trust…

Forming an LLC in Another State May Not Be Smart

Florida debtors often form LLCs in other states because they believe the laws of the foreign state provide better asset protection in the manner of protection of single-member LLCs or more privacy for multi-member LLC ownership. Owning a membership interest in a foreign LLC can have unintended consequences as Florida debtors recently found out in…

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Operating Agreement Can Avoid Probate of Florida LLC Membership Interests.

From time to time we receive inquiries about using limit liability companies to avoid probate of business interests and real estate. Some people believe that they can write terms and conditions in an LLC operating agreement that control the transfer of a member’s LLC interest after the member’s death. They believe that the deceased member’s…

Priority of Sequential Charging Liens Against Same LLC Membership Interest

Florida Statute 605.0503 states that a charging lien is a judgment creditor’s sole remedy against a debtor’s membership interest in a limited liability company. The statute does not explain what happens if two judgment creditors apply for a charging lien against the same LLC interest. It is not clear whether the second charging lien has…

Court Denies Garnishment of Member’s LLC Distributions

A writ of garnishment is a collection tool that gives the judgment creditor the right to collect a debt owed to the debtor. In a Florida appellate case decided earlier this year a judgment creditor convinced a trial court to issue a writ of garnishment against a limited liability company to garnish distributions that the…