I have been getting a lot of questions about what the minimum percent a second member needs to have in order for an LLC to qualify as a multi-member LLC. The purpose of forming a multi-member LLC, rather than a single-member or solely-owned LLC, is because a creditor’s exclusive remedy with respect to the LLC …
Minimum Percentage to Qualify as Multi-Member LLC Read More »
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 …
Using a Foreign State’s Domestic Asset Protection Trust Law in Florida Read More »
A client, a married man, acquired and owned a LLC membership interest in his own name while living in Texas. He and his wife moved to Florida. A Texas court entered a money judgment against the wife only, and the creditor moved the judgment to Florida. Texas is a community property state; Florida is not …
What Happens to Community Property Rights When You Become a Florida Resident? Read More »
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 …
Forming an LLC in Another State May Not Be Smart Read More »
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 …
Operating Agreement Can Avoid Probate of Florida LLC Membership Interests. Read More »
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 …
Priority of Sequential Charging Liens Against Same LLC Membership Interest Read More »
A limited liability company provides asset protection because a creditor’s remedy is limited to a charging lien against the debtors share of profit distributions from the LLC. An interesting issue arises when the debtor owns a membership interest in an LLC that was organized in a state that is different from the debtor’s residence. Does …
Colorado Supreme Court Decision Supports Forming LLCs Outside Florida Read More »
LLCs are useful asset protection tools because Florida law limits a creditor’s remedy to a charging lien on distributions to LLC members. One of my clients was relocating to Ohio and asked if he would get the same LLC asset protection after he became an Ohio resident owning a Florida LLC. I explained that the …
LLC Charging Liens Applicability To Withdrawal of Capital Contributions Read More »
The IRS has issued regulations concerning the estate planning benefits of family partnership. These regulations can affect asset protection planning because they reduce the effectiveness of estate planning rationale for transfers of non-exempt assets in to family partnerships. The IRS proposed regulations were discussed in an article in the Wall Street Journal. Limited partnerships can …
Some of my clients ask me whether there is an advantage to create an LLC Delaware. There may be benefits to a Delaware LLC, but the advantages are largely misunderstood. Delaware law specifically protects single member LLCs from collection remedies other than charging liens. Many people think that if they form a single member LLC …
Are There Benefits From Forming LLC in Delaware? Read More »