[quote author=BLL link=topic=38438.msg184734#msg184734 date=1221009735]
It’s a good idea if you plan to trade mutual funds. It’s a bad idea if just holds it as that increases the chance that an alter ego claim will work.
I was thinking of placing my brokerage account, which has mutual funds in it, in an LLC. I can see advantages of asset protection and privacy. “Appear broke” sounds like good asset protection advice. Comments welcome.
Nice try. Use a business entity to hold personal assets with the intent to defraud creditors. I don’t have enough fingers and toes to count the number of times this set up has failed in court. The LLC is just treated as the alter ego of the members since there is no business conducted by the LLC.
Criminal intent to defraud is not the subject, it’s asset protection. Keeping what you have out of plain sight is to avoid attracting the attention of sharks, thieves, and phony injury claims. If they don’t find assets, they won’t sue. Since LLC’s tax liability flow through to the owner or member(s), there is no issue with personal holding companies which applies to having multiple corporations to avoid taxes. You manage your investments, why not your LLC? Financial services is a huge industry and a legitemate business activity. I’m exploring why not isolate assets into separate entities for privacy and asset protection and why not put your brokerage savings into an LLC? Why not have your Roth IRA be a member and have much of it tax free? Thanks for the sounding board, your pevious reply and any new replies.
Then your research will lead you to the conclusion that business entities must own business assets and conduct business. They are not respected when the entity holds personal assets or does not conduct business. They are treated as a mere extension of the owners for liability purposes. There is no asset protection and you will understand when you read the case law.