The IRS & Creditors

My partner and I started an LLC together and he has acumulated some debt while we had the LLC as well as prior to us forming the LLC…

He has passed away this year, and he owes the IRS, as well as creditors, will either of the two be able to recoup if the LLC starts being in revenue.

I intend to wholesale an REO, but its possible that I could keep it as a rental…Can someone shed some light on this for me from both perspectives…Thanks

They can get a charging order. If they do it right, it will have the following conditions:
No member can take money out of the LLC.
The LLC can’t loan money to anyone.
The LLC can’t sell major assets.
The LLC can’t purchase assets.
A receiver manages the LLC.

If you have a good operating agreement, there should be language that removes the rights of the debtor member (e. g. right to examine books, voting rights).

I would dissolve the LLC and start fresh.

WOW!..I expected to hear that I could just remove his name, and eveything would be fine. When you say dissolve, do you mean that in terms of scraping the whole thing, STarting over and paying all those high fees…Please pardon my lack of knowlege on this…Thanks BLL

How do you propose to take his name off it? His estate is entitled to his distribution.

Yes. You take your share and start all over and with those fees. If you had a qualified planner set up your LLC, you would have had a death clause that would have allowed you to buy out his estate at book value. The creditors get peanuts and you get the LLC. Check yours. You might get lucky.

Yes I do believe there is: It says “Option to Purchase a Deceased Members’s Interest” then under that it deatails that I have a choice to pay off his beneficiaries…

Thing is, we haven’t made any money under our LLC, so I’m guessing his wife would just sign over his shares (percentage in the coampany)…Will I have to file with the state again…What exactly are the steps I must take to clean this up…Thanks in advance

The wife can’t just sign them over. They are an asset that can be used to pay creditors. It’s a different story if they don’t want them, but she can’t just give them away.

For the specific steps for your state, contact the attorney who set up your LLC.

It kinda sounds like I will just scrap it as you mentioned originally…The attorney that set it up, is a jerk…Never heard from him after setting up the LLC, So I guess my best bet is to have another attorney look over everything, then I can just weight my options…I just want a 1 -2-3 process, no headaches or drawn out process…So as a summary to all this, what do you suggest…

That’s why I don’t like DIY kits and the el cheapo LLC. There is no support. What happens if there is a new case that changes the way LLCs must operate? The jerk won’t update you, but a qualified planner will study the case, devise a solution, and inform all the clients that need to know. With the jerk, you don’t find out there’s a problem until it’s too late. You want a relationship with your attorney. You don’t want someone who just throws documents at you without updating you. You can get free ones on the Internet that are just as good as what they provide and you will get the same level of service (i. e. none).

You’ll need to find someone qualified and willing to work with lower net worth clients. Ryan Fowler and Andersen Business Partners are two such people. There is another man in Georgia that has access to a network of professionals that works with investors. I can’t remember his name and couldn’t find his site via Google. He does come recommend by attorney Howard Spiva. Howard can put you in touch with him.

I believe you are better off liquidating the existing LLC and starting a new one. It’s not the cheapest solution, but I think it’s the cleanest.

Here is the site: I mentioned in the other post that I couldn’t find.

Yeah your right, so thats it for Hansley & Ward Real Estate Group…Thanks BLL