I am a new member of this (great) forum and I first wanted to thanks you. This forum helps me a lot. I always take a look at this forum before I call an Lawyer, CPA, Tax Adviser…
(English is not my first language, so please forgive… odd expressions and poor orthography)
My 1st post is about something that I have read recently:
An updated Wyoming LLC law is (suposed to give) the best LLC asset protection law. The following is from a web site:
“Now, as of July 1, 2010, Wyoming has pioneered a new form of Close LLC precluding creditors from any legal or equitable remedy other than a charging order against the LLC interest, even as to Single Member LLC’s. The charging order is the “exclusive remedy.” Other remedies, including foreclosure and a “court order for directions, accounts and inquiries” are not available and may not be ordered by a court. This means that you do not have to have 2 or more members in the LLC to get the charging order protection!”
Anybody agree with it ? Do you have more details ?
Fonz
Nothing special here. Many states already limit creditors to a charging order. Here is a new type of charging order used by creditors.
No one can take any money out of the LLC.
The LLC cannot loan money to anyone.
The LLC can’t sell property or major assets.
The LLC can’t buy property or major assets.
A receiver is appointed at a cost of as much as $600/hr.
How long can you operate under these conditions before you give the creditor what he wants?
This law doesn’t apply to bankruptcy and it only takes an $11,000 to force a debtor into involuntary bankruptcy.
There is also fraudulent transfer and alter ego theories to pierce the LLC. No charging order needed.
The most important part of this law is that it only applies to WY LLCs that operate in WY. A foreign WY LLC is subject to the laws of the other state. It doesn’t do any good unless you live and operate your business in WY.
And in fact, I live in Florida and operate one (consulting) business (SMLLC taxed as a S-Corp) in Florida, not Wyoming…
I would like to invest in condos or small multi units in Florida, in addition to my actual business. For asset protection, I know how SMLLCs and even MMLLCs are useless, here in Florida.
Any suggestion regarding the choice of a business entity in Florida, for asset protection purpose ?
In fact, I have read in this forum this suggestion :
“For the best (yeap could be cumbersone) property in Land Trust, beneficiary is an LLC, the LLC’s members are a couple of Personal Property Trusts, those trusts are owned by you and your wife.”
Seems to me very complicated…
I agree with the land trust, but after that, not sure !
I don’t. I have FL colleagues who are still trying to figure out exactly what Olmstead means for them. I suspect the legislature will have to act to bring clarity.
This is just guru nonsense from people who don’t work in the real world. What is the business purpose for such a convoluted mess. If you don’t have a good answer, the judge will assume you are up to no good and rule against you. Asset protection doesn’t look like asset protection and doesn’t get challenged as such. The opposing attorney will whip out some guru course that advocates this crap as evidence you have engaged in a scheme to defraud creditors. Then, you will have no credibility in the judge’s eyes. Use simple, time-tested strategies that have long case law. New in the legal world means unknown and that is not what you want. Let someone else be the test case and learn from their mistakes.