Limited liability companies were designed to do what their name suggests, limit your liability. LLC’s limit the owner’s liability for any bad business debt within the corporate structure. However, most people fail to think about how to protect their ownership interest in the LLC. As Asset Protection Attorneys we have seen that the laws in some states have allowed for your ownership interest to be taken to satisfy creditor claims.
Creditors have two primary remedies which they can pursue to get their payments.
Charging order remedy – a creditor who receives a judgement against you will have the right to any distributions made to you by the LLC. Effectively taking your income but not your interest in the business.
Foreclosure – If a state has a foreclosure remedy the creditor can choose to foreclose on your ownership interest in the business thereby taking the business for themselves or liquidating it to receive payment on its debts.
The safest states to own an LLC for Asset Protection purposes are states which offer the charging order remedy exclusively. If your state does not limit creditor remedy to charging order exclusively you may not be fully protected. To see what your states creditor remedies are, visit our page on charging order protection.
Some of the states that limit creditors to exclusively a charging order are:
- Connecticut
- Delaware
- Florida (multi member only)
- Mississippi
- New Hampshire (multi member only)
- North Carolina
- Ohio
- Texas
- Virginia
The states that do not specifically indicate charging order exclusivity may allow for other creditor remedies based on case law and previous judgements. This does not mean that you should not utilize or own an LLC in any of these states, but instead it means you may need to utilize additional Asset Protection strategies to ensure you are fully protected.
In order to ensure you are properly protected you should seek the counsel of an attorney dedicated to Asset Protection who can help you navigate the intricacies states specific laws. Call us today to receive a complimentary consultation with one of our experienced Asset Protection Attorneys.
The Presser Law Firm, P.A.
6199 N. Federal Highway, Boca Raton FL 33487
(800) 999-9992 or e-mail Info@AssetProtectionAttorneys.com
