Asset Protection Limited Liability Company
Florida Asset Protection LLC Lawyer
In Florida Asset protection attorneys often use LLC's (Limited liability company's) for Florida Asset Protection. Our Attorneys and Lawyers help protect assets from creditors and potential liabilities by making sure their business assets are properly structured for protection. Not every LLC offers asset protection for Florida businesses but they must be properly structured to achieve these statutory benefits.
On May 31, 2011, Governor Rick Scott approved House Bill 253. The Bill was crafted in response to the Florida Supreme Court decision in Olmstead v. FTC last year. It clarifies that a charging order is the sole remedy available to a creditor who holds a judgment against a member of a multiple member LLC. However, single member LLC’s remain vulnerable to creditors forcing a debtor to surrender all right, title and interest in his LLC to satisfy an outstanding debt.
The Limited Liability Company (LLC) can be used for asset protection, estate planning, and as a general business entity.
The individual's ownership in the Limited Liability Company are not "exempt" from debts of the company (their Creditors). The LLC's asset protection is available because of the way in which a creditor must collect a judgment from a properly created LLC.
Unlike a corporation, creditors can't seize ownership interest in some types of a Limited Liability Company. In choosing the right options within the LLC Operating agreement, the member can limit a creditor's rights and they may only be able to receive distributions. In this case, unless there is a distribution the creditor will not receive anything. Thus a LLC can stop making distributions to avoid paying the creditor.
The process of collecting against a LLC involves using a charging order or charging lien. When these are filed against the LLC they can create income tax liability even if they are never collected. Creditors may incur an income tax liability because of enforcement of a charging order. Companies often start paying the owners a salary, and stop making distributions. The member's salary can be exempt if they are head of their household. This means that the member's salary is not subject to a garnishment. Another solution is for the LLC to use annuities to distribute money to the member.
For now this protection only applies to some multiple member LLC's in which at least one of the member is not responsible for the debt. Recently the Florida Supreme Court was asked to clarify whether the charging order applies to a single owner limited liability company and found that a charging order does not apply to a single member LLC. The court decision has some Florida lawyers hesitant to use Florida LLC's you should contact us to find out what other options you have based on your personal circumstances.
For more information on how to use a LLC for asset protection in Florida Contact a Jacksonville Florida asset protection lawyer by email or by calling (904) 685-1200 to schedule a meeting.