There are several factors that have to be considered before organizing a Limited Liability Company (LLC) that can protect assets from the reach of creditors in a legal dispute. Some of the factors to be considered in making this baseline determination should include:
- The legitimate business purpose of the LLC
- The number of owners in the LLC and how the LLC may need to be divided or funded among those owners
- The taxation of the LLC
- The ongoing costs of the LLC
- The history of use of a LLC for the particular purpose it’s being considered for, including case law
Assuming these all support the LLC as a good fit for the usage at hand as opposed to some other legal structure such as a corporation, trust, or partnership, you must look at some other specific factors to determine how many LLCs an individual may need. Contrary to popular belief, you don’t always need a separate LLC for every piece of real estate. Similarly, an LLC is not a universal fit for every situation or every asset. It should not be funded like a garbage can, where multiple properties, businesses, and even safe passive assets are mixed into a cocktail of liability. This is a common fatal flaw seen in asset protection plans that are structured without assistance of an experienced attorney.
It is critical for business owners to seek preventive legal counseling to carefully consider creation of asset protection plans before legal disputes have arisen so that LLCs can be properly used as one of the tools to protect assets.
If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and have questions about Asset Protection, call (800) 734-9900 or clubassist@amerilawyer.com for assistance. Remember, as a member of the General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.
Spiegel & Utrera, P.A. is a corporate law firm with its main offices located in Miami, Florida with offices throughout the United States. As a law firm, we do more than just help you form your business entity. We stand ready to help with the maintenance of your legal business entity! We will assist you with Incorporation Service, Trademarks, Copyrights, Estate Planning, Legal Counsel, Wills, Trusts, Agreements & Leases, Corporate & Company Changes.