You run into the same problem with corporations. So that's not a unique problem to LLCs. The issue is the charging order when it comes to LLC. I think Esquire to a great job explaining all the details.
Incorporating and doing it right this time
- Thread starter erdini
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You run into the same problem with corporations. So that's not a unique problem to LLCs. The issue is the charging order when it comes to LLC. I think Esquire to a great job explaining all the details.
If a charging order doesn't exist or isn't exclusive, could you skirt consequences by 1) giving a few shares to a family member for a small investment and/or 2) licensing assets (like a domain name) to yourself from a private offshore entity or I guess even a US entity?
1) I think the court would view giving family members a small percentage of ownership via a member certificate as a sham unless they paid what would be considered market value for the member certificates.
2. That might work as long as it was a corporation of some sort or a multi member LLC. I'm not 100% sure. The key would be to have a lawyer write you strong legal agreement(s) between the two entities.
Esquire would know best about it, but these are my 2 cents.
Ok... This is a question that does not involve IM. I have a place in the country. Actually two plots. One is a home and 9 acres. The other is 68 acres of mostly pasture land.
I plan to start raising cattle on the pasture land. Do i form an LLC and lease the land to the LLC?
I assume there would be little liability with this type of operation, but in todays climate one never knows. BTW I'm in Alabama
I plan to start raising cattle on the pasture land. Do i form an LLC and lease the land to the LLC?
I assume there would be little liability with this type of operation, but in todays climate one never knows. BTW I'm in Alabama
You run into the same problem with corporations. So that's not a unique problem to LLCs. The issue is the charging order when it comes to LLC. I think Esquire to a great job explaining all the details.
He said what I was saying. Protecting the "innocent" partners.
He said what I was saying. Protecting the "innocent" partners.
You were talking about a scenario where a partner in the company commits fraud within the business, the other innocent owners are protected; this isn't the same thing that Esquire was discussing however.
A charging order is basically a reverse limited liability protection. It protects the business as well a the other owners in case one of the owners is personally sued over an UNRELATED matter and doesn't have enough money to pay off the judgment.
If one of the owners of the LLC is sued over a matter that is not related to the business, such as defaulting on a personal loan, and then he has a judgment that says he owes $X amount plus interest but he doesn't have enough money to pay off the full judgment all at once, then the money can be diverted from the LLC through a charging order. The owner with the judgment however does not lose control of the business, he simply can't enjoy the profits that it generates since they are diverted to pay off the judgment.
You were talking about a scenario where a partner in the company commits fraud within the business, the other innocent owners are protected; this isn't the same thing that Esquire was discussing however.
A charging order is basically a reverse limited liability protection. It protects the business as well a the other owners in case one of the owners is personally sued over an UNRELATED matter and doesn't have enough money to pay off the judgment.
If one of the owners of the LLC is sued over a matter that is not related to the business, such as defaulting on a personal loan, and then he has a judgment that says he owes $X amount plus interest but he doesn't have enough money to pay off the full judgment all at once, then the money can be diverted from the LLC through a charging order. The owner with the judgment however does not lose control of the business, he simply can't enjoy the profits that it generates since they are diverted to pay off the judgment.
Jesus Christ, you like to pick at the details don't you without seeing the big picture.
I know how charging orders work but thanks for the unneeded information.
Charging orders are to protect partners.
Regardless of who is suing whom. But, we are talking about single member llcs, or at least your question was about it.
Now, as for asset protection in single member LLC. I am skeptical at best regardless of where it is being done.
Supreme Court Wipes Out Asset Protection For Single Member LLCs -
Also a Maryland case which addresses when fraud is present.
Serio: Corporate Veil Of Single-Member LLC Holds Up In Maryland To Protect Owner In Absence Of Fraud - Forbes
"Maryland statutes provide to the effect that a member of an LLC cannot be liable for the debts of the LLC simply because of the fact of membership. But Maryland law recognizes the equitable remedy of veil piercing “where it is necessary to prevent fraud or enforce a paramount equity.”
Chances are if you are sued and lost, you did something wrong. With that said, as a single member llc, I wouldn't put faith that the corporate veil wouldn't be easily pierced if you did done something wrong, son.
Jesus Christ, you like to pick at the details don't you without seeing the big picture.
I see the big picture just fine. I've even been sued and was dismissed from the lawsuit personally, while my corporation settled outside of court. It wasn't a US corporation however. Don't make assumptions.
Also your answers weren't very helpful. I prefer how Esquire handled it.