A limited liability company (LLC) is a form of business organization that offers numerous benefits. Primary among them is that it shields the owner’s assets from liabilities of the company, and the owner’s interest in the company from their personal liabilities.
If you are interested in LLC asset protection in Coral Gables, Ana M. Veliz can offer insightful legal recommendations. Our trustworthy asset protection attorney can explain the benefits of an LLC and help you set up an effective protection strategy.
The owners of an LLC are called members, but in Florida an LLC with only a single member does not enjoy significant asset protection benefits. When asset protection is a goal, an LLC should have at least two members.
The law does not require the LLC to have an operating agreement. However, a properly drafted operating agreement is essential to maximize the LLC’s asset protection capacities. Drafting an LLC operating agreement for asset protection is a complex undertaking and it is critical for Coral Gables residents to work with a skilled and knowledgeable attorney when setting up an LLC.
If a creditor obtains a judgment against a multi-member LLC, the members’ personal assets are not at risk. Only the resources owned by the LLC are available to satisfy the judgment. Individual members’ liability is limited to the extent of their personal investment in the company.
Some assets, like primary residences that qualify for homestead protection, are safe because they are already protected from creditors by Florida law. Other safe assets include the wages of a head of household, life insurance policies, and some public benefits.
Individuals can obtain protection from creditors for unsafe assets by placing them in an LLC. Assets owned by an LLC are protected from the creditors of any of the members. Examples of unsafe assets include businesses, investment real estate, and personal property like art collections. An attorney in Coral Gables could help an individual identify vulnerable assets that would benefit from being protected in an LLC.
Creditor protection for assets held in a multi-member LLC is not absolute. When the LLC holds an operating business, creditors of the business can pursue the assets held in the LLC. However, the members’ individual assets held outside of the LLC are not vulnerable.
According to Florida Statute § 605.0503, a member’s creditor may not attack or attach the member’s interest in an LLC. The only remedy the creditor has is a charging order against distributions the LLC makes to its members.
The members can decide not to issue distributions to an individual member, thwarting the creditor. A capable Coral Gables attorney can ensure the LLC‘s operating agreement allows this form of creditor protection.
Putting assets in an LLC is one of several asset protection strategies that may be beneficial in a specific case. The estate planning attorneys at our firm have substantial experience in LLC asset protection in Coral Gables. Get in touch today so that we can review your situation and explain your legal options.
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