A limited liability company (LLC) is a business structure where the owners (also referred to as “members”) are not personally liable for the company’s obligations or debts. Instead, each member is limited to the amount invested in the business’s formation.
However, LLCs are not exclusively for entrepreneurs in Florida. In fact, many Florida residents either set up LLCs for asset protection or transfer the title of assets to an LLC to shield them against creditors’ judgments.
In this article, you will find out proven strategies for asset protection associated with LLCs in Florida.
Strategies for Asset Protection in a Florida LLC – The Basics
LLC asset protection occurs when one or multiple individuals structure a limited liability company to protect their share of interest in the business and other assets held in the company from creditors’ claims.
In this regard, LLCs offer the possibility to shield assets from both sides – the company’s assets are not exposed to personal liabilities, and the members’ personal assets are not exposed to the LLC’s liabilities.
Without asset protection, a creditor with sufficient willingness to collect from an individual member’s personal assets could foreclose on hisor her interest in the LLC.
Under this scenario, the member’s interest would be put for sale and the business assets would go with it, financially damaging the LLC and the other members involved in the arrangement. Thankfully, Florida law grants LLCs a high level of asset protection.
Strategies for Asset Protection in a Florida LLC – Management Roles and Asset Control
When forming an LLC in Florida, the members involved in the business must file Articles of Organization and prepare an Operating Agreement. In such documents, the individual with authority over the company must establish who will be the managers of the company.
Once designated, the managers have authority to control and direct the LLC’s business affairs. The members who initially invested capital in the LLC receive their fair share of the income generated by the company, also incurring losses in case things do not go as expected.
Ultimately, each member in an LLC is exposed to gains or losses from their proportionate share of financial interest in the business.
This type of arrangement permits individuals to use LLCs for estate planning purposes, using them similarly to living trusts. Accordingly, the organizer of an LLC (the person preparing his or her estate plan) may structure a company with his or her heirs and beneficiaries as members.
By granting other members non-voting membership in the company’s operating agreement, the organizer may stay in control of the assets in the company by occupying the manager role and maintaining control of the company’s assets during his/her lifetime.
Regardless of the purpose of a Florida LLC, no creditor may levy on or force the sale of the personal interest of an LLC’s member. In such cases, the creditor could attempt to charge a lien against the company itself or its profit distributions, which a member could defend against with adequate legal guidance.
Is it Possible to Develop Strategies for Asset Protection Without Professional Guidance? – An Honest Answer
Although one could expend endless hours researching and collecting information about estate planning strategies, the only safe way to structure a solid estate plan is to work with an expert attorney.
While there is plenty of valuable content available on the internet, no personal research may substitute professional legal knowledge and years of experience.