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This Dean Mead Alert provides you with information about the recent Florida Supreme Court decision: Single-member LLCs are no longer asset protected. http://www.floridasupremecourt.org/decisions/2010/sc08-1009.pdf
Single-member LLCs have been thought to provide double protection against creditors. First, a creditor of the LLC is not able to reach the other assets of the member. Second, a creditor of the sole member of the LLC was thought only to be able to obtain a charging order against the membership interest in the LLC (i.e., the rights to any distributions from the LLC). Although some practitioners have long thought that this second form of creditor protection was dubious, the Supreme Court of Florida has cleared up any confusion and eliminated the charging order protection for single-member LLCs.
On June 24, the Court held that a judgment creditor of the sole member of an LLC is not required to seek a charging order against the LLC interest as its sole remedy. Rather, a court can force the member to surrender all its right, title and interest in the LLC to satisfy the judgment. This would allow the creditor to seize the LLC’s assets in order to satisfy its judgment.
Although the Court was focusing on single-member LLCs, the decision also has potential negative implications for multi-member LLCs. The Court’s reasoning suggests that charging orders are no longer the sole remedy for creditors of multi-member LLCs.
If you have any interest in LLCs, now would be a good time to review their structure to see if it meets your specific asset protection needs. For more information on this topic or to request a review of your specific entity structure, we encourage you to contact one of the attorneys at Dean Mead to schedule an appointment.
Dean Mead’s Orlando Estate and Succession Planning Team Members:
Lauren Y. Detzel is a shareholder and chair of the firm’s Estate and Succession Planning Department. She is Board Certified in Wills, Trusts and Estates by The Florida Bar Board of Legal Specialization. Ms. Detzel specializes in techniques to reduce or avoid paying estate tax such as family limited partnerships, grantor retained annuity trusts (GRATs), sales to intentionally defective trusts, charitable trusts, lifetime gifts and generation skipping trusts. Particular emphasis includes planning for the succession of closely held or family business. Ms. Detzel also handles many contested tax matters in the transfer tax area, ranging from audits of returns and administrative appeals within the IRS to Tax Court and Federal District Court litigation. She handles the entire gamut of administration of estates and trusts, including contested matters of will and trust interpretation and reformation. email@example.com
Matthew J. Ahearn is a shareholder and is Board Certified in both Wills, Trusts & Estates and Tax Law by The Florida Bar Board of Legal Specialization. He has extensive experience in the areas of estate and business succession planning, asset protection planning, charitable planning and planning to minimize or avoid wealth transfer taxes. Mr. Ahearn handles all aspects of probate and trust administrations, including estate and gift tax audits before the Internal Revenue Service. He represents both beneficiaries and fiduciaries in contested matters. Mr. Ahearn earned his Master of Laws in Taxation from the University of Florida in 1998. firstname.lastname@example.org
David J. Akins is a shareholder and provides representation in the area of personal wealth planning, with an emphasis on gift planning, estate planning, probate, and the administration of estates and trusts. A significant portion of his practice is related to planning for family owned and closely held businesses. Mr. Akins is co-chair of Dean Mead’s Trust, Estate and Fiduciary Litigation Team. His knowledge of probate and trust administration, as well as federal income tax, gift tax and estate tax, enables him to assist fiduciaries and beneficiaries of Estates and Trusts in developing innovative settlement strategies. In those instances in which a resolution of a contested or disputed Estate or Trust matter cannot be negotiated, he works with members of the Trust, Estate and Fiduciary Team who have extensive litigation experience to provide our clients with a team that is highly competent in both the state and federal laws governing Estates and Trusts and litigation practice and procedure. Mr. Akins earned his Master of Laws in Taxation from Emory University School of Law in 1987. email@example.com
Erik N. Bonnett is an associate and practices in the areas of estate planning, probate and estate administration, and taxation law, including corporate taxation, estate and gift taxation, and income taxation. He also assists clients in the area of state and local taxation. Mr. Bonnett earned his Master of Laws in Taxation from the University of Florida in 2007. firstname.lastname@example.org
Brian M. Malec is an associate and practices in the areas of estate planning, probate and estate administration and taxation law, including estate, gift and income taxation. He earned his Master of Laws in Taxation from the University of Florida in 2008. email@example.com
About Dean Mead:
Dean Mead provides full-service legal representation to businesses and individuals throughout Florida. The firm has 48 lawyers practicing in Orlando, Fort Pierce and Viera. For more information, visit deanmead.deme.dev