Attack #2
Car WreckAttack #1
Tenant Falls
Joe’s LLC
Joe, Member
Entity Protection
Inside Attacks:
Attack #1 LLC/Corporation
1. Types of attack: Against the entity; Tenant or Vendor
2. What can a creditor get? 3. What can’t a creditor get?
Outside Attacks
LLC/Corporation
Attack #2
Member/Shareholder
Types of Attack: Car Wreck
Fraud/Slander
Foreclosure on different property
LLC
Member
Attack #2
Judicial Foreclosure/Sale/Single Member
What can a creditor get?
Weak LLC State:
Weak LLC State:
“You were injured. You
get the fourplex.”
Strong LLC State:
LLC
Member
Charging Order
What can a creditor get?
Attack #2
Strong LLC State:
“Here is your charging order. I am ordering that
you are charged to receive the member’s
distributions. You may be waiting….
Corporation: Corporation
Shareholder Attack #2
What can a creditor get?
49 States
Nevada Corporation
Corporation
Shareholders (between 1 and 99)
Attack #2
What can a creditor get?
Charging Order
Corporation:
A Corporation Needs:
Articles of Incorporation By-Laws Meeting Minutes Stock Issued EIN Bank Account Resident Agent
An LLC Needs:
• Articles of Organization• Operating Agreement• Meeting Minutes• Certificates Issued• EIN• Bank Account• Resident Agent
Land Trusts – No Asset Protection
4-plex 4-plex
Land Trust Land Trust
Beneficiary LLC Personally Responsible Beneficiary
Protected
Protection or Not?
LLC
Land Trust
Land Trust
Land Trust
Protection or Not?
Land Trust Land Trust Land Trust
LLC LLC LLC
Land Trust
Trustee(Someone Else)
Attorney Client Privilege?
Complete Privacy Not Available. In Arizona, for example,
trustee must reveal
beneficiary when filing
deed.
Beneficiary(You)
California Issues
Texas LLC
California Resident
Because you manage a Texas LLC from California, the Texas
LLC is doing business in California.
You must qualify to do business in California and pay
$800 a year.
California changes their rules all the time in an effort to collect more $. Call our office to discuss the
latest rules.
California Asset ProtectionBEFORE: NOW:
CA LLC
CA LLC
WY LLC
WY LLC Q IN CA
CA
residentCA
resident
$800
$850
$800
$50
California Asset Protection
IL LLC
NC LLCUT
LLCIL
LLC
NC LLCUT
LLC
WY LLC Q in CA
CA resident
How Many $800 Fees?
CA resident
No California Investors Allowed
Florida LLC
99%
9 Florida residents
1%
One California resident
California: Florida LLC must pay California $800 per year.
Prove: California investor has no management authority (specially drafted Operating Agreement)
Result: No California residents allowed
Owns Florida LLC