Tuesday, June 20, 2017

Investment LLC's

The next topic in our continuing theme of asset protection is the use of LLC’s for investment assets. For many individuals, investment accounts are the most significant assets they own. Therefore, such accounts are always one of the first assets that creditors wish to attach in the event of a lawsuit. This is true even though some of the investment accounts may be titled in names that have inherent protection built in, such as tenancy by the entirety accounts in Florida.

An investment LLC is an easy entity to form, and its sole function is to serve as the owner of your investment accounts. To enhance the protection of the LLC, we recommend that the LLC have more than one member (a multi-member LLC). A typical setup is for the entity to be owned equally by a husband and wife’s trusts. Additionally, each member of the LLC may serve as a manager and have full control of the investment assets.

Since more than one member owns the LLC, the underlying assets cannot be attached by an individual member’s personal creditors. The sole remedy available to such a creditor would be to obtain a charging order against the member’s LLC interest and only be paid if the LLC distributes assets to that member.
If you are an individual with significant investment assets, please do not hesitate to contact our office to ensure that such assets receive the best possible protection.