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.
