One Way To Ruin Your LLC… And Be Proud Of It (Part 3 of 3)

[WARNING: The following material derives from 100% all-natural, real intelligence. No artificial ingredients.]

In Part 1, I began a discussion of Charging Order Protection, pointing out how it’s important to protect your business from you.? I noted how some may try to attain such Protection, but compromise other should-be aspirational objectives in the process.? I also illustrated the special challenge sole owners have, hinting that these are obstacles I easily help people (who know enough to know) overcome.?

In Part 2, I introduced the Albright case from Colorado as an example of how Charging Order Protection doesn’t necessarily take effect… even if it’s otherwise in effect. ?In that case, Albright argued that the real estate in her LLC should have been safeguarded against her creditors’ claims originating from her personal bankruptcy.? As I pointed out, Charging Order Protection for her LLC was defeated and her personal creditors were able to seek recourse to the LLC assets to satisfy her debts.?

Albright’s argument for Charging Order Protection was defeated when the underlying purpose of such Protection was examined in her case and found absent.? Specifically, recall that Charging Order Protection would normally serve to reduce a creditor’s claim to recourse against any distributions made to the debtor as owner of the company.? This would serve to safeguard business operations and, especially, insulate any partners against the ill effects of the debtor’s entanglements with creditors.??

In this case, Albright was the sole owner of the LLC.? Consequently, it was reasoned, there was simply no other party to protect.? Thus, there was no point in allowing Albright to shelter assets from creditors when, in this case, the LLC basically served as a mere alter ego of herself.? It was all “her” stuff, just via a 2-step process as opposed to direct ownership with her name on deeds or titles.?

Now, the most elegant solution here may not be what you think.? While a second owner would have provided a second party worth protecting, that too has its own drawbacks.? Even if it “worked,” do you want to be operating under a Charging Order with all of those impracticalities?? What if the second owner is a spouse and the court reasons, as with Albright, that the only parties at issue are the debtors… such that it would be unjust to allow the legal fiction of some alleged, yet superficial, distinction??

That said, I nevertheless do advocate for dual ownership.? However, recall that the #1 Rule of Asset Protection is to own nothing in your own name.? So, that leaves us with dual owners… neither of which are you.? Thus, while there would be Charging Order Protection in my Flawless Family Trust Smart System, that’s actually part of a “layered-protection basket” of safeguards put in place.? Indeed, the BEST way to protect your business from you is for it to not even be “your” business to begin with!? Then, there’s nothing to worry about in the first place… and protecting “your” business from you is no longer even a thing!?

Confused??

You needn’t be.?

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This is NOT for you if:

• You already have this all figured out (even though I have a 20,000-hour head start on you),
• You’re sold on the latest internet fad (even though you cannot defend a single claim or conclusion they make about it),
• You already have a “solution” (and would rather justify it, than improve it),
• You’re too busy building your “pile” bigger (and won’t pause long enough to actually protect what you already have),
• You’re too consumed by daily distractions & menial minutiae to prioritize, and entertain, something monumentally meaningful and of much greater gravity

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This is for you if:

• Today you have a pulse, but one day won’t (an accompanying open mind goes a long way, too),
• You want to know, for certain, you won’t eventually be leaving grieving loved ones in a lurch,
• You don’t want to unnecessarily risk everything you have to show for having sojourned this life,
• You value fiscal stewardship & strategic planning to fulfill asset aggregation & preservation goals,
• You’re a contrarian thinker open to engaging new & powerful, family tree-changing opportunities

Grab the CheatSheet for my “Double-Trouble via Dual Ownership,” along with the companion CheatSheets on the other inextricably-connected topics, now:

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