Florida Loses Asset Protection

Florida Loses Asset Protection

Florida Loses Asset Protection

Author: Garrett Sutton

The Supreme Court of Florida took away a key asset protection benefit in deciding Olmstead v. Federal Trade Commission (SC 01-109, Fla. June 24, 2010). Before the ruling a charging order was the exclusive remedy, whereby the judgment creditor (the person who won a lawsuit) could only receive distributions from the LLC. Now, a judgment creditor may directly seize the ownership interest of a member in a single member LLC.

The Olmstead decision allows Florida courts to order a judgment debtor to surrender all right, title and interest in the debtor's single member Florida LLC to satisfy a judgment. Prior to the ruling many had believed that Florida law provided that the charging order was the exclusive creditor remedy.

Not anymore.

Multi member Florida LLC owners should be very concerned by this decision. Writing a dissent in the 3-2 decision Justice Lewis warned that the Olmstead ruling means that the charging order is a non exclusive remedy for all LLCs, whether single or multi member.

Justice Lewis wrote: "The majority opinion now eliminates the charging order remedy for multi member LLCs under its theory of "nonexclusivity" which is a disaster for those entities."

If you are using a Florida LLC to protect your assets you may want to reconsider your state of formation. Wyoming allows LLCs to easily reform themselves into Wyoming. The continuance process allows a Florida LLC to reorganize in Wyoming and keep the same formation date, EIN number and credit history. The advantage is that you now have a Wyoming LLC, which expressly recognizes the charging order as the exclusive remedy. Our office charges $750 plus filing fees to continue LLCs to the better asset protection state of Wyoming. Please call 1-800-600-1760 for more information.

And remember, asset protection is an ever changing area of the law. The Olmstead case was decided in a way that allowed another government agency – The Federal Trade Commission – to collect. Of course, the case now applies to the benefit of all creditors. In a dynamic field it is important to stay current on the latest cases, and move accordingly.

Article Source: http://www.articlesbase.com/small-business-articles/florida-loses-asset-protection-3073000.html

About the Author

Garrett Sutton has over twenty-five years experience assisting and advising entrepreneurs, families and business in selecting the appropriate corporate structures to limit their liability, protect their assets and advance their personal and financial goals through real estate investments and other means of wealth creation. An author, speaker and a member of an elite group of \\\"Rich Dad\\'s Advisors\\\" hand selected by author Robert Kiyosaki, Garrett speaks to investors and entrepreneurs on a variety of topics including asset protection, liability limitation, wealth creation, as well as various business and real estate issues. Garrett has authored Own Your Own Corporation, The ABC\\'s of Writing Winning Business Plans, The ABC\\'s of Getting Out of Debt, How to Buy and/or Sell a Business, and co-authored Real Estate Loopholes. These titles are included in the \\\"Rich Dad, Poor Dad\\\" wealth building book series. Additionally, under the SuccessDNA Publishing label, Garrett has authored and co-authored numerous books including, How to Use Limited Liability Companies and Limited Partnerships and his latest title, INSIDER Secrets of Business & Personal Credit. Garrett\\'s books provide an accessible source of information for building your own success.