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Viles Law Firm


Limited liability companies and limited partnerships are asset protection tools. Creditors can seize assets which you own, but creditors cannot seize assets which you do not own. You do not own an asset if a legal entity owns the asset regardless of your ownership percentage in the legal entity.

LLCs and LPs are better than corporations because LLCs and LPs offer protection from charging orders. A charging order is a judge’s order allowing a creditor to intercept payments, distributions, or proceeds. Corporate stock is not nonexempt property. Creditors can use a charging order to seize corporate stock which they can then sell at an auction and, depending on your membership interest, force a liquidation of the corporation to reach the underlying assets. A charging order does not allow a creditor to take over your membership interest in an LLC or LP. The creditor can only seize distributions. Fortunately, salary for personal services is not the same as a distribution and is exempt from seizure.

As manager of your LLC, you will have full control over your assets while benefitting from asset protection.

 

 

Tax

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Call us now at (713) 622-4647