LLC Confusion -- Need Help
I have been unsuccessfully trying to determine how I should hold my assets. I of course know that holding title in an LLC is preferred. My concern here is that I don’t want to induce the DOS clause. I know that Lenders don’t scour the court records but if at all possible I don’t want to take the chance. The first recommendation I received is to place a Trust on title with the LLC as a beneficiary. Since Lenders will accept that you are doing estate planning. But when talking to an attorney he informed me that, that approach will not protect me from creditors and won’t really offer me any asset protection. I couldn’t believe that.
Scenario -- With a trust on Title and the LLC as a beneficiary.
A tenant gets hurt on the property and sues the “Owner”. Wouldn’t the suit flow through the trust to the LLC since it is the beneficiary? Effectively offering me the Protection I’m looking for?
Another disturbing comment I heard was that if I was personally sued and the plaintiff located an LLC that I had interest in (Single Member); that they could force me to sell the property to pay off the judgment. Now I thought that this was exactly one of the scenarios that the LLC provided protection against. That unlike corporations there isn’t a board for them (plaintiff) to control and vote to sell the property. I was under the impression that because of the charging order procedure the judgment would have to sit silently and receive debtor’s payouts or distributions as determined in the Operating procedure. And also on top of that whoever was collecting the judgment would have to pay taxes on their payouts. I have been informed numerous times that a judgment can not force you to sell your assets in and LLC.
Am I off base? Or is the Lawyer correct?
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