Make a Creditor Cry
It’s time to play hide-n-seek!
In the past, I have discussed LLC’s and FLP’s and how they play an important role in your asset protection planning. In truth, the LLC is one of the fundamental tools used in structuring your strategy. In the US, there are two main considerations when forming your LLC; the state of registration and the operating agreement. I will discuss which states are good and why at a later date. Today I will explain the operating agreement, and quite frankly, why ours is the best.
The purpose of the operating agreement is to have a clear understanding between the parties at the time the LLC or FLP was formed. This is the contract between you and your business. It is to have all parties agree to the terms and conditions. If, an outside creditor tries an attack on a Member’s interest, then the agreement makes it very difficult, if not impossible for that creditor to ever get a viable interest in the entity.
Many clients ask about our operating agreement. They have checked into the discount services available and find that the operating agreements are either nonexistent or very poorly drafted. What do we offer that the competition does not? Here are just a few examples.
- We list the business purpose of your LLC or FLP. We list over 15 business reasons why your entity was formed.
- We list all of the business activities that your entity may engage in. This keeps a creditor from saying that you just formed it for asset protection purposes.
- We state why the company has built in restrictions among the members such as capital contributions and ownership transfers. This keeps a judgment creditor from claiming the restrictions are pure punitive in nature.
- We have Mandatory Capital Contribution clauses at the discretion of the Manager.
- We list extensive accounting issues and tax issues to keep a creditor from causing dissolution of the company due their actions.
- We limit distribution of profits or assets to frustrate creditors attempts to force distribution
- Restrictions regarding Charging Orders. No distributions can be made to any member whose interest has been charged by a charging order.
- Members cannot be forced to return a distribution in order to satisfy a creditor
- Manager is given full authority and broad powers to manage the company. No creditor can claim he does not have the authority to make decisions.
- Certain decisions require the unanimous consent of the members so that a creditor cannot force changes that are not to the benefit of the company and its members.
- If any member is under court order, his vote does not count towards the total off votes needed to pass a decision.
- A creditor cannot force the removal of a Manager.
- A Manager can file for personal bankruptcy and still not be removed by a creditor.
- No Creditor can force a distribution of assets to themselves.
- No Creditor can force a partition of assets to themselves.
- No Member, who gets a charging order against himself, can force a distribution or partition of assets.
- No Member, Assignee or Creditor can force a dissolution of the company.
- Creditors do not have the right to vote on many important issues.
- A charging order does not allow the creditor to become a member of the LLC or FLP.
- No Members interest can be assigned to a creditor.
- If a creditor tries to force the LLC or FLP to pay them the amount owned by the charging order and the Members Interest so charged, the LLC or FLP has 30 years to pay. Requirements to get to this state are exhaustive and difficult.
As previously stated, the LLC is a fundamental element to your asset protection strategy. And our operating agreement will give any creditor a reason to cry, he just can’t collect. Coupled with creative planning and the use of hybrid or offshore trusts, and you can create a completely bullet proof asset protection plan that will provide you with that ‘sleep at night’ insurance knowing your wealth is safe from creditors.
To receive more information on how to make your creditors cry visit Global Wealth Protection’s website by clicking here >>>>>>CLICK HERE
Bobby Casey
Managing Director
+1-347-410-5041
Global Wealth Protection
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