Court Issues Charging Lien Against Interest in Foreign State LLC

Often, clients ask me whether there is an advantage to their forming an LLC or limited partnership in a state other than Florida, commonly, Nevada, Wyoming or Delaware. The clients have heard from friends, attorneys, or internet research that states other than Florida (“foreign states”) have more protective LLC laws. I have almost always advised my clients that there is no advantage for Florida residents to form foreign LLC. Here’s another case that supports my opinion. Continue reading

Attorney Reports Charging Lien Assigns Tax Liability to Creditor

Many people believe that one of the principal benefits of LLCs or partnerships is that a creditor’s charging lien makes the creditor liable for the debtor’s share of income tax associated with his LLC or partnership interest pursuant to Rev. Rul 77-137. I have never encountered a situation where a creditor holding a charging lien was responsible for the debtor’s income, and I have advised my clients not to rely on this aspect of charging lien protection. I have recently seen a report where this protection worked. Continue reading

Florida Appeals Court Strikes Creditors’ Contempt Remedy

Assuming a Florida debtor owns personal personal property (example, cash, stocks, LLC interests) in a jurisdiction outside of Florida, can a Florida judge compel a judgment debtor to bring the assets in to Florida to pay a Florida judgment creditor, and can the judge hold the debtor in contempt of court if the debtor does not comply? The answer is “no” according to a recent Florida appeals court decision. Continue reading

Is Debtor’s Deposit of His Own Money To Joint Bank Account A Fraudulent Transfer?

Generally, when a spouse who is subject to a money judgment transfers his separate property to joint ownership with his non-debtor spouse, the transfer is subject to challenge as a fraudulent conveyance. The issue is complicated when the debtor spouse deposits money he earned himself in to a pre-existing joint bank account. Continue reading

Expressing Inheritance of LLC Membership Interest in Operating Agreement

I sometimes find clients who want to customize their LLC operating agreements to express who will inherit their membership interest upon their death. For instance, a client may ask me to express that if on of the member’s dies the remaining LLC member will inherit the decedent’s interest, or that the decedent’s heirs will automatically take over the LLC membership interest. Continue reading

How To Organize a Business Conducted on Florida Homestead Property

A client wants to operate a software business on his Florida homestead property located outside a municipality. He is concerned about asset protection. He wants to build a separate building on the property, near his house, to use as an office. He wants to know whether he should create an LLC to own the business and the new building on his property. He proposes that the business would lease the office building from the new Florida limited liability companyContinue reading