Attorneys Consider Whether Florida Legislature Will Restore The Florida LLCs Asset Protection Benefits
After the Florida Supreme Court’s Olmstead decision the Florida limited liability has lost its utility as an asset protection tool. Is the LLC is done forever, or could it someday re-emerge as an asset protection entity. The Court’s adverse ruling was based largely on its interpretation of the Florida LLC statute. The court noted that unlike Florida’s limited partnership statute, the LLC statute provides that a creditor may get a charging lien against the debtor’s LLC interest, but that the statute does not say the charging lien is the "exclusive remedy" leaving available more effective collection tools such as levy and sale.
I’ve been monitoring some attorney discussion groups which are discussing asset protection planning in light of the Florida Supreme Court decision. For example, there is a very high level academic discussion through Leimburg Information Services including well-known estate planning and asset protection attorneys such as Alan Gassman, Chris Riser, and Mark Merric.. This discussion group, and some other experienced attorneys I’ve spoken with, seem confident that the Florida legislature will act to fix the LLC statute so that the charging lien remedy is made exclusive as is currently for limited partnership interests. Speculation is that the legislative revision could come in 2011, or if not, soon thereafter.
In the meantime, people with LLC businesses must deal with decreased asset protection against their individual creditors. Speculating on laws being passed by the Florida legislature is not sound asset protection strategy. While it seems logical, if not likely, that the legislature may make LLC’s charging lien provisions consistent with that of the limited partnership attorneys must help asset protection oriented business clients bolster LLC protection either by amending the LLC operating agreements or migrating to other business structures.
