The Florida Supreme Court’s Olmstead decision regarding LLC asset protection has caused surge of academic debate about LLC planning. Some of the discussions involved suggestions to form or move LLCs to states other than Florida because the other states’ laws expressly provide that a charging lien is the creditor’s sole remedy against a debtor’s LLC interests. These other state statutes do not distinguish single member and multiple member LLC protection. The academic issue is which state has the best LLC law? I think the question is provides an interesting academic exercise and comparison charts of various state statutes, but it does not address the real question, which is: would a Florida court dealing with a Florida judgment against a Florida debtor apply the LLC law of the state where the debtor formed his LLC (Nevada, Wyoming etc) or would the court apply Florida’s LLC law to the creditor’s collection enforcement?
A discussion of this issue is too involved for a brief blog post, and in any event, I don’t believe anyone knows the answer with certainty. I do have a suggestion, however, if you want to located an LLC outside of Florida for better asset protection. If you are going to form an LLC in another state, or move your Florida LLC elsewhere, your position will be improved if your LLC owns assets in the state where it is formed. The LLC’s bank accounts should be in banks located in the LLC’s home state at banks that have no Florida branches. If the LLC owns securities, transfer the securities to a broker whose offices are located only within the LLC’s home state. Successfully maintaining an LLC in a state other than Florida probably requires more than just registration. The more assets the LLC owns in its home state the more likely a Florida court will apply that state’s laws to a creditor action against your LLC interest.