justonemore
New Contributor
I've read 5 books on Asset Protection over the last few weeks and my head is spinning.
I'm wondering if anyone here has figured out good strategies to keep your money safe when venturing out onto the internet with an online business.
The main thing that concerns me is it appears that single member LLCs(where you're the only owner) offer zero protection in almost all states. This means if you're single(like me) and/or don't have any business partners, if someone sues your LLC, they can steal everything you own in your personal life(minus your 401k). Your house, your cars, your savings could all be taken by someone upset at you...
I have to imagine most people don't know this OR most people have figured out a trick I haven't found yet?
I found some strategies that could maybe work, but would like others thoughts:
1 - Setup an LLC in one of the few states that does offer protection for single member LLCs and do business directly from that. The problem with this is if your home states determines that you're 'doing business' in your home state and you didn't register as a foreign entity, then all LLC protections will be ignored. Also if you do register in your home state and you get sued, the judge gets to pick which states laws to use so your home states slack laws would be used. Thus I'm not sure this would work?
2 - Use an Limited Partnership which has a lot more case law and almost all states respect it. An LP needs to have a 'general partner' which has 100% liability, so make the GP an LLC in another state that has better LLC protections. I have no idea if this would work or not. It seems like a judge could just ask 'who's the manager of the LLC who's serving as the LP'. When you answer 'me', then I have to image he's going to just rip everything up.
3 - Have a trust own the LLC. To me it seems that if it's a revocable trust, a judge could just tell the manager of the LLC(you) to kill the trust and pay the attacker.
If it's an irrevocable trust, you're really making things hard on yourself if you want to sell your home or sell your car, etc.
4 - Setup 2 LLCs. First is in a state that protects single member LLCs and have that LLC own your second LLC that's based in your local state. Idea being if you get sued in your home state, it would issue a judgment against your other LLC, and not you. No idea if this would work?
5 - Have an LLC or Trust or Charity be a second member of your LLC so you no longer have a single member LLC. Multimember LLCs get protection in most states. No idea if this would work if you clearly own both?
Any thoughts, experience, advise, pointers in the right direction?
Note: Everything above is just my current understanding. I'm no expert on this.
I'm wondering if anyone here has figured out good strategies to keep your money safe when venturing out onto the internet with an online business.
The main thing that concerns me is it appears that single member LLCs(where you're the only owner) offer zero protection in almost all states. This means if you're single(like me) and/or don't have any business partners, if someone sues your LLC, they can steal everything you own in your personal life(minus your 401k). Your house, your cars, your savings could all be taken by someone upset at you...
I have to imagine most people don't know this OR most people have figured out a trick I haven't found yet?
I found some strategies that could maybe work, but would like others thoughts:
1 - Setup an LLC in one of the few states that does offer protection for single member LLCs and do business directly from that. The problem with this is if your home states determines that you're 'doing business' in your home state and you didn't register as a foreign entity, then all LLC protections will be ignored. Also if you do register in your home state and you get sued, the judge gets to pick which states laws to use so your home states slack laws would be used. Thus I'm not sure this would work?
2 - Use an Limited Partnership which has a lot more case law and almost all states respect it. An LP needs to have a 'general partner' which has 100% liability, so make the GP an LLC in another state that has better LLC protections. I have no idea if this would work or not. It seems like a judge could just ask 'who's the manager of the LLC who's serving as the LP'. When you answer 'me', then I have to image he's going to just rip everything up.
3 - Have a trust own the LLC. To me it seems that if it's a revocable trust, a judge could just tell the manager of the LLC(you) to kill the trust and pay the attacker.
If it's an irrevocable trust, you're really making things hard on yourself if you want to sell your home or sell your car, etc.
4 - Setup 2 LLCs. First is in a state that protects single member LLCs and have that LLC own your second LLC that's based in your local state. Idea being if you get sued in your home state, it would issue a judgment against your other LLC, and not you. No idea if this would work?
5 - Have an LLC or Trust or Charity be a second member of your LLC so you no longer have a single member LLC. Multimember LLCs get protection in most states. No idea if this would work if you clearly own both?
Any thoughts, experience, advise, pointers in the right direction?
Note: Everything above is just my current understanding. I'm no expert on this.
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