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Old 07-30-2011, 06:21 PM
 
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I'd like to form a LLC and will invest most of my savings in it. The purpose of the LLC will be to invest in bank CD's, hence the LLC will not be engaging in any risky activity and thus not be in danger of being sued. If most or all of my personal monies go into capitalizing the LLC and I as an individual am later sued, not as a member of the LLC, but strictly as an individual (as for example I get into an accident and it's my fault), can the person who obtains a judgment against me as an individual go after the funds in the LLC, especially if I am making regular distributions to myself from the LLC (in the proper manner, of course) for living expenses?
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Old 07-30-2011, 10:56 PM
 
Location: Conejo Valley, CA
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The LLC is one of your individual assets, as a result its something that people can go after.
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Old 07-31-2011, 08:19 PM
jw2
 
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It depends on your state. Some examples: Florida, your single member LLC is not protected against judgement against you personally. In Virginia it is generally protected.

However, any commingling and a judge in any state will rule that the LLC was not really a separate entity. As an example, if you pull money out of a CD in an LLC and buy a car for your personal use, the entire LLC is fair game as it will be demonstrated that it was not really an LLC.

You need to see a lawyer in your state with your exact requirements.
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Old 08-01-2011, 11:27 PM
 
Location: The North
5,081 posts, read 9,088,459 times
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LLCs are not really protection elements for your investments. They are protection elements for business ventures. You can't just put assets into them and say ha ha, you can't touch me.

Where the rich really get tricky is they set up LLCs with trusts based overseas as owners. Secrecy laws and the lack of publicly released operations protocols and statements make them pretty tough to break open. Hard part is covering up the paper trail to get your assets to the trust, but that is what foreign banks do really well.
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Old 08-04-2011, 11:51 AM
 
11,225 posts, read 11,251,267 times
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Quote:
Originally Posted by jw2 View Post
It depends on your state. Some examples: Florida, your single member LLC is not protected against judgement against you personally. In Virginia it is generally protected.

However, any commingling and a judge in any state will rule that the LLC was not really a separate entity. As an example, if you pull money out of a CD in an LLC and buy a car for your personal use, the entire LLC is fair game as it will be demonstrated that it was not really an LLC.

You need to see a lawyer in your state with your exact requirements.
Why would Virginia generally protect an LLC designed to invest in CD's (that's a legitimate business venture, isn't it?) while florida and others would not? And members are permitted to pull money out of the LLC as a distribution as often as they want as long as they do it without comingling funds in the LLC with personal funds. For example, it would be perfectly permissible for a member to a write a check from the LLC checking account to the member's name, which the member would then deposit into his/her personal checking account. No comingling--just a straight distribution of a portion of his equity (contribution) to the LLC.

Based on what I've read, the rules are: have an operating agreement; keep all activities between the LLC and your personal life separate. They only time you have contact with the funds, other than as a member/manager is to make a distribution to yourself, based on your percentage ownership in the LLC.
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Old 08-05-2011, 01:39 PM
 
Location: The North
5,081 posts, read 9,088,459 times
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Why would someone sue an LLC when all it holds are investment instruments? They will sue the person and if his assets include an LLC they will demand possession of the owners percentage of assets. You set up an LLC or S Corp because you have some risk in your investments or operations and if those go bad, the line for money ends at the LLC. But to put money in there and think that is some sort of shelter from those assets being seized is just plain wrong. A good lawyer and some overseas money shifting, which is generally illegal for tax and possibly identification/control purposes makes who owns the assets hard to discover, but doesn't make them beyond the courts ability to order them seized if they can figure out the ownership structure.
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