The GOOD NEWS:
New Bill Assures Continued Favorable Asset Protection Treatment for Multiple Member LLCs.
Previously we had written to you regarding a Florida Supreme Court ruling that resulted in doubts about the ability of single member LLCs to effectively protect your assets from creditors and we recommended alternatives to ensure continued protection of your assets.
The Florida bill specifically addresses the ambiguities resulting from last year’s court decision and now makes clear distinctions between single and multiple-member LLCs.
- Single-Member LLC – A court may order a foreclosure sale of the membership interest where a creditor shows that distributions under the charging order will not satisfy the judgment within a reasonable time.
- Multiple-Member – The membership interest foreclosure remedy is NOT available to a creditor.
What Can You Do To Protect Single-Member LLC Assets From Creditors?
In light of the dramatic weakening in the asset protection offered by single member LLCs, as a result of the court decision and the recent legislation, we highly recommend that all those with single member LLCs schedule a meeting with your attorney as soon as possible to review alternative options such as:
- Adding an additional member to your LLCs and drafting a new operating agreement
- Converting the single member LLC to a Limited or General partnership
