The Florida Supreme Court recently “set aside” a single member LLC and let the personal creditors of the LLC owner come directly against the LLC assets.  The creditor in the Olmstead case last month was simply given the assets of the LLC to satisfy the LLC owner’s debt.  (Actually, it was the government coming after Olmstead who was a bad dude.  So, the good guy won. Can the government be the good guy?)  Nonetheless, this means Florida has come out against the charging order protection that the Revised Uniform LLC Act says single member LLCs should enjoy.

The LLC is unique, because it gives you the “corporate shield” that protects the owners (members) from liabilities of the company, just like the corporate shield in a corporation protects the shareholders from the liabilities of the company.  Additionally, the LLC has an element of a partnership, because it protects the company from the personal debts and liabilities of an individual member by making the creditors of the individual get a “charging order” against the company.

If an individual owner of a corporation gets sued, goes bankrupt, gets divorced, or suffers any one of a dozen other “tragedies” in his or her life, the creditor (guy who won the suit, bankruptcy trustee, ex spouse, etc.) simply gets the stock the individual owned in the corporation.  If an individual owner of some IBM stock loses his or her stock, it is no big deal for IBM.  However, if an individual owner is the only owner of a small corporation and they lose their stock, then they lose the company.  The new owner of the stock simply votes out the acting officers and directors and takes over “ownership” of all of the corporate assets. (more…)

Divorce Versus Separation

By Lee R. Phillips

I have recently watched a disaster unfold.  Many of you won’t be directly affected by this disaster scenario, but you may have family member in the situation where they are in danger, and you could help.  So, it’s probably worth a couple of paragraphs in an email to you.

Divorce is ugly!  Some couples decide to just separate, and they live their separate lives.  They live in different cities.  They live with other people.  They are divorced by all indications, but rather than go through the legal pain of a divorce they are just estranged.  This is a disaster situation.

There are different “degrees” of separation.  There is a “we agree we will live apart and still be married.”  There is a legal separation, where the spouses agree on terms of a separation and then write up the agreement and then get a court order of separation (called legal separation).  And, then there is divorce that dissolves the marriage.

If you know you are going to get divorced, you should file for legal separation during the time you are waiting to get divorced.  This stops your legal obligations and liabilities related to your spouse. (more…)