The Limited Liability Company: LLC

Nevada_state_flagIn prior segments, I have introduced you to the advantages of the revocable living trust and how it can be used to allow your loved ones to avoid probate. But the revocable living trust provides very little asset protection to the grantor of the trust while the grantor is alive and well. So what can we do to protect our assets for us?

There are several options to consider. One option is the use of a Nevada limited liability company.

LLCs are creatures of the state, just like corporations but can operate without the formality of a corporation.

By statue, the owners of the LLC are not responsible for the debts of the LLC. Excellent vehicle to own inherently risky property like real estate. Strategy is to form the LLC, transfer real estate holdings to the LLC, and allow the revocable living trust be the owner of the LLC.

LLCs offer another critical protection – the charging order. We call this outside asset protection. If the Grantor gets sued for anything unrelated to the LLC, the potential creditor is unable to take the LLC interest from the grantor. Instead, the creditor can only receive a charging order which allows the creditor to intercept any distributions from the LLC to the Grantor, but prohibits the creditor from taking ownership or management of the LLC.

Outside protection is valuable for those assets that don’t have any inherent legal risk – like money, stock, and other financial investments.

So while the revocable living trust should be the cornerstone of everyone’s estate plan, introducing LLCs is often very valuable to provide simple and effective asset protection.

This is Jamie Kalicki of Kalicki Law Offices and remember, when it comes to protecting you, your money and your wealth, its Kalicki Law Offices.

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