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Corporations and asset protection does it work?

Discussion in 'Other Off Topic Forum' started by atheyg, Jan 22, 2004.

  1. atheyg

    atheyg Guest

    I have been gathering info on Corporations and LLC companies and companies that specialize in forming them have told me LLCs are worthless for asset protection in lawsuits and Corporations offer better help but if there is only one owner of the corp it is very easy to pierce the Corporate veil and get personal assets as he is the benificiary singularly from it.

    Ideas they had were to put your assets in a separate corporation from your business corporation.


    Anyone have opinions or been sued and protected by your corp?

    Thanks
     
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  3. noahlh

    noahlh Formula 3

    Aug 28, 2003
    2,225
    NYC, NY
    Full Name:
    Noah
    Well, I have only textbook experience right now (i.e. I've setup several LLCs and Corps, but haven't been sued yet so can't tell you if it all works or not).

    Why on earth would someone say than an LLC is useless for asset protection? That's entirely why they were designed....to limit personal liability and separate it from the liabilities of the business.

    The only way that a creditor is going to "pierce the corporate veil" is if you violate one or more of the laws/rules governing that. One example is called comingling -- if you haven't kept clear records separating you the individual from your Corp/LLC, then creditors can claim that you were not operating as a different entity and thus are liabile for the debts of the company. If you've kept clear records, however, (including separate bank accounts, etc.) then they can't pierce under that test.

    For more info, check this site out (TONS of good info here):

    www.toolkit.cch.com
     
  4. atheyg

    atheyg Guest

    noahlh, thanks for the reply.

    Could have been just a hard sell pitch as he wanted $4700 to set up a few corporations that supposedly work to protect assets.

    According to him LLCs are easily pierced in court and don't hold up, he mentioned the LLC partnerships offer better protection but stated
    corporations are better for business liability and personal asset protection but don't hold up in court as well and you are better off almost hiding your personal assets in a separate corporation if your goal is asset protection which is what mine is as today since people have a 1 in 4 chance of being sued.
     
  5. trevi

    trevi F1 Rookie
    Rossa Subscribed Owner

    May 19, 2003
    2,619
    Switzerland
    there are also other vehicles such as foundations and trusts, which additionally could be combined with companies and/or LLC for asset protection purposes, especially also offshore. but i'm not firm in US laws.

    trevi
     
  6. Texas Forever

    Texas Forever Four Time F1 World Champ
    Rossa Subscribed

    Apr 28, 2003
    48,557
    Texas!
    If you are serious about this, get thee to a local lawyer ASAP. Asset protection is very heavily dependent on local law. What works here, might not work the best there. This is not a DIY project.

    DrTax


     
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  8. trevi

    trevi F1 Rookie
    Rossa Subscribed Owner

    May 19, 2003
    2,619
    Switzerland
    I fully agree!
     
  9. spidr

    spidr Formula Junior

    Nov 13, 2003
    281


    WHO is telling you this stuff?
    Anyone interested in getting $ out of you?
    LLC do hold up as far as I have heard. And 1 in 4 seems a bit high.
    Devide population by 4 and that number of people have been sued?
    Unlikely.
     
  10. racedecknc

    racedecknc Karting

    Nov 24, 2003
    198
    Winston Salem
    Full Name:
    Ed
    around here an LLC isn't as regarded as an S corp. They're more expensive to set up and maintain, also.

    I'm not sure about using either of the above to protect assets, but from the tone of your question, I'd agree that you need to get a good accountant and lawyer.

    Ed
     

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