Michigan Asset Protection Lawyer Blog

When clients come to see me for asset protection planning, it is clear that the client has preconceived notions about offshore trusts that are integral to some type of abusive tax shelters or other nefarious activity. This is not surprising. The media recently reported about a man from Niagara Falls, NY who was sentenced to 36 months in prison for selling and promoting an abusive tax shelter scheme that involved offshore trusts and domestic trusts. It is stories like this one that confuse many clients and give them unnecessary concerns about what asset protection planning is all about. As I always tell my clients, the asset protection planning we do for our clients is not designed to shelter income or avoid the payment of income taxes; instead it utilizes legitimate structures with the simple goal of helping these clients legally position their assets in a way which makes them less vulnerable to creditors.

Continue reading "Abusive Tax Schemes Often Cause Confusion in the Asset Protection Planning Arena" »

I have previously discussed in several blogs the powerful asset protection benefits of the current Michigan law which provides that a charging order is the exclusive remedy for judgment creditors of LLC members, even in cases where the LLC has only one member. In 2011, the Florida Legislature amended the Florida LLC Act and enacted legislation intended to address concerns over the Olmstead case, in which a judgment creditor was allowed to execute against a Member's interest in a single member LLC. So the simple question is this: Does the new Florida law provide the same protections as those offered in Michigan?

Continue reading "Compare and Contrast: Michigan LLC Laws vs. Florida LLC Laws" »

As discussed in my December 24, 2010 blog, Michigan has just enacted legislation which catapults it into first place when deciding which state has the best law for limited liability companies if asset protection issues are present. In Michigan, it is now beyond doubt that the charging order is the exclusive remedy for judgment creditors of LLC members.

Continue reading "CREDITORS CAN'T REACH MICHIGAN SINGLE MEMBER LLC'S" »

With the signature of Governor Granholm on December 16, 2010, Michigan moved to the front of the line when choosing states with the most debtor friendly limited liability company provisions in the country. State of the art asset protection planning with the use of LLC's has arrived in Michigan.

Continue reading "Michigan LLC's -- Now the Best of the Bunch" »

Client presents with a single member limited liability company. The emerging case law is that single member LLC's are not entitled to charging order protection. This makes sense since the original purpose of the charging order remedy was to protect partners in a partnership from being forced to accept a bankrupt partner's creditors as their new partner. However, since a single member does not face that risk, there is no need for the charging order remedy and courts in several states have held that creditors can foreclose the interest and sell the LLC's assets to pay debts. Although no case in Michigan has yet held that creditors of a single member LLC can foreclose on the assets of the LLC to pay the member's debts, it is this author's opinion that it is only a matter of time and Michigan asset protection planners need to figure out how to protect the single member's membership interest from creditor claims.

Continue reading "How to Solve the Single Member LLC Dilemma " »

Although their styles may differ, most asset protection planners will approach their initial client meetings in much the same way. We will listen to the client's concerns and determine if the client has existing or identifiable future creditors or if the client, with no creditor issues at all, simply desires to be prudent and adopt a plan that will protect his assets from unknown future creditors. We will also carefully review the client's assets and income streams to ascertain which ones are free from creditor claims and which may be vulnerable.

Continue reading "Another Asset Protection Strategy...But Does It Work?" »

My April 20, 2010 blog discusses how the IRS avoids being subject to the charging order remedy when seeking to collect from an LLC in which the debtor taxpayer is a member. Unfortunately, the IRS has still another offensive weapon when chasing members of LLC's for money.

Continue reading "Another Circumvention of the Charging Order Remedy" »

I know that many Michigan asset protection planning attorneys mistakenly take for granted that what I am about to say is common knowledge, but utilizing limited liability companies to hold commercial real estate and residential rental properties is an invaluable tool to protect your assets. I spoke with a prospective new client recently and was surprised to see that this sophisticated businessman who owns more than 100 commercial and residential rental properties throughout Michigan holds all of these properties in his sole name.

Continue reading "Limited Liability Companies, a Staple of any Asset Protection Plan Involving Real Property" »

Michigan Asset Protection Lawyers constantly extol the protection that Michigan limited liability companies provide debtors as a result of the charging order remedy. As the story line goes, a creditor with a judgment against an LLC member of a multimember LLC cannot reach LLC assets directly. Instead, it obtains a charging order and distributions otherwise payable to the debtor member must now be paid directly to the creditor. Since the debtor often has influence over whether distributions are made, this gives the debtor a negotiating opportunity with his creditors. However, in the real world the charging order may not be as powerful as advertised.

In dealing with the IRS, you frequently see the government attempting to collect debts owed by members of LLC's by levying directly on the assets of the Michigan LLC. How can the government do this you ask. Isn't the government bound by the charging order rules under Michigan law? Indeed the government has acknowledged in published notices that in the case of multimember LLC's it will honor the charging order rules...so what gives?

Continue reading "The Charging Order...Asset Protection Lawyers Overrate Its Power" »