A Creditor MAY NOT foreclose
against your interest in a Wyoming LLC!
There are only two states that
prohibit the foreclose of a member's LLC interest; Wyoming and Alaska.
Wyoming does not collect
information on the members. Alaska collects members' names and
discloses it on the public record.
The annual report state fees average out to be
the same between Wyoming and Alaska. When comparing apples to apples, Wyoming offers the
better deal because there's no reporting of the members' names and
application by a judgment creditor of a member or transferee, a
court may enter a charging order against the transferable
interest of the judgment debtor for the unsatisfied amount of
the judgment. A charging order requires the limited
liability company to pay over to the person to which the
charging order was issued any distribution that would otherwise
be paid to the judgment debtor.
member or transferee whose transferable interest is subject to a
charging order under subsection (a) of this section may
extinguish the charging order by satisfying the judgment and
filing a certified copy of the satisfaction with the court that
issued the charging order.
limited liability company or one (1) or more members whose
transferable interests are not subject to the charging order may
pay to the judgment creditor the full amount due under the
judgment and thereby succeed to the rights of the judgment
creditor, including the charging order.
article does not deprive any member or transferee of the benefit
of any exemption laws applicable to the member's or transferee's
section provides the exclusive remedy by which a person
seeking to enforce a judgment against a judgment debtor,
including any judgment debtor who may be the sole member,
dissociated member or transferee, may, in the capacity of the
judgment creditor, satisfy the judgment from the judgment
debtor's transferable interest or from the assets of the limited
liability company. Other remedies, including foreclosure on
the judgment debtor's limited liability interest and a
court order for directions, accounts and inquiries that the
judgment debtor might have made are not available to the
judgment creditor attempting to satisfy a judgment out of
the judgment debtor's interest in the limited liability company
and may not be ordered by the court.
The wording of the Articles of Organization of
the LLC creates the LLC when filed with the Secretary of State. The
Articles of Organization spell out whether it's a manager-managed or
member managed LLC.
Q: Which is better?
A: Manager-managed LLC:
protection secures assets from hostile creditor threats.
The charging order protection
is what triggers the hostile creditor to be liable for an income tax,
without collecting on your assets. This is called "phantom
income," and it's successfully restricted from the hostile creditor
ONLY when the LLC is manager-managed.
Q: Why do
incorporators avoid discussing the charging order protection?
A: They don't want to
confuse you. They know you're most likely deciding between a C
Corporation and an LLC. They don't want to lose the sale and
have you walking away scratching your head. So, they don't
mention it. They prefer to limit your choices and make the
decision simple. We prefer to illuminate our clients'
choices and inform.
state of choice
means a great deal because it determines how secure the benefits really
are. A Nevada LLC or a Wyoming LLC is extremely secure in terms of
the charging order protection.
The operating agreement
determines what everyone can and cannot do (manager, members, and
LLC), and how it's done.
The operating agreement
validates that you did something right, such as bringing in another
member, issuing member certificates, or selecting the manager of the
Problem: Most LLC's
are written in very general form. They try to be everything
for everyone. How do we know this? Because 99% of all
incorporators use the same operating agreements time and time again.
It's a broken record. And although this objective is noble in
theory, it leaves clients at a disadvantage. Most incorporators
are too lazy to draft an original operating agreement.
A: LLCs intended for
asset protection must be designed for that purpose from the ground up.
And since many asset protection planners are glorified incorporators,
they aren't prepared to get the job done right the first time.
It's easier for them to just copy another person's operating
operating agreement was drafted by a CPA/Attorney for the purpose of
asset protection and limited liability. There's no comparison to
our shelf LLC operating agreement to the others available on the