LLC Protection: Myths, Realities, and Navigating Personal Judgments
Big Picture Retirement®
Devin Carroll
4.7 • 546 Ratings
🗓️ 25 September 2023
⏱️ 21 minutes
🧾️ Download transcript
Summary
In this episode, John dives deep into the intricacies of charging orders for LLCs. If you own an LLC, what happens when there's a personal judgment against you? How do state laws influence the level of protection? Many view LLCs as a protective measure, especially when holding valuable assets like real estate. Yet, while these structures are designed to offer a shield, are there circumstances where one's personal liabilities can affect their business assets?
From understanding the foundational purpose of an LLC to discussing the nuances of outside liabilities, we tackle all these questions and more.
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Transcript
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| 0:00.0 | The Big Picture Retirement Show does not provide tax, legal, or financial advice. |
| 0:04.0 | Listeners are encouraged to seek out their own advisors in these areas. |
| 0:10.6 | Hey, everyone, welcome to the Big Picture Retirement Show. |
| 0:13.4 | I'm your host, Devin. |
| 0:14.8 | Join today, as always, by my co-host, John Ross. |
| 0:17.8 | Howdy? |
| 0:25.5 | Yeah. my co-host, John Ross. Howdy. John, so I have multiple LLCs. |
| 0:28.5 | Yes, you do. |
| 0:29.1 | Mostly upon your advice, right? |
| 0:31.1 | That's true. |
| 0:31.5 | My building is on by one. |
| 0:33.2 | My practice is on by one. |
| 0:34.7 | My real estate. |
| 0:35.9 | I've got a couple or three different ones for the real estate. So I feel like I'm pretty protected until I hear some crazy stories like you've told me recently. But should I? Should I feel like I have this protection? Well, it's a fine question. So I think most people out there have heard of the limited liability company. I think a lot of our listeners and a lot of retirees, they have some sort of business asset, right? Maybe an actual business. Right. Even in retirement, they may still be running their plumbing company or whatever, had a client who traded classic cars, you know, and bought and sell, |
| 1:13.9 | pretty regular. And so quite a bit of value in the inventory there at any given moment. |
| 1:19.8 | Right. And then you have people that maybe their retirement income is supplemented with |
| 1:23.4 | rental real estate. Those are business assets. So the idea is, you know, most people, when they think about that business asset, and we'll just use a rent house, for example, and they think about that rent house, and they're like, well, okay, but what happens if somebody gets hurt on the rental property? Yes. And they're thinking, oh, man, you know, I'm going to have strangers living in this place, and then those strangers are going to invite other strangers over. And somebody's going to get hurt. And if they get hurt, they're going to sue. And I don't want them to get to my personal assets. Yes. And so they think, oh, well, that's okay. I'm going to create an LLC. Yeah, there we go. Sounds perfectly legitimate. Absolutely. And that's, and nothing else to just said right there is, is, is incorrect. That's all |
| 2:02.6 | correct. Generally speaking, any state, you'd probably be good with that. Some states, you might have to |
| 2:08.7 | be a little more formal than others and, and, you know, different things like that. But generally speaking, |
| 2:15.5 | those limited liability company entities are going to be |
| 2:18.6 | recognized and whether or not the liability can get out of that LLC to you personally, that's why it's |
| 2:26.9 | set up, right? The laws are designed to shield it right there. So the liability can't get out. |
... |
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