At Ascent Law LLC, we know that you work your entire life to protect what is yours and not allow it to be destroyed by some predator, so we want you to understand your options. Compared to the FLP, the LLC is the relative newcomer to the field. LLC’s began in the 1970’s in Utah. They create a corporate structure, and give the benefits of a corporation without the downside of double taxation. Prior to the LLC this was accomplished by using an S-Corporation; however, S-Corps have significant restrictions and are therefore difficult to use. With the introduction of the LLC came a true hybrid with essentially all of the benefits of the Corporation and none of the S-Corp restrictions or double taxation downside. The LLC has the exact same tax options as the FLP. The LLC does not use the term shareholders, but rather “members.” In the standard LLC structure there is only one class of member. This was meant to mirror the corporate stock ownership and creates a majority rule type of management. While this can be changed through careful drafting, it is this distinction that becomes important when comparing it to the Limited Partnership for use in Asset Protection Planning. Asset Protection and Business PlanningThere is much confusion today about which structure is most desirable when it comes to the area of Asset Protection. While both are useful, their differences should not be overlooked. In particular, there is a distinct advantage to the Limited Partnership structure when it comes to designing a truly effective Asset Protection Plan. For example under the laws of Utah, a model state and considered one of the very best jurisdictions for the purpose of Asset Protection, there are the following critical differences between an FLP and an LLC:
While these seem minor, they are often overlooked and may be used by a judge to justify dissolving an LLC. There is no corresponding statute for an FLP, which is much more likely to remain intact in a creditor crisis.
For all of the above reasons, when it comes to structuring the most effective Asset Protection Plan possible, the use of an FLP as the primary consolidating entity is preferable. This is particularly true if the planning combines the use of an Asset Protection Trust. Since the APT would typically hold a majority of the FLP interest, using a Limited Partnership share is ideal as opposed to attempting to draft around the LLC rules with a membership interest. The LLC is, nevertheless, extremely useful. Most often an LLC will be used to hold and shield individual “risky” assets such as real estate, boats, airplanes, and other potentially liability generating assets. These may be held by a multi or single member LLC, which in turn may be held by the master FLP. The clients may directly hold the General Partnership interest of the FLP with the APT serving as the majority Limited Partner. The net effect is that the majority of the client’s assets would be ultimately held in the FLP with the wrap around protection of the APT. This structure is the ultimate in ease of use, protection and lawsuit deterrence, while maintaining the level of comfort and control most clients require. The mere existence of this level of planning is often enough of a deterrent to dissuaded potential plaintiffs’ and their aggressive attorneys. Free Initial Consultation with a Business and Asset Protection LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
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State of Utah Grandparents Rights How Far Back Can Child Support Go? via Divorce Lawyer Midvale Utah https://divorcelawyermidvaleutah.tumblr.com/post/172408592426
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ABOUTHi my name is Fiona Rikke and i am Divorce Lawyer at Midvale, UT. Archives
April 2019
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