Synopsis: Discusses the use of non-traditional entities as it relates to debtor-creditor planning.
Definition: Hybrid Entity -- An entity that does not have a classic form, such as a corporation or partnership, but instead exists as a combination of entities, such as a combination of trust and corporation. Even as late as the early 1990s the LLC was considered to be a hybrid of a corporation and a partnership, for example, but it has since become a classic form of business entity.
Synopsis: Discusses the predominant offshore jurisdictions that have limited liability company statutes.
Definition: Offshore Limited Liability Company (OLLC) -- A limited liability company formed pursuant to the laws of a foreign debtor haven jurisdiction, such as the Nevis LLC.
Synopsis: Discusses probably hurdles that creditors would face in attacking OLLC structures, and the use of OLLCs in conjunction with foreign trusts and domestic ocmpanies.
Synopsis: Discusses the basics and operations of a United Kingdom Limited Liability Partnership, and its potential asset protection advantages from the U.S. viewpoint.
Definition: U.K. Limited Partnership (UKLP) -- A limited partnership formed under the United Kingdom's Partnership Act of 1907.
Definition: U.K. Limited Liability Partnership (UKLLP) -- A limited liability partnership formed under the United Kingdom's Limited Liability Partnership Act of 2000.
Definition: Charging Order -- An order issued by a court to a judgment creditor which essentially compels an entity of which the debtor is a partner or member to direct to the creditor until the judgment is satisfied any distributions that would otherwise have been made to the debtor.
Foreclosure Synopsis: Discusses the possibility and ramifications of a creditor successfully persuading a court to convert the charging order into a foreclosure of the interest, so that the creditor has fully the partnership or membership rights of the debtor.
The Delaware Series LLC Synopsis: Discusses the basics and operations of the Delaware Series LLC.
Definition: Series LLC (a/k/a "Cell LLC") -- A form of LLC allowed by the statutes of only a few jurisdictions (most popularly Delaware) that allow membership interests to be divided into categories or "cells" with liability for particular actions of the LLC theoretically limited to the capital contributed to the particular series in which the operations of the LLC occurred.
Definition: Charging order protected entities (COPEs) -- Entities that restrict the remedies of a creditor of an owner to a "charging order" that entitles the creditor to distributions made in respect of that ownership interest, but do not allow -- at least initially -- the creditor to actually take the ownership interest. From an asset protection standpoint, the advantage is obvious: The creditor has no immediate means of getting at the assets in the entity even though the creditor holds a judgment against one of the owners.
Extensive information relating to charging orders, including excerpts from the uniform partnership and LLC acts, and a collection of opinions concerning charging order protection, is collected at http://www.assetprotectionbook.com/charging_orders_intro.htm
Synopsis: Discusses the basics of general partnerships and limited partnerships, and their U.S. tax treatment.
Definition: Partnership -- A partnership is an association of two or more persons carrying on a business venture as co-owners for profit. Partnerships come in two basic varieties: general and limited.
Definition: General Partnership (GP) -- A partnership that consist only of general partners, all of who are jointly liable for the liabilities of the partnership, and all of whom have management rights to the partnership. In asset protection planning, general partnerships are usually to be avoided.
Definition: Limited Partnership (LP) -- A partnership that consist of general partners who are jointly liable for the liabilities of the partnership and who have management rights to the partnership, and limited partners whose liability is limited to their contributions to the partnership and who have no management rights, i.e., general partners are true partners and limited partners are mere passive investors.
Synopsis: Discusses the basic elements and operations of limited liability companies.
Definition: Limited Liability Company (LLC) -- A hybrid type of legal entity that combines certain traits of corporations with certain other traits of partnerships and other noncorporate legal entities. LLCs allow their owners (called members) to have the best of all worlds: pass-through tax treatment like a partnership, limited liability like a corporation, unheralded flexibility in ownership and management structure, and charging order protection.
Definition: Member-Managed LLC (MgrLLC) -- An LLC that allows the members to have management rights, very similar in operation to a general partnership, but with some degree of limited liability for the members.
Definition: Manager-Managed LLC (MemLLC) -- An LLC that provides for one or more designated managers to have management rights, and with the members having no management rights. With a Member Managed LLC, the members are in a role very similar to limited partners.
Definition: Single-Member LLC (SMLLC) -- An LLC with but one member, who is typically also the manager, formed in a jurisdiction that allows a single member. Because they are relatively untested, the liability protections of SMLLCs are mostly theoretical, but should be similar to that of a sole-shareholder corporation.
Synopsis: Discussion of the history of the LLC in Europe and Latin America, the adoption by Wyoming of the first LLC statute, and the Check-the-Box Regulations.
Definition: Check-the-Box Regulations -- Regulations promulgated by the Secretary of the Treasury in 1996 which allow an LLC simply to choose whether to be taxed as a partnership or a corporation.
Synopsis: Discussion of the tax treatment of LLCs as corporations, partnerships, or disregarded entities.
Definition: Disregarded Entity -- An entity for which the tax consequences are attributed to its owner as if it did not exist. Note that this does not mean that the entity is "tax exempt", which is a common and false claim made by tax scam artists.
Synopsis: Discusses the uses of LLC for estate planning, and their similarities for federal gift and estate tax planning purposes to limited partnerships.
