This is Part 4 of our four-part series of blog posts where we are sharing the basics of using Limited Liability Companies (LLCs) as part of your asset protection plan. In Part 1 of this series we introduced LLCs. If you missed Part 1 of the series, you can check it out here: Part 1 – Introduction to LLCs. Last week in Part 2 of the series we shared how an LLC is taxed. If you missed Part 2 of the series, here is the link: Part 2 – How is an LLC Taxed? Last week in Part 3 of the series we discussed how to use LLCs to own your investment real estate. If you missed Part 3, here is the link: Part 3 – Using LLCs to Own Investment Real Estate. In today’s post we cover the downside to using Florida LLCs and a brief discussion of why it can be beneficial to use LLCs formed in other states as a part of your asset protection plan. Downside to Using Florida LLCs In Shaun Olmstead, et. al., v. The Federal Trade Commission, (June 24, 2010), the Florida Supreme Court case held that Florida law permits a court to order a judgment debtor to surrender all right, title, and interest in the debtor’s single-member limited liability company to satisfy an outstanding judgment. Although it specifically addressed a single-member LLC, the opinion appears to apply to multi-member Florida LLCS as well. The Florida Legislature responded with HB 253. Effective July 1, 2011, new legislation was passed that rewrote the Florida LLC charging order statute to provide that the charging order shall be the “sole and exclusive” remedy available for judgment creditors of a debtor-member of a Florida multi-member LLC – but not for Florida single-member LLCs. Unlike Florida, a handful of states still provide charging order protection to single-member LLCs. This includes Nevada, South Dakota, Wyoming and Delaware. In addition to the elimination of charging order protection for single-member LLCs, the legislation specifically states that creditors can use the equitable principles of alter ego, equitable lien, or constructive trust against an LLC or a member of an LLC. These equitable remedies are frequently used by creditors to access the assets of an LLC or the personal assets of its members. Certain states, including Nevada, South Dakota, Wyoming and Delaware prohibit the use of such equitable remedies against an LLC or an LLC member. When determining which state in which to form your LLC, it is vital to meet with an experienced attorney who has designed asset protection plans that include LLCs formed in states such as Nevada, South Dakota, Wyoming and Delaware and are well versed in the LLC laws of those states. Our attorneys have that experience and can help you determine the best way to use LLCs in your asset protection plan. If you are interested in using LLCs as part of your asset protection plan, give our office a call at (407) 273-1045 and we can help you design an asset protection plan that meets your personal needs and goals.