Limited Liability Companies (“LLCs”) are a type of business entity recognized in all fifty states. LLCs provide the protections of a corporation and the flexibility and tax advantages of a partnership.
An LLC possesses the corporate characteristic of limited liability for all its members. This characteristic generally shields the individual LLC members from personal liability beyond their investment or capital commitment to the LLC for the debts and obligations of the LLC. Thus, members are protected from being liable for debts incurred by the company, but the company’s assets are also protected from a member’s individual creditors. In Nevada (along with only a handful of other states), a charging order is the exclusive remedy for creditors of LLC members, which means that those creditors can generally only get money or property that is actually distributed to the liable member. The manager of the LLC, or the controlling member or members of the LLC, has some flexibility in withholding distributions to ensure that the creditor of the liable member does not get the company’s property. Additionally, an LLC possesses the income tax flow-through attributes of a partnership, avoiding the double taxation problems typically associated with traditional corporations.
The LLC also has extremely valuable estate planning uses, such as for gifting and reducing estate tax liability, protecting family assets, and insurance planning considerations. Thus, the LLC is an extremely versatile tool from both business and estate planning perspectives. To determine whether an LLC could work for your business or as a part of your integrated estate plan, contact one of the attorneys at JEFFREY BURR today.