Are all corporations the same? Are all LLCs the same? No.
The wording of the Articles of Organization of
the LLC creates the LLC when filed with the Secretary of State. The
Articles of Organization spell out whether it's a manager-managed or
member managed LLC.
Q: Which is better?
A: Manager-managed LLC:
protection secures assets from hostile creditor threats.
The charging order protection
is what triggers the hostile creditor to be liable for an income tax,
without collecting on your assets. This is called "phantom
income," and it's successfully restricted from the hostile creditor
ONLY when the LLC is manager-managed.
Q: Why don't
incorporators avoid discussing the charging order protection?
A: They don't want to
confuse you. They know you're most likely deciding between a C
Corporation and an LLC. They don't want to lose the sale and
have you walking away scratching your head. So, they don't
mention it. They prefer to limit your choices and make the
decision simple stupid.
Our clients are not simple
stupid. They want to learn more and that's why they come to us in
the first place.
state of choice
means a great deal because it determines how secure the benefits really
are. A Nevada LLC or a Wyoming LLC is extremely secure in terms of
the charging order protection.
The operating agreement
determines what everyone can and cannot do (manager, members, and
LLC), and how it's done.
The operating agreement
validates that you did something right, such as bringing in another
member, issuing member certificates, or selecting the manager of the
Problem: Most LLC's
are written in very general form. They try to be everything
for everyone. How do we know this? Because 99% of all
incorporators use the same operating agreements time and time again.
It's a broken record. And although this objective is noble in
theory, it leaves clients at a disadvantage. Most incorporators
are too lazy to draft an original operating agreement.
A: LLCs intended for
asset protection must be designed for that purpose from the ground up.
And since many asset protection planners are glorified incorporators,
they aren't prepared to get the job done right the first time.
It's easier for them to just copy another person's operating
operating agreement was drafted by a CPA/Attorney for the purpose of
asset protection and limited liability. Compare that to the
run-of-the-mill LLCs that you buy on the internet.