On June 24, 2010 the Asset Protection world got news of yet another significant case that makes us look again at how strong domestic asset protection really is. Once again the FTC is at the masthead (Remember FTC vs. Affordable Media). This time around the Florida Supreme Court is taking its crack at making Domestic Asset Protection less effective. So what’s happening. Here are the facts.
The FTC ended up with a $10 Million judgment against Shawn and Julie Olmstead (Olmstead v. FTC). Problem was that the assets were all in Florida Single Member LLC’s which being based on partnership law are expected to have the famous “Charging Order” protection to them. The wiggly little problem is that in FL, unlike some other more clear states, the Florida LLC statute did not specifically state that the Charging Order was the EXCLUSIVE remedy of the courts. And it was this very small, very important, missing word which allowed the courts to radically damage and put into question the future effectiveness of not just single member LLC’s, but all LLCs (at least in Florida).
So how does that affect you if you have your assets are in an LLC in Florida? Well, it depends. If you happen to be a Lodmell & Lodmell client already, then the answer is that your plan is already drafted for exactly this type of scenario. How did I know how to do that? Because this is not the first time a U.S. court has decided to take matters into its own hands and reinterpret the case and statutes to fit a desired outcome.
In fact, it is for this very reason that we do not rely on a completely domestic asset protection plan. Courts have a habit of manipulating the law to fit what they want, regardless of how that may affect future cases and disregard established case law, or even statutory construction.
So what if you are not a Lodmell & Lodmell client? What then? I would recommend that you have your LLC’s reviewed, as well as any other planning you have. Depending on how it is structured you may have some adjustment to do.
The bottom line is that if you are serious about truly protecting your assets, then look beyond the reach of the U.S. Court system. This case is another strong reminder that the United States legal system is run by lawyers, for lawyers to keep the money machine running smoothly.
My Advice: “Stay out of the legal system and get your assets totally protected!”
[…] order only” remedy and directly reach LLC assets to satisfy a creditor. One example was the Olmstead Case in FL, where the court determined that since the LLC was single member, there was no harm in accessing […]
Quote: Courts have a habit of manipulating the law to fit what they want.. and disregard established case law, or even statutory construction… Unquote
That’s so darned true and we’re seeing it in spades at the US government level. What’s next?!