September 16, 2016

Personal Judgements And Assets In An LLC

If I have an LLC, am sued personally, can they come after assets in my LLC to satisfy a personal judgment? Thank you.

– Mike, Washington

Answer

Not directly, but indirectly.

The assets of the LLC are not yours, but your interest in the LLC is, and can be attached.

For example, if you own shares of Microsoft, and a judgment is rendered against you, the creditor can seize your stock in Microsoft.

But they can’t seize Microsoft’s assets (buildings, unsold copies of Vista sitting in warehouses, etc.)

What the creditor can do is get a charging order against your interest in the LLC such that if the LLC makes payments to its members, then the creditor will get those payments and not you. It’s similar to garnishing wages.

Your operating agreement can be written to prevent a creditor who seizes your LLC membership interest from exercising voting rights or any control over the business’ daily operations. This is a core concept of the llc’s asset protection.

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