Legal Question in Business Law in New York

Re: Protecting business from personal lawsuit

To protect hour business assets form a corporation.

Re: Protecting business from personal lawsuit

Here's the deal.

If you do something that exposes you to personal liability, all of your personal property can be used to satisfy the resulting obligation. This includes shares in a corporation and membership units in an LLC. If you own it, then your judgment creditor can take it. And assuming the judgment creditor gets control of a majority of the shares/membership units, he can do what he wants with the assets of the business.

The tax attorney who posted an earlier, somewhat cryptic, response to your question suggested placing the shares/membership units in a trust. The idea is that this vehicle would remove the assets from your personal portfolio into that of a separate legal entity. One result might be (and I emphasize the MIGHT part)to shield the assets from your creditors; there may also be tax, business, and personal consequences that you would need to explore fully before deciding on that route.

The best medicine is preventive -- address legal problems early, before they become large enough to swallow you up.

Re: Protecting business from personal lawsuit

If you have family members that you could consider in your estate plan, you could create an irervocable trust with a discretionary life estate for yourself (your co-trustee has the discretionary rights to benefit you), transfer your personal assets to the trust, use gifting provisions to the other family members to make them the asset owners, subject to your life estate. This should accomplish the result you desire, with some minor ramifications. Write or call me if you need more information (973)-377-3313, and I can assist you in creating the trust.