{"id":1794,"date":"2017-07-20T16:14:09","date_gmt":"2017-07-20T16:14:09","guid":{"rendered":"http:\/\/dslawcolorado.com\/?p=1794"},"modified":"2017-07-20T16:14:09","modified_gmt":"2017-07-20T16:14:09","slug":"cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits","status":"publish","type":"post","link":"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/","title":{"rendered":"Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits"},"content":{"rendered":"<p><strong>July 20, 2017<\/strong><\/p>\n<p>The Delaware Chancery Court has now ruled on the continuing asset protection aspect of a charging order against assets in a 49% owned LLC. In that court case, a charging order had been obtained by a creditor who wanted to seize the assets inside of the LLC.<!--more--><\/p>\n<p>The charging order however (as is many times the case) granted the creditor rights to the LLC assets only at the time the manager (who is usually also the debtor or a related party) decides to distribute the LLC assets out of the LLC. In this matter, the LLC owned just the home that the debtor used as his residence and therefore never had any reason to make any distributions (and now, even more so, the debtor had an extra incentive to not make any distributions, ever!).<\/p>\n<p>What happens though when the debtor member (who apparently was also an LLC manager) dies and the LLC agreement (a\/k\/a the \u201coperating agreement\u201d) had the provisions (which I frequently still see in these agreements) that (A) forced the termination\/liquidation of the LLC in the event of a death of an LLC member and (B) in the absence of certain affirmative action being carried out <em><span style=\"text-decoration: underline;\">very quickly<\/span><\/em> after the death event, allows the creditor with the charging order to easily attach and seize the LLC assets. That is what in fact happened in this case and the creditor was able to attach the LLC assets at that point. This highlights the need for those who are relying on an LLC\u2019s asset protective qualities to revisit the operating agreement to determine if it should be amended before a later event, such as a death, exposes the LLC assets, such as real estate, to a creditor\u2019s reach.<\/p>\n<p>By Edward D. Brown Esq., LLM. CPA<\/p>\n<p>Cite: <em>Delaware Acceptance Corp. v. Estate of Metzner<\/em>, C.A. No. 8861-MA\u00a0(May 22, 2017)<\/p>\n<p><a href=\"https:\/\/dslawcolorado.com\/isnt-there-already-a-law-that-leaves-everything-to-my-spouse-and-kids\/\">Check out our latest blog, &#8220;Isn&#8217;t There Already a Law That Leaves Everything To My Spouse and Kids?&#8221;<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>July 20, 2017 The Delaware Chancery Court has now ruled on the continuing asset protection aspect of a charging order against assets in a 49% owned LLC. In that court [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,4],"tags":[9,32,70,71,72,34,73,46,18,74],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits - Davis Schilken, PC<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits - Davis Schilken, PC\" \/>\n<meta property=\"og:description\" content=\"July 20, 2017 The Delaware Chancery Court has now ruled on the continuing asset protection aspect of a charging order against assets in a 49% owned LLC. In that court [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/\" \/>\n<meta property=\"og:site_name\" content=\"Davis Schilken, PC\" \/>\n<meta property=\"article:published_time\" content=\"2017-07-20T16:14:09+00:00\" \/>\n<meta name=\"author\" content=\"Tom\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Tom\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/\",\"url\":\"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/\",\"name\":\"Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits - Davis Schilken, PC\",\"isPartOf\":{\"@id\":\"https:\/\/dslawcolorado.com\/#website\"},\"datePublished\":\"2017-07-20T16:14:09+00:00\",\"dateModified\":\"2017-07-20T16:14:09+00:00\",\"author\":{\"@id\":\"https:\/\/dslawcolorado.com\/#\/schema\/person\/539913349182602c468221d55a881196\"},\"breadcrumb\":{\"@id\":\"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/dslawcolorado.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/dslawcolorado.com\/#website\",\"url\":\"https:\/\/dslawcolorado.com\/\",\"name\":\"Davis Schilken, PC\",\"description\":\"Law Offices\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/dslawcolorado.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/dslawcolorado.com\/#\/schema\/person\/539913349182602c468221d55a881196\",\"name\":\"Tom\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/dslawcolorado.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/7768526b44ae92bf49bc837e5f62a9b3?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/7768526b44ae92bf49bc837e5f62a9b3?s=96&d=mm&r=g\",\"caption\":\"Tom\"},\"sameAs\":[\"https:\/\/dslawcolorado.com\"],\"url\":\"https:\/\/dslawcolorado.com\/author\/tom\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits - Davis Schilken, PC","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/","og_locale":"en_US","og_type":"article","og_title":"Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits - Davis Schilken, PC","og_description":"July 20, 2017 The Delaware Chancery Court has now ruled on the continuing asset protection aspect of a charging order against assets in a 49% owned LLC. In that court [&hellip;]","og_url":"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/","og_site_name":"Davis Schilken, PC","article_published_time":"2017-07-20T16:14:09+00:00","author":"Tom","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Tom","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/","url":"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/","name":"Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits - Davis Schilken, PC","isPartOf":{"@id":"https:\/\/dslawcolorado.com\/#website"},"datePublished":"2017-07-20T16:14:09+00:00","dateModified":"2017-07-20T16:14:09+00:00","author":{"@id":"https:\/\/dslawcolorado.com\/#\/schema\/person\/539913349182602c468221d55a881196"},"breadcrumb":{"@id":"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/dslawcolorado.com\/cautionary-tale-charging-order-upon-death-debtor-losing-limited-liability-company-asset-protection-benefits\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/dslawcolorado.com\/"},{"@type":"ListItem","position":2,"name":"Cautionary Tale: Charging Order Upon Death of Debtor, Losing All the Limited Liability Company Asset Protection Benefits"}]},{"@type":"WebSite","@id":"https:\/\/dslawcolorado.com\/#website","url":"https:\/\/dslawcolorado.com\/","name":"Davis Schilken, PC","description":"Law Offices","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/dslawcolorado.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/dslawcolorado.com\/#\/schema\/person\/539913349182602c468221d55a881196","name":"Tom","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/dslawcolorado.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/7768526b44ae92bf49bc837e5f62a9b3?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/7768526b44ae92bf49bc837e5f62a9b3?s=96&d=mm&r=g","caption":"Tom"},"sameAs":["https:\/\/dslawcolorado.com"],"url":"https:\/\/dslawcolorado.com\/author\/tom\/"}]}},"_links":{"self":[{"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/posts\/1794"}],"collection":[{"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/comments?post=1794"}],"version-history":[{"count":0,"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/posts\/1794\/revisions"}],"wp:attachment":[{"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/media?parent=1794"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/categories?post=1794"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dslawcolorado.com\/wp-json\/wp\/v2\/tags?post=1794"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}