CORPORATIONS AND SHELF LLC'S
BUILD CORPORATE CREDIT
REPAIR PERSONAL CREDIT
WARNING ON New York CORPORATIONS & New York
THOUGHTS ON SUCCESS
RIGHTS AND THE CHARGING ORDER PROTECTION
Why file a
Wyoming LLC in New York? What's the advantage of doing
business with a Wyoming LLC (filed in NY) rather than operate from a New York LLC?
You have a real estate property in
problem: The property's equity is of public record.
The owner of the property has produced a valuable litigation
target. Even if the bank has a first priority lien against
the property, the remaining equity is available to a judgment
creditor. If a sale is forced, the funds are available to
the creditor after the first lien (to the bank) is satisfied.
The available equity is found
through an asset search. Whether the property is owned by
you or a New York LLC, the information remains available.
The solution: Ask
your attorney about monetizing a real estate asset. How is
that done? You simply convert the equity of the real
estate into a lien. The Wyoming LLC files a lien against
your real estate in NY. The equity in the property has
just shifted from New York to a Wyoming LLC with a Wyoming
Before a creditor goes after
you, he'll do an asset search. He will see the property
and the lien. You're in a better position to negotiate a
settlement with your properties looking poor in equity. In
a bad situation, you could default on the loan to the LLC.
You could sign over the properties to the LLC to satisfy the
lien against the property to avoid foreclosure.
To make the lien legitimate,
it's coupled with a promissory note that you owe the LLC an
amount equal to the lien. The interest rate would need to
be a market rate. Insure the lien through the title
When you sell the property, the
Wyoming LLC will be paid first. That capital in the LLC
bank account serves as the financing for the next property.
In essence, the LLC becomes a financing arm.
|NEW YORK LLC
DOING BUSINESS IN NEW YORK
New York Consolidated Laws,
Limited Liability Company Law - LLC § 607. Rights of creditors
(a) On application to a court of
competent jurisdiction by any judgment creditor of a member, the
court may charge the membership interest of the member with
payment of the unsatisfied amount of the judgment with interest.
To the extent so charged, the judgment creditor has only the
rights of an assignee of the membership interest. This chapter
does not deprive any member of the benefit of any exemption laws
applicable to his or her membership interest.
There appears no prohibition of
foreclosure of a members' LLC interest.
section provides the exclusive remedy by which a person seeking
to enforce a judgment against a judgment debtor, including any
judgment debtor who may be the sole member, dissociated member
or transferee, may, in the capacity of the judgment
creditor, satisfy the judgment from the judgment debtor's
transferable interest or from the assets of the limited
liability company. Other remedies, including foreclosure on
the judgment debtor's limited liability interest and a court
order for directions, accounts and inquiries that the judgment
debtor might have made are not available to the judgment
creditor attempting to satisfy a judgment out of the judgment
debtor's interest in the limited liability company and may not
be ordered by the court.
Ask your attorney to compare the Wyoming LLC
statute to that of New York.
No foreclosure of member's LLC
No court order for directions,
accounts and inquiries are not available to the judgment
creditor attempting to satisfy a judgment.
agreements are written for ease of understandings and neglect
how to protect the interests of the members.
Check your New York LLC:
- Is it manager managed?
No? You need to restate your articles of organization.
- Do you have at least
two(2) members? No? You need to add one member
in the operating agreement. A corporation may also be
- Is the LLC taxed as a
partnership? This is the best choice for maximum asset
protection. If your New York LLC is axed as a
corporation or as a Subchapter S corporation then you have
less protection. Your LLC operating agreement should
state that the company is taxed as a partnership.
- Ask your attorney about
Revenue Ruling 77-137. For maximum asset protection,
the LLC should be manager-managed, taxed as a partnership
and have two(2) members. If that's not the case, you
- Change the LLC you
- Open another LLC that
holds a lien against your real estate. Handle that
NY LLC's usually make the mistake
of mandating an annual distribution to the members. The
judgment creditor only needs to obtain a charging order against
the member's LLC, and wait for the Manager to make a
distribution. Then that distribution is paid out to the
- What to do: Our WY LLC doesn't mandate an
annual distribution to the members. In this way, a hostile
creditor cannot wait for the distribution to take place by a
certain time of year. If the manager has the discretion to
make the distribution, then the creditor waits indefinitely for
funds intended to the member subject to charging order.
There are other devices we instituted in our aggressive
operating agreement to look after the interests of the members.
Our operating agreement is hyper-aggressive and designed
in-house, and included with every LLC we offer.
CONSIDER ISSUE OF
There is a
school of thought that since you filed the Wyoming LLC into New
York, that you will be subject to NY's interpretation of the
charging order. The key to prevent this from happening is
to keep the key assets away from NY. How could this work
with NY real estate? The equity should be held by an
entity that's not in NY. Let's say a NY LLC or NY
corporation holds title to the property. Consider
transferring the equity to an LLC in Wyoming through a lien and
account shouldn't be in NY. Where should you open the bank
account? Consider one of many internet banks. If
your New York LLC has an account in NY, use it for operations
only while maintaining a minimum balance. The reserve cash
should be in an account outside NY.
When you write
a check from the operating account, you're giving away the
account information. And when you deposit someone's
check into the account of your New York LLC, the cancelled check
will contain your routing number. This is why you need two
accounts for your New York LLC. You need a local and
convenient operating account. You also need a second
account for your NY LLC that is outside NY and used as a
The argument of
locality is the biggest concern in states such as New York,
California, New Jersey and Illinois. These are socialist
minded states with a large supply of hungry lawyers armed with
an asset collection machine. If you're subject to
litigation, and you're the signer on the LLC bank account,
consider the following:
known account open with a minimal amount of funds.
This will serve as the canary in the coal mine when they
attach the account. In other words, it'll give you
notice that they are actively looking to attach and freeze
Open a new
account using someone else as the signer.
new account outside of the state where the lawsuit was
filed. If you're being sued in NY, open the account
with an internet bank such as in Virginia, Indiana, or
elsewhere. Don't open the account in neighboring
Pennsylvania, New Jersey or Connecticut.
lawsuit is in NY, don't sign on the bank account in NY!
See point #1. The same applies to California LLC's.
If you're a CA resident with a CA LLC, and you're a member
of the LLC, and the signer on the account, it will likely be
frozen. Don't deceive yourself that the process will
be fair and just. Stop gift wrapping your assets to
the opposing party.
the manager of the New York LLC. Another company may
serve as the manager. Alternatively, another living
person may assume the position of manager.
the manager may be anyone, anywhere in the world.
Wyoming LLC can file a lien against real estate in NY at any
doesn't work with bankruptcy. If you own any interest in
an LLC, please disclose that to your bankruptcy attorney.
Don't hide anything from the bankruptcy trustee.
WHAT IF THE NEW YORK PROPERTY IS
IN YOUR NAME?
Ask your lawyer how to quit claim
the property to the LLC.
CAN I LEND THE LLC PROPERTY?
Yes. Your Wyoming LLC may loan property to the New York
LLC or the NY Corporation. The WY, LLC may also be a
member of the NY, LLC.
Ask your attorney about NY LLC Law
New York Consolidated Laws, Limited Liability
Company Law - LLC § 611. Business transactions of a member
with the limited liability company
Except as may be provided in the operating agreement, a
member may lend money to, borrow money from, act as a
guarantor or surety for, provide collateral for the
obligations of and transact other business with the limited
liability company and, subject to other applicable law, has
the same rights and obligations with respect thereto as a
person who is not a member.
I am lazy or too busy and
don't want to file a lien against my real estate
assets. What else can I do right now that is much easier
sign a promissory note that you owe the Wyoming LLC.
You're contributing the promise to pay the LLC a certain amount
of money or asset by a certain date, in exchange for an interest
in the LLC. You, the debtor, is in NY, and the
promissory note is signed in NY. Your attorney should draft
the promissory note or you may obtain one online.
If you sign the promissory note
stating that you owe the Wyoming LLC in exchange for an interest
in the same LLC, the Wyoming LLC can act as a creditor in NY.
And if you're hit with litigation, you can then choose to pay
off the WY LLC when it's most convenience to you. To
satisfy your debt to the WY LLC, you can pay the WY LLC with
cash, real estate, a lien against your property or any other
asset. You are creating a friendly creditor (Wyoming LLC)
and paying off that creditor when it suits your interests.
But the debt to the WY LLC should ideally be created before
litigation strikes. If you, as the debtor, lives in NY,
ask your attorney how Section 502 applies to you by owing
the Wyoming LLC.
Ask your attorney about:
New York Consolidated Laws, Limited Liability
Company Law - LLC § 502. Liability for contributions
a) Except as provided in the operating agreement, a member
is obligated to the limited liability company to perform any
promise to contribute cash or property or to perform
services that is otherwise enforceable in accordance with
applicable law, even if he or she is unable to perform
because of death, disability or any other reason. Except as
provided in the operating agreement, if a member does not
make any required contribution of property or services, he
or she is obligated at the option of the limited liability
company to contribute cash equal to that portion of the
value, as stated in the records of the limited liability
company, if so stated, of the contribution that he or she
has not made. The foregoing option shall be in addition to,
and not in lieu of, any other rights, including the right to
specific performance, that the limited liability company may
have against such member under the operating agreement or
We file the
Wyoming LLC and forward the mail from Wyoming directly to you.
We also provide a manager for the Wyoming LLC who doesn't reside
in NY. Our Contract Manager has served for many businesses
since 2001 at a reasonable rate. Please call 484.256.4563
for a consultation. We work for you, report to you, and
your attorney. We are not attorneys. We aim to
highlight a few questions on what to ask your attorney during
your consultation about whether these services are of benefit to
you or your business plan.
shouldn't serve as a corporate officer for your company.
That's our job to file the company and serve as a Manager, and
serve accordingly. And our Contract Officer/Manager signs a
document that he cannot do anything involving the company
without your written directive. Your directives also
demonstrate that the company is yours. We're not
interested in being liable for your taxes. Since the
Wyoming LLC is taxed as a partnership, this is a pass-through
entity, meaning that the taxes are paid to NY as reported on
your 1040 and state tax returns. There's no tax advantage
to a WY LLC.
on the public record for the company? We provide a
Contract Manager that serves on the public record.
You don't appear on the public record, we do. We
provide signed documents that we transferred the company to
you. At all times, you're in control.
We serve a
the mail to you.
photo ID's to keep everyone accountable to one another.
a background check of our clients to keep our client pool
contracts and closing documents? Our Contract Manager
will do that for you as long as a personal guarantee is not
required. The Contract Manager can only do this upon
your direction and under your control. We put that in
the tax return? You do-- the client.
for the Employer Identification Number with a SSN? You
do-- the client.
responsible for paying the taxes? You do-- the client.
on the business account? You do-- the client.
Who is in
control? You're in control-- the client.
as guarantor for the company's liabilities? You do--
New Wyoming LLC, $400 for set up.
- Filing of the articles of
organization with the Wyoming Secretary of State
- Aggressive operating
agreement to protect the interests of the members.
- Resolutions that work with
the operating agreement.
- Filing fee with the
Wyoming Secretary of State
Mail forwarding from Wyoming to
your address. $200 per year.
- 12 mailings per year using
our commercial business address in Cheyenne, Wyoming.
Contract Officer service. $500
- A Contract Manager is
provided who knows the operating agreement and the
resolutions of the LLC.
- The Contract Manager works
for you. A photo ID of the Contract Manager is
provided to you. The client provides a photo ID to the
Contract Manager. This is how we verify the directives
of the client.
- Your Contract Manager
serves on the public record for the company.
- Your Contract Manager is
willing to sign documents that don't require a personal
- Your Contract Manager
signs closing documents in the selling or acquisition of
- Your Contract Manager will
also sign the foreign qualification to do business in New
York, or another state.
- You, the client, apply for
the Employer Identification Number (EIN) with your Social
Security Number (SSN).
- You, the client, prepare
and sign the tax return. We recommend using Turbotax.
- You, the client, open and
sign on the LLC bank account. We help you open the
Please call 484.256.4563