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Theus Law Offices is rated 5 out of 5.0 stars based on 5 review(s).

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Most people have many questions about estate planning but never make a move to go see an attorney. Before Theus' free seminar I did not even know their were attorneys that specialized in only estate planning. Thank goodness I attended...as I did not even know what asset protection was, even though I had assets. Most people think a written will is fine and pass away thinking that things will be as they wished/stated. Most times that is not the case. I urge you to go Theus Law Offices for consultation. They are friendly and down to earth with your wishes being #1. I cannot say enough good things about them. Now that I have gone to Theus I rest so much easier knowing that my wishes...are going to be held up...just as I wanted...no doubt about it....Thanks to the Theus family !

- Peyton Guillory

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The Theus Law Offices’ Family Estate Planning is a must from my perspective. I had recently lost my dad when I decide to attend the in-person Workshop at the time. My dad and I had attended a similar workshop some four (4) years prior but my dad didn’t elect at the time to move forward. I so wished that he (my dad) had done so because now I am helping my mom go through the Succession/Probate steps with a lawyer currently. If you or your loved ones haven’t made this decision with Estate Planning, I would strongly encourage you to attend this web-based workshop/webinar. Graves Theus is a great attorney to go with for this important step in you and your family’s planning for the future in many, many ways!!!

- Mark Johnson

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The Theus Law Offices’ Family Estate Planning is a must from my perspective. I had recently lost my dad when I decide to attend the in-person Workshop at the time. My dad and I had attended a similar workshop some four (4) years prior but my dad didn’t elect at the time to move forward. I so wished that he (my dad) had done so because now I am helping my mom go through the Succession/Probate steps with a lawyer currently. If you or your loved ones haven’t made this decision with Estate Planning, I would strongly encourage you to attend this web-based workshop/webinar. Graves Theus is a great attorney to go with for this important step in you and your family’s planning for the future in many, many ways!!!

- Mark Johnson

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They are a wonderful Team!

- Jessica Cole

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Estate planning is a complicated process, but my wife and I feel it is valuable and necessary. We started by attending an Estate Planning workshop offered by the Theus Law Offices and led by Jim Theus. That was about the wisest decision we have made in some time. We engaged the services of Theus Law Offices and have benefitted enormously from the direct working relationship with Jim Theus. They did not sign us up and then pass us off to a staff member. We worked with Jim Theus personally. When it was time to work with others of the staff, we found them friendly, knowledgeable, and professional. Jim Theus is exceptionally competent and patiently answers questions. His due diligence is admirable. We found their fees for estate planning reasonable and fair. You would be wise to consider using the services of Theus Law Offices if you are interested in estate planning. We are grateful for their help and recommend them to you without reservations. Our loved ones will also be the beneficiaries of a comprehensive plan, as are we. Doyle L Bailey

- Doyle Bailey

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Liability Protection is Uncertain for Single Member Limited Liability Companies in Louisiana


29 May, 2017

Liability Protection is Uncertain for Single Member Limited Liability Companies in Louisiana
Bad Facts Make Bad Law
Shaun Olmstead and Julie Connell were residents of Florida when the trouble started.  Shaun and Julie operated a credit card business and were charged by the FTC with perpetrating an advance-fee credit card scam. The FTC eventually obtained a $10 million judgment against Shaun and Julie, individually, and then sought to collect the judgment.

Shaun and Julie each owned separate single member limited liability companies (“SMLLCs”) and the FTC sought an order compelling each of them to surrender all their right, title and interest in their SMLLC to satisfy the judgment.  Shaun Olmstead, et. al., v. The Federal Trade Commission [Supreme Court of Florida. Case No. SC08‑1009. (June 24, 2010)]  The Florida Supreme Court actually granted the order, which allowed the judgment creditor to seize, control and sell the debtor’s SMLLC sending a shock wave through the business world.
Breach in the Firewall
Many small business owners choose to conduct business through a limited liability company, rather than a corporation or partnership.  The LLC is supposed to act as a bi-lateral firewall protecting (i) each individual member from personal liability for business debts; and (2) the LLC and underlying business from personal liabilities of each individual member.  The Olmstead decision basically disregarded a SMLLC as separate from its owner, which defeats the purpose of having an LLC in the first place.  

All states, including Louisiana, provide that a judgment creditor of a member can obtain a “charging order” against the member's LLC interest. A charging order is a lien which affords the judgment creditor the right to distributions, if any, from the debtor member’s LLC interest, but not the right to vote, access records or compel a distribution from the LLC.  Public policy enabling charging order protection seeks to balance (i) creditor’s rights with (ii) the need to protects the company and innocent members from claims against a debtor member.   

The open question in Louisiana is whether charging order protection applies to SMLLCs where there are no innocent members.  Because of the similarities between the Louisiana LLC Act and the Florida statute at issue in Olmstead, a member of a Louisiana SMLLC could very easily suffer the same fate.
 A Charging Order is Not an Exclusive Remedy In Louisiana
The Florida Supreme Court based its decision on the construct of the Florida LLC Act, which failed to provide that a charging order was the exclusive remedy available to a judgment creditor of an individual member.  As such, the Florida Supreme Court allowed the judgment creditor to employ other means to satisfy its judgment, including the seizure and sale of the SMLLC.  

Florida is not the only state to allow a judgment creditor to seize a SMLLC to satisfy a claim against an individual member.  The common denominator in each state which allowed seizure of a SMLLC was that the applicable LLC Act failed to provide that a charging order was the exclusive remedy available to a judgment creditor of a member.  Louisiana fits squarely in this box.

The Louisiana LLC Act mirrors the Florida statute at issue in the Olmstead case in that it does not provide that a charging order is the exclusive remedy of a judgment creditor of an individual member.  As such, if/when the issue is tested in Louisiana, a Louisiana court may well follow the Olmstead decision allowing a creditor to reach inside a debtor’s SMLLC to satisfy a claim.  

Other states, such as Alaska, Nevada and Delaware, have been more proactive.  These states have taken steps to legislatively override the Olmstead decision by adopting legislation that specifically provides that a charging order is the exclusive remedy available to a judgment creditor of a member of an LLC.  SMLLCs are protected in these jurisdictions, but not in Louisiana.
Play Your Hand
Anyone with a SMLCC in Louisiana should be aware of the potential for a Louisiana court to effectively disregard a SMLLC as separate from its owner and to allow a judgment creditor to reach inside a SMLLC to satisfy a claim.  Organizing a SMLLC under the laws of a more favorable jurisdiction, such as Alaska, has many advantages, but will not - alone - avoid the issue because a Louisiana court may choose to apply Louisiana law to a foreign LLC if the suit is pending in Louisiana.  

If protecting the business of a Louisiana SMLLC is a priority, an alternative approach would be to use a multi-member LLC rather than a SMLLC.  A recent case of first impression in Louisiana (and the subject of a different blog post) establishes that multi-member LLCs provide “different and greater” protection under Louisiana law compared to partnerships and corporations. As such, charging order protection exists for multi-member LLCs in Louisiana.  

Layering a SMLLC with a specially designed trust with trust protector features controlled by the member would result in a multi-member LLC with enhanced asset protection, and without any loss of control.  If properly structured, neither the LLC nor the trust would be required to file a tax return, which preserves the simplified tax status of a SMLLC as a “disregarded entity” for tax purposes. 

There are many other options to fortify or enhance liability protection associated with SMLLCs.  Given the current uncertainty in Louisiana law in the wake of the Olmstead decision, owners of SMLLCs should review and carefully consider existing business and estate planning structures that employ SMLLCs.  

Theus Law Offices provides a complete range of estate and business planning services with integrated asset protection techniques, including domestic asset protection trusts (a/k/a domestic asset preservation trusts). If you are facing an estate planning, business planning or asset protection issue and need help from a Louisiana asset protection lawyer in Alexandria, Lafayette, Lake Charles, Baton Rouge, New Orleans, Shreveport, Monroe or elsewhere in Central Louisiana, let our estate planning, business planning and asset protection attorneys help you and your business.

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