There is this false narrative or myth that is going around. That anonymity LLCs are an actual way to people to evade taxes, or for landlords to avoid being identified to evade lawsuits. The essential idea is that Anonymous LLCs are where the LLC member names are not available publicly. Your personal identity is protected by that state that the LLC is registered in. Anonymity LLCs have their place in the asset protection world as a first line of defense for business owners to conduct business without placing themselves or their families at risk of harm or harassment. But, this does not mean that your identity cannot be found, or if your LLC is sued, that you will not be required to appear and defend yourself and your LLC.

The simple reality is that once a lawsuit is filed and served, the discovery process begins. You will be subpoenaed to represent the LLC and your name discovered. At that point, the plaintiff’s attorney can amend the original complaint and name your personally in the complaint.

Now, lets dive into anonymity ever further. Some states make LLC disclose the names of owners and managers. Some sales driven firms will do their best to convince you that secrecy is the key to protecting you wealth and anonymity is the silver bullet. There is no such thing as a silver bullet. The simple truth is that secrecy (aka lying under oath) is a very fast one way ticket to jail. Full disclosure of a proper asset protection plan, on the other hand, give you credibility, strong optics, and full protection. Besides, if you are ever sued, the strongest protection planning needs to have the strongest jurisdiction, which includes an offshore trust component. The mere existence of an asset protection plan with an offshore element is many times more sufficient to end litigation on very favorable settlement terms.

Now, that is not to say LLCs do not have their place at the table. They are very good foundational pieces and starting points. Used properly and together with an LP and a Bridge Trust (hybrid domestic and offshore asset protection trust) this is one of the strongest asset protection plans that you can have. However, some people are mistakenly lead to believe that the first of the tools, the LLC, is alone sufficient to protect assets, and hide them. It’s not, and the only way it ever could be sufficient is if you lie under oath. If you’re caught lying under oath, which you will be, you will unleash the full wrath of the courts power.

Now, some jurisdictions do have LLC statutes that allow an individual to own membership interests without disclosure. Delaware, Nevada and Wyoming are a few examples. Again, this does provide some privacy benefits when you are not being sued, but it does not provide any form of asset protection. Especially once the LLC is sued. One example, very shortly after a judgment is entered against a debtor, creditors have the legal right to demand information about the assets owned by the debtor and the courts enforce this right very broadly. At this point in litigation, the only way to keep an asset a secret is to lie about them and commit perjury. Perjury is a Crime! Besides that, when an asset protection plan is properly done, it’s unnecessary.

The real benefit of using an LLC does not come from the false hope of anonymity, but from charging order statutes which allow creditors of the LLC members to receive only distributions from the LLC…in theory at lest. This protection is even being stripped away.

It’s not worth risking criminal penalties in an effort to protect and hide assets when other lawful means of achieving that goal are available and stronger.

Enjoy this recent feature on asset protection from The Wealth Preservation Show. https://www.youtube.com/watch?v=fA00U_souuA

By:

Brian T. Bradley, Esq.

Senior Managing Partner

Bradley Legal Corp.

Asset Protection Law Firm

www.btblegal.com