Attorneys
Worcester
Worcester
The Guaranty Building
370 Main Street, 12th Floor
Worcester, MA 01608
Framingham
Framingham
The Meadows
161 Worcester Road, Suite 501
Framingham, MA 01701
Cape Cod
Cape Cod
1597 Falmouth Road
Centerville, MA 02632
Medfield
Medfield
Olde Medfield Square
266 Main Street, Bldg. 2, Suite 15A
Medfield, MA 02052
New Bedford
New Bedford
651 Orchard Street, Suite 107
New Bedford, MA 02744
Providence
Providence
1 Richmond Square, Suite 303N
Providence, RI 02906
Boston
Boston
12 Post Office Square, 6th Floor
Boston, MA 02109
Hudson
Hudson
69 Main Street
Hudson, MA 01749
Practice Areas
Niche industries
Open detail
Cannabis & Breweries
Cannabis & Breweries
Open detail
Closely Held and Family-Owned Businesses
Closely Held and Family-Owned Businesses
Open detail
Condominiums
Condominiums
Open detail
Medical & Dental Practices
Medical & Dental Practices
Open detail
Private Foundations
Private Foundations
Open detail
Real Estate Developers
Real Estate Developers
Open detail
Restaurants
Restaurants
Open detail
All Industries
  • Multiple Dates

Estate Planning Webinar

Please join Fletcher Tilton Tax Attorney and Certified Elder Law Attorney Michael T. Lahti for an informative webinar. In the comfort of your own home or office, you will learn why some wills do not work, even when drafted correctly.  Details for the next upcoming date.

SHOW ALL UPCOMING DATES

Learn More
Learn More
  • Multiple Dates

How to Administer a Special Needs Trust

This annual training and update for Parents, Trustees and Successor Trustees of Special Needs Trusts and OBRA ‘93 Trusts has been reconfigured into a three-part series of evening webinars to accommodate these unusual times.  Details for the next upcoming date.

SHOW ALL UPCOMING DATES

Learn More
Learn More
Learn More
  • Tue. Nov. 17, 2020
  • 6:00-7:00 PM
 

Thrive Support & Advocacy Virtual Workshop

Fletcher Tilton attorney Theresa Varnet, M.S.W., J.D. will speak about ABLE Accounts with 1st and 3rd Party Special Needs Trusts.

Learn More

Learn More

View Past Seminars

Articles

Liability Protection in 2019

By Dennis F. Gorman on July 18, 2019

Business and investment assets are subject to varying degrees of attack by creditors. Understanding the actual protection which your assets enjoy (or don’t enjoy) is important during difficult economic times. While I am unable to cover all of the various aspects regarding choice of entity, e.g., income tax implications, the cost of formation and annual maintenance, uses regarding estate and gift tax planning, I will review the creditor protection aspects of the most commonly used entities.

First, having no entity i.e. operating a business as a sole proprietorship or owning investment assets in one’s own name affords virtually no protection from the claims of creditors. Thus, if the enterprise/investment asset generates its own liability i.e. lead paint suit regarding real estate or auto accident by a sole proprietor’s employee, the owner is fully exposed individually

to any such liability. Furthermore, the assets of the enterprise/ investments are subject to the claims of the owner’s other creditors, e.g., the owner’s guaranty of a child’s auto loan.

INHERITANCE TRUSTS

If we self settle trusts for our own benefit, in general, the assets are not protected from the claims of our creditors. If, however, someone else establishes a trust for our benefit the assets are generally protected from the claims of our creditors provided the trust is properly drafted.

An increasing number of parents are now extending the remainder distribution ages for their children’s ultimate inheritances in order to protect the assets from the claims of potential creditors, divorcing spouses, etc. Many are even opting for “Lifetime Trusts” for their children by giving your trustee “absolute” discretion as to when and how much gets distributed to beneficiaries each year, the assets become unreachable by all creditors including Super Creditors (IRS/SCC).

REALTY TRUSTS

Nominee realty trusts were commonly used to hold title to investment real estate. Unfortunately, the trustees, beneficiaries and in some cases both, are subject to potential liability stemming from the assets held by the subject trust. Furthermore, creditors of the beneficiaries of a nominee realty trust may attack the assets of the trust with a little effort.

CORPORATIONS

Corporations insulate the owners from liability stemming from the business operations. However, the owner’s stock in a corporation is subject to the claims of the owner’s other creditors. While multiple shareholders of a closely held corporation typically have share cross purchase agreements to keep the stock within the ownership group, the value attributable to a shareholder’s stock is subject to the attack by the shareholder’s outside creditors.

LIMITED PARTNERSHIPS

Limited partnerships were traditionally the best creditor protection vehicle before the advent of limited liability companies (LLC’s). Limited partners are not subject to liability with respect to the business operations or investment assets of the limited partnership. Unfortunately, the general partner of a limited partnership (who manages the enterprise) is subject to liability. For this reason, corporations were often formed to act as the general partner to eliminate liability to the ultimate individuals who own the general partnership interest. This created a complicated expensive entity structure. The limited partnership shares are also protected from the claims of any third party creditors of a limited partner (i.e., outside creditors are unable to go to court and seize the limited partnership shares to satisfy an outside obligation). The “charging order remedy” is the only one available to the creditors of a limited partner i.e. if and when any profits are distributed out to the limited partner a court may intercept such payments and turn them over to a third party creditor of the limited partner.

LIMITED LIABILITY COMPANIES (LLC’S)

After the IRS issued a favorable tax ruling to LLC’s in the late 1980’s, LLC’s began to make traction in the US for both business and investment property use. LLC’s afford the owners (members) the same liability protection as a limited partner of a limited partnership i.e. protection from any liability stemming from the business venture/investment asset. At the same time outside creditors are not able to seize the LLC shares rather the “charging order remedy” is the sole remedy. Thus, today LLC’s are the state-of-the-art creditor protection vehicle (in my view). There is no need for a corporate general partner since the statute is clear that all members enjoy this protection.

For more on this and other related topics visit our website at www.fletchertilton.com and see articles published under my biography. Should you have any questions regarding the above please feel free to contact me.

Please enter your name.
Please enter your email address.
Please enter your message.

You must attach a copy of the PDF application form linked above. You may add pages to the application, but the name of the file must remain the same.

Please attach Job_Application_Form.pdf
reCAPTCHA is mandatory
Subscribe to our newsletter.
First name is required.
Email is required.
Email does not match.
Publications
reCAPTCHA is mandatory
Welcome to fletcher tilton Online Invoice Payment Center.
Card holders name is required.
Please enter invoice number.
Please enter amount to be paid.
Please enter valid card number.
CCV code is required.
/
Please select expiration date.
Please enter your street address.
Please enter your city.
Please enter your state Code.
Please enter your postal code.
Please enter your contact number.
Please enter your email address.
Welcome to fletcher tilton Online Retainer Funding Center.
Card holders name is required.
Please enter a client number.
Please enter amount to be paid.
Please enter valid card number.
CCV code is required.
/
Please select expiration date.
Please enter your street address.
Please enter your city.
Please enter your state Code.
Please enter your postal code.
Please enter your contact number.
Please enter your email address.
Welcome to fletcher tilton Online Immigration Pre-Payment Center.
Bank account type is required.
Please enter a valid name.
Please enter amount to be paid.
Please enter client number.
Bank routing number is required.
Bank routing did not match.
Bank account number is required.
Bank account number did not match.
Please enter your street address.
Please enter your city.
Please enter your state Code.
Please enter your postal code.
Please enter your contact number.
Please enter your email address.
Welcome to fletcher tilton Online PAY BY CHECK.
Bank account type is required.
Please enter a valid name.
Please enter amount to be paid.
Please enter invoice number.
Bank routing number is required.
Bank routing did not match.
Bank account number is required.
Bank account number did not match.
Please enter your street address.
Please enter your city.
Please enter your state Code.
Please enter your postal code.
Please enter your contact number.
Please enter your email address.