Asset Protection for Professionals, Entrepreneurs & Investors (2nd Edition)

Asset Protection corporation). The existing corporation offers no “outside” creditor protection. Jack’s business equity (and the equity held by Jack’s minority partner) is exposed to their respective “outside” creditors. Jack’s new LLC interest could also be titled as TBE with Jill (if available in their state) to avoid charging order exposure to Jack’s outside creditors.

Any valuable construction equipment should be transferred to a separate LLC, and leased back to the construction LLC. The equipment would typically be transferred to a sister entity (of the construction LLC), depending on the tax consequences. Subsequent to the transfer, employees, suppliers and other business claimants of the construction company would likely have no access to the valuable machinery. Management and ownership of the sister equipment LLC would correspond with the construction LLC, owned by Jack and his younger minority partner. The segregation of equipment in a sister LLC is analogous to Jill’s segregation of the medical office in an LLC (which leases space to Jill’s medical practice). Jack could also strip equity from the equipment by establishing a line of credit, secured by the equipment.

An operating agreement for the construction company will allow Jack to sell majority ownership to his younger partner (over time), without losing managerial control. If Jack were to die before the sale of his entire interest, the operating agreement could require Jack’s partner to purchase Jack’s interest with life insurance proceeds (maintained pursuant to the operating agreement). The agreement would also allow Jack to 213