Page 85 - Ultimate Guide to Estate Planning Third Edition_Neat

children got divorced, and now their ex-
spouse ends up with a financial interest in the
family limited liability company, with your
other children.

We use limited liability companies to secure
the protection afforded by charging orders.
To understand the protection associated with
charging orders, it’s helpful to compare the
limited liability company entity to a corporate
entity. With a corporation, governance rights,
like the right to vote the stock, and financial
interests, like the right to receive a dividend,
flow together. In an LLC, governance rights
and financial rights are separated. Creditors
are not able to access the governance rights so
they never have a seat at the table of the
board of directors to decide the disposition of
assets or the operation of the business. They
may receive somebody’s financial rights, but
they’re not a controlling party or a forced
partner to other members.

Typically, we see these assets being
transferred to limited liability companies with
a unique feature that all the members are also
members of the family. It is preferable to

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