If a person takes legal action against you and is awarded a judgement, is your LLC protected in the fashion a corporation is?
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If a person takes legal action against you and is awarded a judgement, is your LLC protected in the fashion a corporation is?
If your home is under your LLC, can the take that from the corporation? Most importantly, are your shares of the corporation protected against any such judgement?
Asked on February 20, 2013 under Business Law, California
Answers:
John Gorman / John L. Gorman III, Attorney at Law
Answered 11 years ago | Contributor
If you are sued as an individual in California, all of your assets are subject to a judgement. Some types of assets such as your home have limited protection (CA has an automatic homestead in an amount that changes). Your interest in the LLC is an asset like any other and if someone gets a judgement against you (not the LLC) then your interest is subject to collection activities on that judgment. A properly formed LLC protects you by limiting your liability to a judgement against the LLC (not against you) to the assets in the LLC. So, if you own part of an LLC that owns real estate, and someone triups and falls and sues the LLC, only the items the LLC owns are at risk. Things you own personally are not.
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