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RGMacEsq
RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11491
Experience:  Licensed Texas General Practice Attorney
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If I have a working agreement with my Real Estate Company with

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If I have a working agreement with my Real Estate Company with my corporation, can someone garnish my commissions through my name and social#?
Submitted: 1 year ago.
Category: Business Law
Expert:  RGMacEsq replied 1 year ago.

RGMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

RGMacEsq :

Just to be clear, you're having the corporation pay your LLC (I assume single member LLC?) and then you take payment from the LLC?

Customer:

yes, the Real Estate Company pays my LLC and then I pay myself and yes a single member LLC

RGMacEsq :

If you are the one who has the right to receive the payment (because of work that you do for the real estate corporation) but are just having it paid to the LLC, the creditor could get an order that the company pay him directly. If you were doing the work on the LLC's behalf, so that the LLC has the right to receive the payment, then the creditor could not get such an order garnishing the payment from the real estate company, but would have to get the garnishment order against your LLC. Now ultimately it would really depend upon whether or not this is really just "you" doing the work (which is much more likely in a single member LLC situation) rather than the LLC as a separate legal entity.

RGMacEsq :

Now that being said, you can absolutely challenge such a garnishment, in that "you're" not getting paid, but if the LLC is set up as a "formality" or merely to avoid this situation, then it's much more likely that you could be garnished.

RGMacEsq :

The better way to avoid creditor payments is to set up a trust that you have limited beneficiary access to.

RGMacEsq :

This is typically what doctors use to protect themselves from malpractice judgments.

RGMacEsq :

They'll put up a trust, have the payments go to the trust, and their families will be the primary beneficiaries of the trust, with themselves as limited beneficiaries for health, education, maintenance, or support.

Customer:

The LLC was set up before the garnishment

RGMacEsq :

It doesn't matter when it was set up, but rather the purpose and effect of the LLC.

RGMacEsq :

That is, if it is really just you that is doing the work (even in the name of the LLC) but the LLC is being paid by your direction, then they could garnish.

RGMacEsq :

Look at it this way:

Customer:

Who should I challenge, my real estate company? the garnishment is already in place and 30% of my commission so far has been deducted. I have a couple of commissions coming up and would like to avoid the 30% again

RGMacEsq :

If you can tell the real estate company today that you want it paid to your personal bank account, rather than the LLC (and have that authority to do so) then it's just being paid to you.

RGMacEsq :

You would need to challenge the writ of garnishment with the court, in that they're garnishing the wrong company.

RGMacEsq :

But it's possible that the court wouldn't order the return of the monies wrongfully garnished from the real estate company if the garnishment itself is legitimate (and if they could otherwise garnish the LLC). That is, it would be determined to be "harmless error" by the courts in that situation.

Customer:

OK, thanks,

Customer:

The writ was in my name and SS# XXXXX is why I am asking the question if they can garnish my LLC

RGMacEsq :

They can garnish your LLC if the payments are made to you.

RGMacEsq :

If it's a "true" LLC agreement (that is, if you can't just tell your real estate company to change the payments)

Customer:

Please explain the Trust again, it is a True LLC

RGMacEsq :

But if it's merely an "alter ego" situation, where they are indifferent of paying the LLC or you, then the garnishment could go through the real estate company.

Customer:

alter ego?

RGMacEsq :

Which question do you want me to answer first?

RGMacEsq :

(trust or alter ego)

Customer:

Trust

RGMacEsq :

The trust is where you set up an irrevocable trust to receive the payments. This is beneficial when you have a family that would benefit from these payments. Where you're the sole beneficiary, it does not help. In that trust, you would be a "limited" beneficiary, so that only the distributions made to you would be subject to garnishment, rather than the entire amount. You would want to have an estate planning attorney set this up, as it can be pretty complicated (as you can see).

RGMacEsq :

"Alter ego" means that, while the LLC is a legal separate entity, the real purpose of the LLC is not to operate as a separate company, but in reality serve as the "alter ego" of the single member of the LLC. In essence, it's where the LLC is not really a separate legal entity, but merely an extension of that member.

RGMacEsq :

(to enjoy the protections of the LLC structure)

Customer:

OK, I think I understand , they can garnish my LLC

RGMacEsq :

Again, if you could change the terms of payment by yourself, then the real estate company is really paying "you", not the "LLC". If they say that they need the permission from the LLC and a release, etc... then that would be more evidence that they were paying the LLC, not "you".

RGMacEsq :

Yes, they could.

RGMacEsq :

Well, garnish any payments made to you from the LLC.

RGMacEsq :

Not the LLC itself.

Customer:

OK, thanks

RGMacEsq :

My pleasure.If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX good luck to you!

RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11491
Experience: Licensed Texas General Practice Attorney
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