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Landon Lerner
Landon Lerner,
Category: Business Law
Satisfied Customers: 12
Experience:  Senior Associate at Lerner & Weiss
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I have a question about an LLC

Customer Question

i have a question about an LLC
Submitted: 3 months ago.
Category: Business Law
Expert:  Mark CPA replied 3 months ago.

Hi, my name is Mark. I will be happy to help you with your question.

Customer: replied 3 months ago.
hi mark, i was looking for a lawyer. it showed me a lawyer just before i paid. why am i getting a tax professional? can you send me lawyer?
Customer: replied 3 months ago.
i don't want a tax professional!!! i'm looking for a lawyer
Expert:  Landon Lerner replied 3 months ago.

I'm a lawyer, what's your question?

Customer: replied 3 months ago.
i am one of 3 members in a Delaware LLC, which was properly formed and has not been run improperly (meaning no personal assets are intermingled, it has its own bank account used only for the LLC's expenses, etc.). about $150,000 of our capital has been invested in the LLC. The purpose of thebusiness of the LLC is to generate ongoing income for the members, and we intend to distribute virtually all income monthly (assuming that is possible). we have not started generating any income as of yet though.
It has recently come to our attention that there are legal trolls pursuing class action lawsuits against businesses like ours. While we haven't been sued or even approached, the question is, "would income that we've already distributed to members be safe from liability"? in other words, are the current assets of the LLC the only assets that potential plaintiffs can go after?" Given that we plan to distribute income regularly (and spend it), we want to make sure that income is not subject to liability, or if it is, under what circumstances. Thanks.
Expert:  Landon Lerner replied 3 months ago.

If you've complied with LLC requirements (no commingling, adequate capitalization, etc), the LLC's purpose is to protect personal assets from liability. Once money has been transferred it becomes your personal asset. Therefore, it should be safe. That does not prevent anyone from suing you and trying to obtain it, but it should give you a defense to any such claim. In short, yes, only the LLC assets would be on the table absent some other action on the LLC members' part that would open the door to a piercing the veil argument.

Expert:  Landon Lerner replied 3 months ago.

Given that you are dealing with a hypothetical situation at the moment, that is how you should look at it. In the event that you are actually sued, or a demand letter is sent, you need to consult with an attorney immediately to analyze fully the situation.

Customer: replied 3 months ago.
what constitutes adequate capitalization?