A popular asset protection tool we use at Wiseman Bray PLLC is the Wyoming Close Limited Liability Company. One or more people can establish and own this type of entity and may also manage the LLC.
Anyone can establish a Wyoming Close LLC, even if you do not live in Wyoming or conduct your business there.
Protection from Lawsuits
Under current law, assets inside a Wyoming Close LLC are protected from “outside” lawsuits and creditors, such as those resulting from a car accident or malpractice action. In a few states, like Wyoming, the sole remedy for a creditor of an LLC member against that member’s LLC interest is a “charging order.” A charging order only allows the creditor access to the debtor’s LLC interest to the extent distributions are made to the member.
Estate and Gift Tax Benefits
Under current law, the value of a membership interest in a Wyoming Close LLC may be subject to valuation discounts for estate and gift tax purposes. We anticipate in the future that the IRS will institute regulations limiting tax benefits.
Separation of “Hot” and “Cool” Assets
A “hot” asset is something like a rental property. A “cool” asset is something like a brokerage account. Separate LLCs should be formed to keep “hot” and “cool” assets separate. “Cool” assets should be isolated from “hot” assets because any “inside” lawsuits, such as those resulting from accidents occurring on property inside the LLC, will subject “cool” assets to claims of creditors of the “hot” assets.
Is a Wyoming Close LLC right for you?
If you have questions about whether a Wyoming Close LLC might be right for you, or if you’re curious about other forms of asset protection and business organizations, please call us at 901-372-5003 or email us here. We will examine your personal situation and work to develop the asset protection strategy that is right for you.