This overlooked legal code can create stronger protection—but only if you do this first…
Why you may not be as protected as you think
If you formed your entity in a state with strong LLC protection like Wyoming, you may not be as protected as you think. Because your protection level is affected by where your entity is formed. And where you live.
If you live in a state with weak protection, such as California, then those weaker laws apply during a lawsuit. Even if your entity is formed in a state with strong protection laws like Wyoming.
How’s that Possible?
Your membership interest in an LLC is considered a security. According to Uniform Commercial Code (UCC) Article 8—the law in all 50 states—there are two types of securities:
- Certificated securities
- Uncertificated securities
Certificated securities are represented by a properly prepared and held certificate, like a stock certificate. Uncertificated securities aren’t as formal, or protected. See, UCC 8-102(4), (18).
The trouble, is most membership interests in an LLC are usually represented by an uncertificated security.
What Does This Mean to Me?
Many state laws see these uncertificated securities as your personal property. This means your membership interest of an LLC “lives” where you live and is subject to that jurisdiction’s laws.
Example: Let’s say you live in a weak protection state like California and your LLC holdings are in Wyoming as uncertificated securities. Then you got into a car accident where the other party won. They want to collect an amount that’s beyond what your insurance covers, so they go after your personal assets. Because your LLC holdings are uncertificated securities, your personal assets now include your holdings in Wyoming as well.
It’s another way courts can pierce your corporate veil.
If you own 30% of an LLC’s membership interest, the judgment creditor can seize all 30%. If you’re a single member LLC, the creditor can seize 100% of the membership interest in your company.
How Far Will Courts Go?
They could order you to sell your partnership interest to pay off debt—no matter how that may affect the business.
- In Crocker National Bank v. Perroton, a California court ordered the sale with the partners’ consent.
- In Hellman v. Anderson, the California court ordered the sale without the partners’ consent.
You see, the courts aren’t concerned about your business. They’re only concerned about payment and they’ll help the ‘victims’ get it any way they can.
But there is a way to protect yourself with Wyoming’s stronger asset protection laws no matter where you live.
How to Protect Yourself
Corporate Direct developed a method for certificating LLC securities in Wyoming to be governed by UCC Article 8 so that Wyoming law applies. It’s called Armor8.
Here’s How it Works:
1. Corporate Direct turns your LLC membership interest into a certificated security.
2. Your membership certificates are held in a safe deposit box at a Wyoming bank.
The second step is critical. Because when Corporate Direct physically holds your certificated securities in Wyoming, your membership interest is now governed by Wyoming law!
Armor8 Adds a Greater Layer of Protection
When protected by Armor8, a judgment creditor can only seize your LLC membership interest by hiring a Wyoming attorney to get a Wyoming court order to reach the certificates. For many, that’s a substantial deterrent to take further action.
What’s more, the additional legal work, physical travel, and other costs to do this may deter many attorneys and courts from pursuing it further.
Armor8 turns the tables by wisely using Article 8 to your advantage. By doing so, your Wyoming LLC remains protected—no matter where you live.
Protect your Wyoming LLC. It’s fast, easy, and affordable. Call Corporate Direct at 1-800-600-1760 today.
Easy and affordable
For less than the cost of a dinner out, why not protect your business with the strongest defense available?
|Safety Box Services||
|Annual holding fee||
$75 (for up to 7 certificates)
|Certificate removal from safe deposit box||
$50 (for up to 7 certificates)
|Certificate return to safe deposit box||
$50 (for up to 7 certificates)
For new Wyoming LLCs using Corporate Direct’s Armor8 service, we can add the Article 8 language to your operating agreement at no charge. For existing Wyoming LLCs we can amend your Operating Agreement to gain Armor8 protection for, depending upon complexity, a minimum fee of $295.
Turn Article 8 to Your Advantage
We haven’t had a case challenging this procedure and make no guarantees as to how any one court would rule. What we know for sure is that Article 8 is an existing code that can work against you. But we developed a method to have this code protect you instead.
You may be wondering, why haven’t other people seen this loophole?
All we can say is Corporate Direct’s Founder, Garrett Sutton, Esq., spent the last 35 years protecting entrepreneurs and real estate investors. It’s most definitely his passion and specialty. Because of his diligence and desire to offer the most rock-solid protection available, he uncovered the hidden loophole in Article 8.
That’s why we’re the first to offer this service. While other asset protection companies may say that a Wyoming LLC provides enough protection, now you know better.
No one knows how life will unfold. So guard your LLC with the strongest protection available. Guard it with Armor8.
Fortify your Wyoming LLC with Armor8. It’s fast, easy, and affordable. Call Corporate Direct at 1-800-600-1760 today.