Limited Liability Companies and Corporations in Delaware

• It provides a stable and safe business platform for the protection of the members’ investments. This investment cannot be disrupted by a member’s creditors. Delaware law provides special protection against creditors by limiting their remedy to a “charging order.” With a charging order, the hostile creditor can only go after the debtor member’s profit distribution from the LLC and not against the LLC itself. Delaware is one of only a few states to provide a charging order.

• The IRS treatment, for tax purposes, makes the Limited Liability Company similar to the “S” Corp in the way that taxes are paid not by the company, but rather only by the members.

• LLCs do not have the ownership restrictions of “S” Corporations, making them a favored choice for business structures involving investors who are outside of the United States.

• The LLC is governed almost entirely by its Operating Agreement. The Operating Agreement is private and is not required to be publicly filed or disclosed to the Delaware Division of Corporations.

• LLC Operating Agreements allow a wide degree of contractual flexibility and, in fact, some formalities such as minutes, by-laws, meetings, officers and directors may be eliminated in the LLC agreement.

• In Delaware, you may have an LLC with only one member. A Delaware single-member LLC may be registered to do business in other states, even though those states require LLCs formed in that state to have more than one member.

• Members are not usually personally liable for the company's debts and obligations.

• Management of an LLC may be by the members or by selected managers who may or may not be members themselves.

• Anonymity/Confidentiality is possible with careful and thoughtful planning.

• Many people find value in using a corporate entity as an estate planning tool. By putting assets into an LLC and adding family members as members of the LLC, one can have effective and efficient control of assets upon death without triggering the complexities of probate. (This should always be discussed with your estate planning attorney and not attempted alone).