I have discussed the Florida Supreme Court’s decision in Olmstead in other posts on December 20, 2010September 22, 2010 and August 2, 2010.  In addition to severely weakening the asset protection advantage of a single member LLC in Florida, the decision unfortunately calls into question the effectiveness of multi-member LLCs in that state.

There are various alternatives for those who are currently members of a Florida multi member LLC.  You can consider converting the LLC into a different form of entity (such as a limited partnership); change the management structure from a member managed form to a so-called manager-managed form; create non-voting interests for certain owners; or re-form the LLC in a state that has well settled charging protection law (such as Delaware, Wyoming, Nevada or Texas).  It may also be reasonable to wait and see if the Florida courts or the legislature clarify the situation with respect to multi-member LLCs.

In any event, it is critical to get the right professional help before making any changes your Florida LLC (or any other LLC).  Changing the ownership structure, management structure, or state of formation of an LLC can have tax and other considerations that may need attention.

For Florida attorneys, I recommend an excellent article in the Florida Bar Journal, Volume 84 (December 2010).  The authors provide a thorough review of the impact of Olmstead on multi-member Florida LLCs.

The Olmstead decision provides a stark reminder of two very important points:

  1. Asset protection law varies significantly from state to state; and
  2. Asset protection laws are constantly changing, both through statutory changes and court decisions.

Having a competent professional assist you with your asset protection planning is vitally important.  It is also important to have any asset protection plan reviewed periodically because the law in this area is evolving very rapidly.