A historical case with a current planning lesson. This article revisits the Florida Supreme Court’s 2010 decision in Olmstead v. Federal Trade Commission. The case concerned an earlier Florida LLC statute. Today’s planning must use current law.
What the Court Decided
In Olmstead, the court concluded that the statute then in effect did not prevent a judgment creditor from using execution remedies against a debtor’s ownership interest in a single-member Florida LLC. The case arose from FTC enforcement litigation involving an advance-fee credit-card scheme.
The decision showed why the words of a particular statute matter. It did not establish that every LLC is unprotected, that every judgment gives a creditor the LLC’s assets, or that all domestic planning fails.
Read the Current Statute
Florida now addresses these issues in section 605.0503. It distinguishes single-member and multi-member LLCs. A sole member’s interest may be subject to foreclosure under stated conditions; foreclosure is not available under that section as a judgment-collection remedy against an interest in a multi-member LLC.
The law also preserves exceptions involving secured creditors, fraudulent transfers, and certain equitable remedies. Our current Florida charging-order guide explains those distinctions.
Use More Than One Layer Where Appropriate
Strong planning can combine suitable entities, insurance, exemptions, and trust arrangements. The correct combination depends on the assets, business activities, jurisdictions, costs, and creditor risks. Adding an offshore element is a decision to evaluate, not a requirement for every client.
An international trust may offer additional protections, but it also brings administration, control, and reporting considerations. It does not guarantee that a U.S. court order will be ineffective or that a creditor will abandon a claim.
Review the Plan Before Trouble Develops
A structure should be reviewed as laws and circumstances change. Genuine ownership, proper records, funding, and ongoing administration matter as much as the name of the entity.
Do not assume that being a client of any firm makes every asset protected. Ask what a proposed plan covers, what it does not cover, and what responsibilities remain yours. If a claim already exists, seek advice before changing ownership or transferring assets.
Comments (2)
In California, if you form an LLC with one member being yreosulf as an individual and the second member an S-Corp in which you are the sole shareholder, would this still be seen as a single member LLC being that you in reality own 100% of the newly formed LLC or would this be seen as a multi-member LLC when it comes to charging order protection?
This structure would likely not pass muster as a multi-member LLC. The other problem is that CA allows for more than just a charging order as a remedy for a creditor. You typically do not want to rely simply on a CA LLC for your asset protection. A single-member LLC in CA can be held, for example, by a Limited Partnership organized out of CA. This would ad a stronger layer of protection in most cases.