Excerpt from Veil Not Fail by Garrett Sutton ESQ.
You purchased a small home and turned it into a rental property. You appreciate that renting out real estate does constitute a business and you’ve got a couple of successful years under your belt. You’re feeling confident.
From the beginning, you tried to do everything right.
You created a single-member limited liability company, Great Expectations, LLC, to protect your personal assets. You printed up business cards but left off the “LLC” at the end of your business name because that sounded too officious. You opened a business checking account and obtained an Employer Identification Number, which you need to file your taxes and hire employees.
Your cash flow isn’t always as high as you would like, so you often use your personal account to cover the bills. You’re supposed to file a state annual report on your LLC, but you have been too busy to do that. No one reads that stuff anyway, you reason. The most important thing is that you’re paying the bills and earning equity on your property. Your financial situation is improving.
But then disaster strikes.
A woman named Amelia trips on a crack in the sidewalk leading to your property and breaks her back. She files a personal injury lawsuit against you and your LLC. You feel empathy for Amelia, but you don’t feel responsible for her injury.
The court disagrees and grants $2 million in damages to Amelia. You only have $300,000 in liability insurance. Your LLC must file for bankruptcy.
But you feel safe because you created Great Expectations, LLC. Injured Amelia can take the equity in your rental property but not the money in your personal bank accounts, or in your home, car or other possessions. After all, that’s why you created an LLC — to protect your personal assets. Right?
But Amelia’s attorney files a motion with the court aiming at your bull’s–eye and seeking to invalidate your veil. You’re confused. You thought the veil always protected your personal assets.
Your attorney clarifies the situation by drawing out two charts:
In the first example the corporate formalities have been followed and the veil is strong, protecting your personal assets from business attacks. However, in the second chart, the formalities are lacking, resulting in the great misfortune of personal liability.
This can’t happen, you argue.
Your attorney sets you straight. It can and it does.
Read and learn how to protect your personal assets from business attacks. Click to Purchase your copy of Veil Not Fail today!
“A concise but thorough introduction to strategically protecting personal assets from corporate liability.” – Kirkus Reviews
When a business owner or shareholder is held personally liable for a business’s debts, that’s called “piercing the corporate veil” – and it happens in nearly half of all lawsuits against single-member and small corporations and limited liability companies (LLCs).
Garrett Sutton, Esq. is a corporate legal expert and the personal asset protection attorney for Rich Dad founder Robert Kiyosaki. In Veil Not Fail, he shares the critical information business owners, entrepreneurs, investors, and high-wealth individuals need to set up and maintain secure corporate entities to protect themselves from personal legal exposure.
With case studies and clear legal guidance, Sutton will help make sure you and your business are not at risk. Learn how to:
- Protect your personal finances and assets from business attack
- Use corporate entities like LLCs and corporations to reduce your personal liability in the event of a lawsuit
- Stay above board and avoid sham and alter ego determinations in court
- Understand the rules and corporate formalities you need to follow to keep your legal entities in good standing
Veil Not Fail is a straightforward guide to corporate governance and financial risk mitigation for anyone who owns a business, property, or other investments – or for anyone looking to. With his signature candid and easy-to-understand style, Sutton gives you the information you need to better defend yourself and your company, and more importantly, reduce the risk of a lawsuit in the first place.
Learn how to protect your personal assets from business attacks. Click to Purchase your copy of Veil Not Fail today!
