More details to this question:
I am selling a piece of vacant land that is currently in an LLC. After the sale closes, I will be terminating the LLC since it will no longer be needed. Does that mean that if some legal issue should arise in the future that the LLC would no longer protect me since I closed it? Or given the fact that the property was sold as the LLC, it continues to provide liability protection? Thank you very much
1 ANSWER
If the LLC funds are distributed, LLC creditors may be able to trace the distributed funds to satisfy their claims, depending on whether those claims existed at the time of the distribution, how long they take to raise a claim, etc. However, if you were not personally liable for the full amount of the claim before the LLC is terminated, you don't become personally liable because you terminate it, except to the extent that you take money out of the LLC. In other words, if the LLC is found to owe somebody $1 million, and you take a distribution of $500,000 out ofthe sale of the LLC's assets, you could be forced to pay over that $500,000, but not the ful million. You really should speak to an accountant about tax implications, however. The LLC is going to have to file various tax forms (some of which may differ depending on where it did business) and will owe taxes, and the members of the LLC may be personally liable for some of those filings and monies owed.
Answered on Apr 28th, 2014 at 2:56 PM