Can I eliminate the equity in my business instead of my real estate?
Yes, same exact procedure except that we will not record a lien secured by your property, we will file a UCC-1 form with the Secretary of State’s office where your business is located.
Do I need to have the WY LLC register to do business in my state? I am in California, if that makes any difference.
No, you do not need to have your WY LLC register to do business in your state, no matter where you live, because the LLC is not conducting active trade of any sort and is only owed a sum of money through a Promissory Note and a Lien.
The LLC is not “Holding” any property in any other state where you have your assets. Hence it does not have to worry about each state’s Corporation Code (such as California Corporation Code 17450). These codes are in place to govern any claims arising between the members and the managers etc. but you are either a single member LLC or a multiple member LLC not conducting any trade of business in your particular state(s) where your Asset(s) is located.
If litigants obtain a charging order against you in California (because you reside in California and your asset(s) is in California), they would find that the WY LLC has not registered to conduct business in California, because it is not conducting an active trade or business in California.
You see if you were conducting business in California, your entity would’ve had to register in California and it would’ve availed itself of California’s laws which would’ve given the Litigants the power to foreclose on your assets as a member of the LLC under California Code 17402 (foreclosing on member’s interest in an LLC).
Our structure with WY LLC being an out of state entity, not conducting any trade or business in the state(s) where you have your asset(s) or where you reside, hence not needing to register as doing business in that state, gives you a huge advantage without additional entities and complicated structures because WY LLC would not fall under the state’s Jurisdiction and it becomes immune from its enforcement actions.
In the unlikely event that the Litigant obtain a Charging Order, and forces you to sell your assets in a foreclosure proceedings, you would have to by law, pay the existing liens first which is whatever you own to a bank on the 1st Trust Deed position and the amount of lien you owe the WY LLC in the 2nd Trust Deed position (Your LLC). This would leave the Litigant with nothing collected other than a tax bill due to the “phantom income” that could be assessed against them from the IRS after winning their lawsuit for a specific amount and obtaining the charging order.