Sunday, August 28, 2011
Provident Trust Group recently interviewed Steven Oshins, an estate planning attorney at Oshins & Associates, LLC, regarding his influence in drafting Nevada’s Senate Bill 405 (a bill dealing with remedies for creditors of single member limited liability companies, or SMLLCs). An excerpt of the interview is below:
Q. Why the need for new legislation addressing SMLLCs?
After reading the Olmstead case in early 2010 and seeing where the trend in the law was heading, I felt that it was time to clarify Nevada’s charging order laws to continue to enhance them and keep Nevada ahead of the rest of the pack. So I contacted Attorneys Rob Kim and Mark Smallhouse, both part of the Business Law Section of the State Bar of Nevada, and worked with them on the new language. This is the third time I have authored or co-authored the Nevada charging order laws. I also wrote them in 2001 and 2003. This change in Nevada law makes Nevada and Wyoming the only two states to statutorily legislate that a single member LLC gets the same protection as a multi-member LLC.
Q. The Nevada statute provides that a charging order is the “exclusive remedy.” Are you confident that the prohibition against any other remedy being imposed by a court prevents the imposition of equitable remedies such as a constructive trust or resulting trust?
Yes. In addition to the single member LLC changes, I added in language specifying that no equitable remedies can apply. Equitable remedies are remedies that the court will sometimes use where the legal remedies are insufficient for the judge to get to the desired result. I felt that South Dakota law had the best equitable remedy language, so I used that language.
Q. Is there a provision in the enacting legislation, if not in the statute itself, assuring that the new law applies to pre-existing SMLLCs?
There’s no specific language. It is clear that it applies to pre-existing SMLLCs.
Q. In Olmstead, the Florida Supreme Court pointed to an entirely independent statute that allowed creditors to foreclose on assets of the debtor. Is there any other provision in Nevada law that could be relied upon, as was the case in Olmstead?
There is no foreclosure language in the Nevada charging order statute. So this is not an issue under Nevada law.
See Neil Schoenblum, Nevada Extends Charging Order Protection to Single Member LLCs, Provident Trust Goup, Jun. 20, 2011.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.