How one person can create a double member LLC?

[Mary Jay]

Hi guys,

Could you please help me out?

Everybody keeps saying how if a husband and a wife own an LLC it is still considered as one member LLC.

Also, its easy to pierce the corporate veil of one member LLC, and courts sometimes treat a one member LLC as an individual.

So, I can put as a second member another LLC, but what if that LLC is a one member? In other words, in I own an LLC that is two member LLC (one is me and another member is another LLC that has ony one member, who happens to be me again) would not court consider it as one individual?

So is there a way around it?

Thank you!

[Frank Chin]

If the issue is piercing the corporate veil, adding a member will not help you. There's a lot of other issues involved.

I had a business in an LLC, purchased it from the married couple who had it in an S Corp. The S Corp and them were personally sued. My involvement was my employees had to take time off the give court depositions on a lawsuit for over $2 million. They worked for them before I took over. Asked attorneys in the case if the corporate view was pierced. The answer was "NO", because the couple were personally involved in managing the business. Were they? I was allowed the opportunity to observe the business before buying it, and the husband spent most of the day strolling around the neighborhood and reading the papers while he was there. Be that as it may, the court allowed the case to proceed against them because of their personal involvement.

Outcome of the case? The couple retired to Florida from NY, put all the money into a home protected by the state's Homestead laws, so the plaintiffs settled for whatever they can from the insurance.

While I had the business in an LLC, there was a slip and fall at the business, and the customer got an attorney after me. He threatened lawsuits and all kinds of things. At first, I had the correspondence sent to me. But when the amount they're looking for went up to over $10,000, I told them to send everything to my insurance. I got liability insurance for my LLC and an endorsement that covers me personally. Nine months went by and the customer came back to me crying that his attorney stopped answering his calls. Reason why? It's too much work for a claim of measly $10,000. The insurance company had a case number, I checked, and they tell me they received correspondence from the attorney and it's being looked at. Haha. I told the customer to hire another attorney that's not so lazy. Never heard back.

Bottom line, the corporate veil will be pierced in any event. You're the alter ego of the LLC. All they have to ask is what this dummy partner in the LLC does, and it would be case over. With an insurance company, attorneys will not touch the case unless they get a big payday. Bottom line, you're wasting your time.

My experience is that insurance worked better than an LLC.