The term ‘conversion’ can refer to converting one entity type to another, such as a corporation to an LLC, or it can refer to converting an entity to a different state.
When does this happen?
The need for either of these types of conversion can arise for a number of reasons. The entity might have been formed originally in a state that does not offer the level of asset protection the owner needs. The business might not be the correct entity type for the business type. Or, the business might be relocating and therefore needs to be filed in the new state where it will be operating.
This process usually involves:
- Filing a conversion document for the entity type in the state of formation, or;
- Filing a conversion document in the new state of operation, then dissolving the entity in the original state of formation
- Paying the fee associated with the document(s) being filed with each state
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Take a look at these actual client stories to see how much of a difference an Anderson plan can make.
We set up a Nevada LLC for a client with significant savings. She was sued 3 years later for an environmental claim stemming from property she owned over 30 years before. Plaintiff wanted over $2 million in damages for the cleanup. After we disclosed that her assets were protected by a Nevada LLC and a HELOC on her residence Plaintiff accepted less than $100k in a settlement.
A bank wanted to pursue one of our clients for a deficiency judgement ($5.5 million) for commercial real estate he lost in foreclosure. Once the bank found out how we protected all of our clients remaining assets with LLCs and a Nevada holding LLC the bank’s attorney stated “we decline to seek a deficiency judgment given the complicated structure you have weaved for yourself”.
Our client purchased property in a LLC and it was later discovered the soil beneath the property was contaminated. The state sued the LLC to clean up the land. Client walked away from the property without any personal liability. Without the LLC he would have been on the hook for over $1 million.
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