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LLC disolution

As with any business, should an LLC become insolvent without the ability to raise capital or operate as a business entity, the LLC will cease to exist. There are a number of events that can trigger the dissolution of an LLC. These events are referred to as termination events. The articles of organization often contain specific events that, if or when they occur, will terminate the LLC. Some jurisdictions may specify termination events in the legislation governing an LLC. This is noted here because should a termination event occur, there isn't any option, the LLC must cease to exist as a viable business in that jurisdiction.

The most common event for termination is the death (or desire to leave) of one of the members or managers of the LLC. There are times that the LLC is created to fulfill a specific purpose or for a specified duration of time. When that purpose has been completed, or over a period of time, the LLC will be automatically dissolved.

Certain jurisdictions legislate that an LLC is forced to terminate at the occurrence of certain events. An unwanted early termination of an LLC can cause financial problems or expose the assets to forces threatening them. Therefore, it is important when drafting the articles of organization to know the LLC jurisdiction legislation and to structure the LLC in such a way that it creates the strongest level of protection possible. For example, by including clauses allowing for the remaining members to purchase the interests of members no longer desiring to participate in the operations, or who die unexpectedly, it would avoid an untimely termination of the LLC. Thus, it is imperative to have adequate knowledge of the laws governing the LLC in order to properly structure the articles of organization to plan for unforeseen events that could cause unwanted termination, or other detriment, to the LLC.