Why file a Wyoming LLC in New York? What’s the advantage of doing business with a Wyoming LLC (filed in NY) rather than operate from a New York LLC?
Let's state the problem:
You have a real estate property in New York.

The problem

The property's equity is of public record. The owner of the property has produced a valuable litigation target. Even if the bank has a first priority lien against the property, the remaining equity is available to a judgment creditor. If a sale is forced, the funds are available to the creditor after the first lien (to the bank) is satisfied.
The available equity is found through an asset search. Whether the property is owned by you or a New York LLC, the information remains available.

The solution

Ask your attorney about monetizing a real estate asset. How is that done? You simply convert the equity of the real estate into a lien. The Wyoming LLC files a lien against your real estate in NY. The equity in the property has just shifted from New York to a Wyoming LLC with a Wyoming address.
Before a creditor goes after you, he'll do an asset search. He will see the property and the lien. You're in a better position to negotiate a settlement with your properties looking poor in equity. In a bad situation, you could default on the loan to the LLC. You could sign over the properties to the LLC to satisfy the lien against the property to avoid foreclosure.
To make the lien legitimate, it's coupled with a promissory note that you owe the LLC an amount equal to the lien. The interest rate would need to be a market rate. Insure the lien through the title company.
When you sell the property, the Wyoming LLC will be paid first. That capital in the LLC bank account serves as the financing for the next property. In essence, the LLC becomes a financing arm.


New York Consolidated Laws, Limited Liability Company Law – LLC § 607. Rights of creditors of members


(a) On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest.  To the extent so charged, the judgment creditor has only the rights of an assignee of the membership interest.  This chapter does not deprive any member of the benefit of any exemption laws applicable to his or her membership interest.


There appears no prohibition of foreclosure of a members’ LLC interest.


2015 Wyoming Code

(g) This section provides the exclusive remedy by which a person seeking to enforce a judgment against a judgment debtor, including any judgment debtor who may be the sole member, dissociated member or transferee, may, in the capacity of the judgment creditor, satisfy the judgment from the judgment debtor’s transferable interest or from the assets of the limited liability company. Other remedies, including foreclosure on the judgment debtor’s limited liability interest and a court order for directions, accounts and inquiries that the judgment debtor might have made are not available to the judgment creditor attempting to satisfy a judgment out of the judgment debtor’s interest in the limited liability company and may not be ordered by the court.


Ask your attorney to compare the Wyoming LLC statute to that of New York.

The Wyoming difference:


No foreclosure of member’s LLC interest.

No court order for directions, accounts and inquiries are not available to the judgment creditor attempting to satisfy a judgment.


Many operating agreements are written for ease of understandings and neglect how to protect the interests of the members.

Check your New York LLC:


There is a school of thought that since you filed the Wyoming LLC into New York, that you will be subject to NY’s interpretation of the charging order. The key to prevent this from happening is to keep the key assets away from NY. How could this work with NY real estate? The equity should be held by an entity that’s not in NY. Let’s say a NY LLC or NY corporation holds title to the property. Consider transferring the equity to an LLC in Wyoming through a lien and promissory note.


The bank account shouldn’t be in NY. Where should you open the bank account? Consider one of many internet banks. If your New York LLC has an account in NY, use it for operations only while maintaining a minimum balance. The reserve cash should be in an account outside NY.


When you write a check from the operating account, you’re giving away the account information. And when you deposit someone’s check into the account of your New York LLC, the cancelled check will contain your routing number. This is why you need two accounts for your New York LLC. You need a local and convenient operating account. You also need a second account for your NY LLC that is outside NY and used as a reserve/savings.


The argument of locality is the biggest concern in states such as New York, California, New Jersey and Illinois. These are socialist minded states with a large supply of hungry lawyers armed with an asset collection machine. If you’re subject to litigation, and you’re the signer on the LLC bank account, consider the following:

The above doesn’t work with bankruptcy. If you own any interest in an LLC, please disclose that to your bankruptcy attorney. Don’t hide anything from the bankruptcy trustee.


Ask your lawyer how to quit claim the property to the LLC.

CAN I LEND THE LLC PROPERTY? Yes. Your Wyoming LLC may loan property to the New York LLC or the NY Corporation. The WY, LLC may also be a member of the NY, LLC.

Ask your attorney about NY LLC Law Section 611.

New York Consolidated Laws, Limited Liability Company Law – LLC § 611. Business transactions of a member with the limited liability company

Except as may be provided in the operating agreement, a member may lend money to, borrow money from, act as a guarantor or surety for, provide collateral for the obligations of and transact other business with the limited liability company and, subject to other applicable law, has the same rights and obligations with respect thereto as a person who is not a member.

Check out Nass Business Identity Theft Presentation October 2011 document to avoid business identity theft problems.

I am lazy or too busy and don't want to file a lien against my real estate assets. What else can I do right now that is much easier and cheaper?

You can sign a promissory note that you owe the Wyoming LLC. You’re contributing the promise to pay the LLC a certain amount of money or asset by a certain date, in exchange for an interest in the LLC. You, the debtor, is in NY, and the promissory note is signed in NY. Your attorney should draft the promissory note or you may obtain one online.

If you sign the promissory note stating that you owe the Wyoming LLC in exchange for an interest in the same LLC, the Wyoming LLC can act as a creditor in NY. And if you’re hit with litigation, you can then choose to pay off the WY LLC when it’s most convenience to you. To satisfy your debt to the WY LLC, you can pay the WY LLC with cash, real estate, a lien against your property or any other asset. You are creating a friendly creditor (Wyoming LLC) and paying off that creditor when it suits your interests. But the debt to the WY LLC should ideally be created before litigation strikes. If you, as the debtor, lives in NY, ask your attorney how Section 502 applies to you by owing the Wyoming LLC.

Ask your attorney about:

New York Consolidated Laws, Limited Liability Company Law – LLC § 502. Liability for contributions

a) Except as provided in the operating agreement, a member is obligated to the limited liability company to perform any promise to contribute cash or property or to perform services that is otherwise enforceable in accordance with applicable law, even if he or she is unable to perform because of death, disability or any other reason.  Except as provided in the operating agreement, if a member does not make any required contribution of property or services, he or she is obligated at the option of the limited liability company to contribute cash equal to that portion of the value, as stated in the records of the limited liability company, if so stated, of the contribution that he or she has not made.  The foregoing option shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the limited liability company may have against such member under the operating agreement or applicable law.


We file the Wyoming LLC and forward the mail from Wyoming directly to you. We also provide a manager for the Wyoming LLC who doesn’t reside in NY. Our Contract Manager has served for many businesses since 2001 at a reasonable rate. Please call 484.256.4563 for a consultation. We work for you, report to you, and your attorney. We are not attorneys. We aim to highlight a few questions on what to ask your attorney during your consultation about whether these services are of benefit to you or your business plan.

Your attorney shouldn’t serve as a corporate officer for your company. That’s our job to file the company and serve as a Manager, and serve accordingly. And our Contract Officer/Manager signs a document that he cannot do anything involving the company without your written directive. Your directives also demonstrate that the company is yours. We’re not interested in being liable for your taxes. Since the Wyoming LLC is taxed as a partnership, this is a pass-through entity, meaning that the taxes are paid to NY as reported on your 1040 and state tax returns. There’s no tax advantage to a WY LLC.


New Wyoming LLC, $400 for set up. Includes:
Mail forwarding from Wyoming to your address. $200 per year.
Contract Officer service. $500 per year.
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