You Do Not Own What Your LLC Owns

You Do Not Own What Your LLC Owns

      In a recent decision from Utah, it was applied the rule that an individual does not own the property that is owned by that person’s LLC. White v. White, 27 UT App. 140, ___ P.3d ___, 2017 WL 3326790 (Utah App. August 3, 2017).

      Dean White and Julie Dawn White divorced in 2010. Several years before they divorced, they purchased a rental property and, after purchasing it, transferred it to an LLC. That LLC was in turn awarded to Dean White in the course of the divorce, and he began to reside in what had been the rental property. Dean defaulted on a number of payment obligations under the divorce settlement. Ultimately Julie would seek a charging order against Dean’s interest in that LLC. As the property was not income producing, she requested as well foreclosure on the charging order lien in order to effect the sale of the property to generate funds to satisfy her rights under the divorce decree.

      In response, Dean asserted that the LLC’s property was subject to the Utah homestead exemption act, and likewise the sale proceeds would be exempt.

      Both of these assertions were rejected.

      Reviewing the terms of Utah law governing homestead exemptions, the court found that the separation of ownership via the LLC was dispositive, and the homestead exemption did not apply. Likewise, the sale proceeds from the sale of that property were likewise not subject to the homestead exemption, and were attachable pursuant to the charging order.