Delaware LLC, Trust, Asset Protection Confusion
An LLC trust for asset protection when I go to invest funds ask for Social security number even though with a trustee and a separate Id number. What was the purpose of the trust? Also I had a nominee trust done but do not no which one is better?
Lots of "stuff" floating around in your question. Let's break apart each of your phrases and give a few comment to help get you on track:
- "An LLC trust for asset protection" - this is a limited liability company. Having some portion of your assets owned in an LLC can be an effective asset protection technique if the formalties are adhered to and its not a fraudulent conveyance (a transaction de-frauding your creditors, in loose terms -- see a lawyer to get a better understanding, its important).
- "when I go to invest funds ask for Social security number" - bank and brokerage firrms have to go through some pretty extensive background data to open an account. Your LLC account must be opened under the LLC tax identification number. However, a bank may want your Social Security number for the background information it needs. No LLC accounts should, however, be under your Social Security. The LLC must be treated like a separate entity to work.
- "even though with a trustee and a separate Id number." - sounds like you have a trust set up which owns part of the LLC. The trust has to have its own tax identification number as well and the trust must have its own bank account under its ID number.
- "What was the purpose of the trust?" - Can't be sure without seeing more, but the trust is likely to be a domestic asset protection perpetual trust formed in Delaware. It is likely to be irrevocable (you cannot change it). You might be a beneficiary which is something that Delaware law permits. If the trust owns part of the LLC it can fractionalize the LLC ownership to make the LLC more difficult to pierce by a claimant. However, that being said, the formalities of all these entities have to be adhered to.
- "Also I had a nominee trust done but do not know which one is better." - Sorry on this one but not sure what you're referring to. Could be that a revocable living trust was set up to manage your assets (e.g, assets which you should not have transferred into the above structure).
You might want to take a look at my book The Complete Book of Trusts 3d ed. published by John Wiley. It will explain all the above in much more detail. The real concern is that you had to have a lawyer prepare all the above documents, yet you don't understand what was done. That should not be. Go back and get a better explanation. If he/she can't explain it so you understand it at least in general terms, get another lawyer.