"Term" LLC

LLCs are organized as either “Term” LLCs or “at-will” LLCs. Unless there is a good reason not to, I recommend LLCs be organized as “term” LLCs, usually with a 50 to 100 year term. “Term” structure is the only way to take advantage of provisions in the LLC Act that truly make an LLC a superior asset protector to a corporation.

Creditors of an individual LLC owner/member can force an “at-will” LLC to liquidate immediately allowing them to seize the value of the debtor owner/member’s LLC interest. On the other hand, if the LLC is a “term” LLC, the same creditor would have to wait until the end of the LLC’s “term”, say 50 years, before the LLC could be forced to liquidate.

The South Carolina Statutory Default Rules will make the LLC “at-will” unless the organizer specifically acts to make it “term”. When I organized “Form” LLCs whether the LLC Operating Agreement was structured as “term” or “at-will” depended upon which “from” I used.