That’s why the operating agreement of the LLC should have a charging order protection. It discourages reverse piercing. A charging order protection will allow the LLC to stop distributions to a member who lost such a court case.
In case of an LLC taxed as a partnership the creditor will need to pay the taxes as stated on the K1 but doesn’t receive actual money. Obviously this will make it very unattractive to the creditor to go for a charging order on your membership in the first place.
In case of an LLC taxed as a partnership the creditor will need to pay the taxes as stated on the K1 but doesn’t receive actual money. Obviously this will make it very unattractive to the creditor to go for a charging order on your membership in the first place.