Owning the Loan
Sonya has a question for Dave about a very big loan that her brother took out for his LLC.
QUESTION: Sonya in California says her brother passed away this year. She is the sole beneficiary of his trust. He was loaned $500,000 to fund an LLC, and she's not sure if the LLC or the estate needs to pay off the loan. Dave says she really needs an attorney due to the large amount of money involved.
ANSWER: If the loan is to the LLC, the bank has to make the check to the LLC. You will then accept the check as the chief manager of the LLC, because you became the owner of the LLC. You need an attorney. There is half a million dollars involved here, so make sure that you don't take a radio host's advice on this with five minutes of discussion. There is too much involved. But it sounds like, to me, what the attorney will tell you is you inherited the ownership position in the limited liability company. You now own that company even though it doesn't have anything in it.
You need to talk to an estate planning attorney. Then I think the attorney doing the closing on the escrow could probably accept from you the documentation that you're the sole heir of this LLC. It is no longer active but you are the owner of it, so you could sign the documentation so that he could just make the check to you.
That should be possible, and it would be a lot easier mechanically than having to go open up a checking account in the name of the limited liability company and then turn around and run the money through there and then close that account. That's the worst-case scenario, but you can certainly do that because you own the LLC.
Take a few minutes with a decent attorney to show you how to do that, and then you can communicate, once you've done that, with the escrow attorney on this loan and they can tell you what they need you to do. You can do either one. It doesn't leave you in jeopardy, and it helps them get their deal done because they need to know this isn't going to come back on them.
When they hand you this check, they need to know there is nothing else on this loan and the whole situation is cleared up at that point. They must have reasonable assurance of that, and you are the person to give them that assurance. It sounds like you are and this is a fairly easy deal to walk through, but you need some legal advice.