Key Takeaways
- Veil piercing requires a multi-factor test—commingling funds plus two other factors almost always results in personal liability.
- Defensive protocols must address each factor: separate accounts, documented meetings, adequate capitalization, entity-name usage.
- Annual member meeting documentation (even a one-page resolution) is a critical formality for SMLLCs.
- Litigation readiness requires proactive documentation—2-4 hours per year per entity prevents catastrophic exposure.
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Test Your Knowledge
1.Which combination of factors is most likely to result in a court piercing the LLC veil?
2.What is the approximate cost of veil-piercing prevention versus the cost of failure?
3.Which defensive protocol is most critical for preventing veil piercing?