Scenario: Chad is getting personally sued for damaging someone’s property and is getting a divorce for half of all he owns. He didn’t really do it but he didn’t have good enough lawyers to prove him innocent. And Chad’s soon to be ex wife is money crazy. Chad is going through it.

Background: Chad has his S-Corp making $250,000/yr. But Chad only has $50,000 to his name. Chad used his S-Corp to pay $250,000 towards: 1) trust and 2) three different LLC’s: a) marketing company, b) car wash, c) commercial office buildings... A) makes $40,000 a year profit, b) makes $20,000 a year profit, c) makes $40,000 a year profit… $100,000 profit a year from those three LLC’s but he only pays himself $15,000 a year from those three LLC’s combined. His trust owns $500,000 worth of residential real estate, bonds, t-bills and other paper assets.

Conclusion: Chad getting personally sued and divorce is only responsible for $50,000 worth because that’s all he has to his name.

(Tax structure: Basically his tax structure is: S-Corp pays 1) Trust and 2) LLC a, LLC b, LLC c… then 1) Trust has a loan taken out towards Chad and 2) LLC’s have business loans taken out towards Chad)

Question 1: Is this correct? That he is only responsible for $50,000 to his name to payout due to him being personally sued and divorced. Or are there other tax structures necessary/rearranged to pay a little?

Question 2: His taxable income is only $15,000 because his LLC’s pay Chad only $15,000 a year. And he is taking $35,000 from his trust a year. Is that also correct? Or should he be taking business loans from his LLC and loans from his trust?