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Should you incorporate in Delaware
October 22, 2020
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Should you incorporate in Delaware
            Regular readers of this forum know that I have a few pet peeves, mostly dealing with one stupid idea or another.  I belong to a local listserv of lawyers in my town and just got the following inquiry:
            “I have a situation wherein the decedent formed a Delaware corporation which owns property in Brooklyn.  There was no will and as far as I know, he was the sole shareholder of the Corporation.  My thought is that in addition to petitioning for Letters of Administration, I would also have to petition for Letters of Trusteeship with respect to the corporation.  Can anyone confirm that this is so and, if I am incorrect, what would have to be done so that the property that the corporation owns can be sold?”
            I am reminded how often I hear from an alarm company who either has or wants to incorporate in Delaware.  Too often it’s their accountant who suggests it, though more often than not they just don’t know why.
            Well it’s stupid unless you are a public company.  A one shareholder corporation that owns one property in Brooklyn NY has only managed to leave behind a mess by dying.  To add to the mess, the dummy died without a Last Will and Testament.  They may as well turn the property over to the lawyer to cover all the legal fees [not quite but that’s how it’s going to feel to the beneficiaries].  
            The primary reason to incorporate in Delaware is the many protections Delaware's laws and courts offer. Delaware's strong and well-proven asset protection shield protects the personal assets of company owners. This shield protects both Delaware corporations and Delaware LLCs.  Corporations want to operate under modern laws that clearly spell out what they can and cannot do.  The other major reason corporations choose to incorporate in Delaware is the quality of Delaware courts and judges. Delaware has a special court, the Court of Chancery, to rule on corporate law disputes without juries.
            A good reason to incorporate in Delaware is the asset protection shield which protects the personal assets of company owners. It protects both Delaware corporations and Delaware LLCs, and it protects a business manager from business owner lawsuits. This is true even if a particular business decision results in a loss to the company. This is known as the “Business Judgment Rule”.  It encourages risk-taking on the part of managers who may operate freely, without concerns of personal recourse liability. 
            Although it may seem like the common consensus, incorporating in Delaware only makes sense for large corporations. It is generally not worth the time or the effort for a small business to incorporate in Delaware (unless you already happen to be in Delaware).
            Invariably the first choice for the state of incorporation is the state where your principal business is located, especially if you are a single owner or small business owner.  Every state offers shareholder and LLC members liability protection and unless you’re a public company you don’t need to be worried about officer and director liability.  Even if it’s cheaper to incorporate in Delaware, by a few bucks, you will most likely have to register to do business in your state anyway; you will have accomplished nothing.
            Save your money, now and in the future; incorporate in your state unless you have a very good reason not to.
            K&K’s corporate department can help guide you; contact Jennifer Kirschenbaum,Esq at 516 747 6700 x 302 or  To reach her assistant contact Zach Sher at or 516 747 6700 x 317.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301