Monday, August 13, 2012
Why a Husband and Wife Should Never Own the Same Business?
The purpose of this blog today is "Why A Husband and Wife Should Never Own the Same Company? There is a simple reason a two (2) spouses should not own the same business. The first reason is a simple asset protection reason. If the business such as an LLC or S corporation gets into trouble, generally, the owners of that business will be sued in their personal capacity plus in their business capacity. For example, Sue and Bob are wife and husband and they own a web site business together called "ABC, LLC", which is owned 50 percent by the wife and 50 percent by the husband. In my experience, a Plaintiff's attorney will sue the business, the wife, and the husband individually as well as "ABC, LLC". In this example, the wife and husband have a problem because they both are brought into this legal proceeding. Generally, in Illinois, a husband and/or wife generally are not liable for each other's debts. This is not the case in community property states such as Wisconsin or California. In my experience in Cook County, Dupage County, Kane County, Kendall County, or Will County, a creditor or Plaintiff's attorney will name the individual shareholders as co-Defendants in the proceeding. Why? The reason is because the creditor or Plaintiff's attorney understands that the business, LLC or S corporation often times does not have the assets. Individuals have assets such as certificate of deposits, checking accounts, saving accounts, and other assets. What happened to no personal liability for a business debt? Yes, this is the general rule but real life court is about obtaining a judgment for your Plaintiff client and filing a lawsuit against the business only often times will result in a loss of money and payment of attorney's fees. Thus, it is a good idea for a business to never have both a husband and wife jointly own that business. If a husband or wife go through a divorce, it is generally viewed as both husband and wife own fifty (50) percent of each other's assets. By Illinois law, a husband or wife for divorce purposes, what be a joint owner of the business (not creditor or debtor law). Thus, if one spouse is avoided the pain and agony of this court proceeding, it gives the husband and wife the ability to protect their bank accounts from judgment proceedings. Furthermore, one spouse generally wants to maintain the good credit while the other spouse may have bad credit. It is a good idea to maintain at least one spouse's good credit especially for business and practical purposes. In many cases, a business will be sued for consumer and business fraud or in a partnership or business dispute, a Plaintiff's attorney will argue that an individual is liable for their actions. Thus, it is not a good idea for a husband and wife to jointly own a business. It is bad for asset protection purposes and more importantly, it will help you and your spouse avoid the pain of experiencing the "American Nightmare". The "American Nightmare" is happening to many small to medium sized business owners right now in Cook County, Dupage County, Will County, Kane County, and Kendall County, which is the target of this blog. The American nightmare is when a small business failure occurs and you have lawsuits and/or creditor proceedings such as a Citation to Discover Asset's Proceeding. In simple terms, the American nightmare is a situation where you and your family are having a difficult time keeping your head above water and feeding your family or providing basic necessities. Sean Robertson is an asset protection and commercial litigation attorney. Sean Robertson is Managing Partner of Robertson Law Group, LLC, which is based in downtown Chicago, North Aurora, and Naperville, Illinois. Robertson Law Group, LLC concentrates in helping small to medium sized entrepreneurs and business owners facing economic and financial distress. Robertson Law Group, LLC counsels and advises business owners and family-owned businesses on how to properly structure their business and personal assets in a manner that reduces or eliminates the liability risks associated with entrepreneurship or small business ownership. Robertson Law Group, LLC may be reached at either 312-854-7102 (Downtown Chicago) or 630-800-2033 (Western Suburbs). Our website is www.RobertsonLawGroup.com. Key words: Citation to Discover Asset's Proceedings, Family-Owned Business Planning, Asset Protection for Small Business Owners, Exemption Planning for Business Owners, Bankruptcy Exemption Cook County, Bankruptcy Exemption Illinois, Clerk of the Circuit Court Cook County and Citations to Discover Asset's Proceedings, Rule to Show Cause Cook County, Rule to Show Cause Dupage County, Rule to Show Cause Will County, Rule to Show Cause Kane County, Rule to Show Cause Daley Center, Personal Property Exemption Illinois, Plaintiff Citation to Discover Assets Cook County, Plaintifff Citations to Discover Assets Dupage County, Non-Wage Garnishment Cook County, Non-Wage Garnishments Dupage County, Non-Wage Garnishments Will County, Non-Wage Garnishments Kane County, Non-Wage Garnishments Daley Center, Third Party Citation to Discover Assets Cook County, Third Party Citation to Discover Assets Dupage County, Third Party Citation to Discovery Assets Will County, Third Party Citation to Discover Assets Kane County.