More details to this question:
My husband owns his own commercial refrigeration business. It''s not incorporated, it''s "plus/minus." He had this business before I married him. Now that we are married, I am concerned that the assets I had prior to the marriage and continue to own (they are solely in my name), namely a home that has a mortgage but is being rented out, and also some investments including IRA''s, are in jeopardy should something happen with the business, such as being sued or bankruptcy, etc. Are the assets that are in my name at as much risk as things my husband owns?
1 ANSWER
The answer is most likely, yes, your personal assets may be at risk. WIth respect to your husband's business, because he is not incorporated into an entity, he is deemed to be operating a sole proprietorship. In this form of operation, his personal assets may be required to stand for the debts of the company. As to your assets, IRA's are protected from the claims of creditors by Federal Law (until you start receiving distributions, in which case the distributions can be garnished or executed upon). The problem in your matter is that most lawyers would make an argument that the business being run by your husband is actually a partnership between you and your husband and would attempt to name you in the lawsuit (especially is you have assets). Incorporation of your husband's business would provide a good bit of protection (except for certain areas, like any personal acts of your husband which would make him still liable [e.g. acts like an assault upon a customer, or an accident while driving]).
This is not intended to be legal advice, and is general in its nature. No attorney-client relationship exists or is formed by this information. Furthermore, this does not represent the views or opinions of LexisNexis or its affiliated companies.
Answered on Nov 07th, 2011 at 10:03 AM