All Forum Posts by: Joel Beckman

Well, I'm a little concerned about this attorney that "busts" LLCs, as piercing the corporate veil is extremely difficult to do and courts are reluctant to impute personal liability upon individuals under this legal concept. Nevertheless, the appropriate corporate formalities and funding protocols must be followed. 

If we forget about XYZ and have the husband own 90% of ABC and the trust 10%, i would anticipate that the same theories still apply. If claimant is able to pierce the corporate veil (as difficult as that often is) then a court might find that the trust is also liable for the debts and obligations of the LLC. You're really starting to dive into some complex legal topics that I unfortunately don't have much familiarity with. I would suggest that you discuss your concerns with an attorney familiar in the area of setting up corporations and familiar with the business laws applicable to the jurisdiction where the LLC will operate. Sorry I can't be of more help.

Regarding whether or not a claimant can go after the husband as a single member, the fact that XYZ owns ABC has only some bearing on claimant's ability to go after the husband, but is not dispositive. In most circumstances, Husband should be protected under the LLC laws regardless of who owns the LLC (it's the point of LLC protection). However, claimant could go after the husband directly if they can "piercing the corporate veil". This would only occur if the husband is engaging in business practices that by their nature are designed for the very purpose of escaping personal liability. While examples are numerous, they include co mingling personal funds with corporate funds, the use of the corporate form to promote fraud, the use of the corporate form as an alter ego (i.e. under capitalized, lacks business formalities, etc.), amongst others.