How can I protect myself if my husband is sued?

[skygurl28]

What is the name of your state (only U.S. law)? Illinois

My husband has created an LLC to do some work "on the side" of his full-time employment. While I do not know whether there is a non-compete clause in his full-time employment contract (nor does he), I feel there is a conflict of interest between his side business and full-time employment. I am afraid he will be sued by his employer. How can I protect myself and our children financially if he is sued? Could we lose our home? Is my 401(k) safe, as well as the kids' 529s? Regular bank accounts, house, and cars are in both of our names.

 

[FlyingRon]

If your house is held as tenancy by the entirety it is safe. You really should have it titled this way. Illinois law requires TBE to be expressly spelled out in the deed (some states just assume TBE for married couples). If your deed doesn't read that way, you should have a lawyer (typically they have them available in places that can hande real estate settlements) to prepare a deed for you to change this.

If they sue your husband personally (or pierce the LLC veil), your other marital property can be taken subject to very small personal exemptions.

Your retirement accounts are protected. The 529s in your state are NOT.

 

[Paul84]

If your house is held as tenancy by the entirety. You really should have it titled this way. Illinois law requires TBE to be expressly spelled out in the deed (some states just assume TBE for married couples). If your deed doesn't read that way, you should have a lawyer (typically they have them available in places that can hande real estate settlements) to prepare a deed for you to change this.

If they sue your husband personally (or pierce the LLC veil), your other marital property can be taken subject to very small personal exemptions.

Your retirement accounts are protected. The 529s in your state are NOT.

My understanding is that, in addition to retirement accounts, any separate bank accounts and separately held assets of the spouse not subject to a lawsuit are protected from a suit against the other person. I assume that is why FlyingRon is suggesting you change your house's deed. If you also have sizeable liquid assets, perhaps you could do the same with those--separate them under each spouse's name.

 

[LdiJ]

If your house is held as tenancy by the entirety. You really should have it titled this way. Illinois law requires TBE to be expressly spelled out in the deed (some states just assume TBE for married couples). If your deed doesn't read that way, you should have a lawyer (typically they have them available in places that can hande real estate settlements) to prepare a deed for you to change this.

If they sue your husband personally (or pierce the LLC veil), your other marital property can be taken subject to very small personal exemptions.

Your retirement accounts are protected. The 529s in your state are NOT.

If the 529's are owned by the OP the would be protected. If they are owned jointly or owned by her husband, then they would not be.

 

[FlyingRon]

If the 529's are owned by the OP the would be protected. If they are owned jointly or owned by her husband, then they would not be.

Yes, marital property (other than the house held by TBE) including 529, but excluding the retirement accounts can be attached. Separate property of the other spouse is not.

However, I disagree with the way you worded it. The "ownership" is immaterial. The definition of marital property in Illinois doesn't rely on whose name is on the property. If it was acquired through the marriage, it is marital property. You can't just hide marital assets in the "innocent" spouses name and get around the judgement.