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wife's liability for LLC debt?

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trussmandave

Junior Member
What is the name of your state? North Carolina

My partner and I have a new LLC since June. All is going great. However, my wife is concerned that if anything were to happen to me (death) she would be liable for my business debts, with them coming out of her life insurance proceeds. Is there any way to insulate her from these debts, which consist of credit accts., that I have personally guranteed?

Debt is not a problem, and is up to date. She is thinking worse-case scenario.

Thanks,

Dave
 


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seniorjudge

Senior Member
trussmandave said:
What is the name of your state? North Carolina

My partner and I have a new LLC since June. All is going great. However, my wife is concerned that if anything were to happen to me (death) she would be liable for my business debts, with them coming out of her life insurance proceeds. Is there any way to insulate her from these debts, which consist of credit accts., that I have personally guranteed?

Debt is not a problem, and is up to date. She is thinking worse-case scenario.

Thanks,

Dave
Click to expand...
Dave, good questions.

Now, what does your LLC operating agreement say about this?

That is where it should be made clear.

BUT, if you are personally guaranteeing these credit debts, why have an LLC at all?
 
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sukharev

Member
Minor mistake you have made is personally guaranteeing the debt. LLC is specifically designed to avoid personal liability, and its finances should be done completely separately from personal ones. If you can, re-finance as soon as possible and avoid personal guarantee.
 
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divgradcurl

Senior Member
sukharev said:
Minor mistake you have made is personally guaranteeing the debt. LLC is specifically designed to avoid personal liability, and its finances should be done completely separately from personal ones. If you can, re-finance as soon as possible and avoid personal guarantee.
Click to expand...
Of course, most people who open LLC's (and even corporations) don't capitalize them sufficiently such that a creditor would allow the loan to be guaranteed by the LLC instead of one of the LLC owners personally.
 
S

sukharev

Member
divgradcurl said:
Of course, most people who open LLC's (and even corporations) don't capitalize them sufficiently such that a creditor would allow the loan to be guaranteed by the LLC instead of one of the LLC owners personally.
Click to expand...
That's a risk that every LLC owner takes when needed. Consequences are clear: it's your personal guarantee, you are the one who is liable.
 
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