“Ask Your Attorney” Column
About Insulating My Business From My Husband’s Creditors
Dear Counselor: My husband and I just moved to Wisconsin, where we are going to “start over.” I want to open a new business, and we’ve agreed that it will be mine alone. I am concerned that my husband still owes a number of creditors from a business he operated before we were married. He is paying them off, but I don’t want his creditors (old or new) coming after my business. What do I do?
Dear Client: Some years ago, the Wisconsin legislature enacted a marital property law which applies to married couples who are Wisconsin residents. The general rule for married couples in Wisconsin is that all income, earnings and other property acquired during marriage (except by gift or inheritance) is presumed to be the marital (ie. community) property of the spouses. This general rule will be applied to your new business unless you and your husband agree, in writing, through a Marital Property Agreement, that the business is your separate, individual, property, including any profits generated by the business. You may want to form a corporation or limited liability company to operate your business, and you would be the sole owner. You would then have to be very careful to treat every aspect of the business as your separate property. And, there are special rules that you need to comply with in order to properly advise your household creditors what is marital vs. individual property. Books have been written about this area of Wisconsin law, and there are many court cases that have arisen over the years addressing creditors’ rights over marital vs. non-marital property. You need to work closely with us to properly set up your business so that your interests are protected. Come on in, and let’s discuss.
John L. Maier, Jr.