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TJ, Esq.
TJ, Esq., Attorney
Category: Business Law
Satisfied Customers: 11783
Experience:  JD, MBA
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My ex-wife and I are co-managers of a KM Brady LLC which was

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My ex-wife and I are co-managers of a KM Brady LLC which was used while we were still married to procure a $560K loan to build a dance studio for her dance business which is operated under a second LLC. The loan for the building was given to the KM Brady LLC using myself and her as co-signers.

Her dance business now leases the building from the KM Brady LLC. Since we are now divorced I plan on taking my name off as a manager of the KM Brady LLC. The divorce decree awards the building to her as long as she makes payments on it. I am not planning on claiming any income or expense associated with the building on my taxes since it has been awarded to her.

Per the divorce decree, if in the future she fails to make payments I can take over before the building goes into foreclosure since my credit is on the line.

Are there ramifications I should be aware of to taking my name off the KM Brady LLC which "owns" the building? Or should I just leave it on the LLC but not it on my taxes?
Submitted: 7 years ago.
Category: Business Law
Expert:  TJ, Esq. replied 7 years ago.

Hello and thank you for allowing me the opportunity to assist you.

Whenever your credit is tied to property, it’s always best to own the property. In this case, that means owning the LLC. This is particularly important if your ex stops making payments. As you stated, you have the legal right to take over the building if she refuses to pay the loan. If you’re not an owner, then you need to go back to court before taking action. If you are already an owner, then you can take action prior to court. Therefore, I would not take my name off the LLC unless the judge specifically ordered me to do so.

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