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JerrySJD
JerrySJD, Attorney
Category: Business Law
Satisfied Customers: 821
Experience:  Attorney for business formation, business sales, tax, partnerships, sole proprietors and buy/sell agreements.
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I need an answer reguarding a divorce which involes an LL

Customer Question

I need an answer reguarding a divorce which involes an LLC
Submitted: 1 year ago.
Category: Business Law
Expert:  JerrySJD replied 1 year ago.

JerrySJD :

If you are both on the bank account, then there is not a fraud problem. The more immediate issue is whether there are orders in a pending divorce. Usually, when a divorce starts, neither party may take out or change any financial matters, other than normal day to day expenses. You do not want to violate that order. If this is something you both always do, then you should be ok on that score too.

JerrySJD :

The other question that comes up with LLCs in divorces is valuation. How much is it worth? The best thing to do for that one, when it comes up (it will!) is to find a good appraiser to value the company so you have a sound basis for claiming certain value in your property settlement.

Customer :

The LLc is a commercial property I need to know if he can get me for fraud for taking monies out putting it in my account to pay our bills?

Customer :

the property is worth arounf 1million dollar

Customer :

yes he has withdrawn alot of money out of that account all this was done prior to divorve he keeps trhreatning me

Customer :

He forced me to remove my name of of that account

JerrySJD :

If your name is on the account and you are a member of the LLC, then no fraud. If you are not a member of the LLC, but have always paid house bills out of the account, then no fraud again. You are paying bills to maintain marital assets. As to taking you off the account, he can only do that if he controls the LLC. If he takes you off the account and you still draw money (somehow) then you have have a problem, as you would be violating banking laws.

JerrySJD :

So far, he has not started a divorce. He just threatens one. Hopefully this will not happen, since a divorce will ultimately hurt you both financially and emotionally. Bottom line is that you are on the account, just like him, and he pays personal bills out of the account too. If he tries to go after you for fraud, then the authorities will likely say it is a "civil matter". I would not take large amounts out for non-household bills, however. That would be a bit different. Still, you are on the account, so you have authority to write checks. If you take out a big chunk in cash, then that could effect your divorce settlement, as the LLC is a likely a maritial asset.

JerrySJD :

Who owns the LLC? That will determine whether he can take you off. A more likely course would be that he closes the account and opens a new one at a different institution without you on the signature card.

JerrySJD :

I really hope you can work it out with him. If you cannot, then you cannot, but it is definitely worth a try. If you work as a team, you will both fair much better in the long run. Hopefully he will see that and things can calm down. If not, then you will have an opportunity to take at least half of the value of the marital estate. Right now, you both have 100% of the marital estate, so even a 50/50 split will be a major step down. Also, in the long run, your income will be lower because you will not participate in whatever growth he achieves after the divorce. That includes 401k, IRS and the like, not to mention the business.

JerrySJD :

So back to your question, if you are on the account and are withdrawing funds to pay household bills as you always have, you are ok. Be ready for him to take other, more practical action, like changing banks.

JerrySJD :

Thank you for using JA. Please click "Accept". If you need more, just let me know.

Customer :

Well there were large amounts on both sides and I can prove the bills I paid with it we are going for a divorce for sure but he has hired a lawer to get me for fraud and yes he removed my name made me reimburse him from another company which Im sole signer on the acct but taking care of that acct which is also an llc if after the divorce I reimburss that acct that I take care of can I still be prosicuted for fraud?

JerrySJD :

They can try, but it is hard for them, since you have signature authority, or had it when you paid the bills. It is hard because they have the burden of proof, which is higher in a case of fraud - clear and convincing evidence. That is a higher standard than preponderance of the evidence. Bottom line is that it is harder to prove fraud. Given that you were operating these companies and this was a common course of action for both you and your x2b, it will be hard for them to prove it out. They are doing this to throttle you and scare you.

JerrySJD :

Let them try. You both paid personal bills out of the accounts and you are married. I would say there is implied consent and again, you are on the account. If checks were forged or that sort of thing, it would be different. Then they wopuld have something.

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