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Category: Business Law
Satisfied Customers: 4634
Experience:  23 Years business & securities law, NY and FL bars. SEC all states.
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What would be my Daughters interest in co-signing on a loan

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What would be my Daughters interest in co-signing on a loan for a business with my son-in-law & his brother? This is probably going to be around a million dollar son-in-law has kept my daughter from any of the business affairs for years...He & his brohter already own several stores and never has she been asked to sign on a loan before and never been told anything about the businesses. She begs for every dime she gets from him, etc.
e would not ask her to do this if he wasn't going to benefit from her doing so. Speaking on her behalf: If they were to divorce, what then? And if he were to become deceased, since he is quite a bit older then her, then what? There are no savings account, no life insurance policies or anything such as this made out to her beneficiary and she knows if there is a way for him to keep her from having any interest in said business or "hiding" the other business or any other monetary items, such as selling it to another family member or putting items in their names, then he will do that.
Can you give her any advice on what she should do and the pro's and con's of each & also for any of the situations mentioned?
Thank you


My advice is to not co-sign for any business loan where she does not have a direct ownership interest in the business. If she does, her credit, money and future are at the hands of the business and its ability to repay. I hope this is not being asked of her because he intends to pledge their house as collateral for the business loan. She must run from any such deal. NEVER pledge personal assets for a business loan unless you will not mind living in a box under a freeway overpass.


Thank you for your response but does this mean that even tho she co-signs on the loan with her husband & his brother, she still does not have at least a 3rd interest in that business?If he does convince her to co-sign and that does not automaticaly put her as a business partner, what does she need to make sure is done before she signs? I am thinking lie you & was wondering if the only reason he has asked her just all of a sudden to do this , if he is wanting to put the house up as part of this loan...which she has already told him wasn't going to happen


Co-signing a loan makes her an obligor under the loan. It gives her no rights to the business. It's like co-signing a car loan. In order to be a business partner there must be a written agreement that she is a co-owner.


Thank you so very have thoroughly answered my questions & I appreciate your expertise.

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