How does one protect personal assets following death of a sole proprietor?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
How does one protect personal assets following death of a sole proprietor?
My friend’s father passed away recently. He was a sole proprietor and one of his clients has filed a suit against him. If the client wins the suit and is awarded damages, will his wife or his estate be responsible to pay the damages? Can a lien be placed on her home/or other assets? What is the best way to protect the widow and family members from financial burdens from lawsuits from the
business, which is now closed.
Asked on July 15, 2018 under Estate Planning, Montana
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
1) Your friend's father's estate could be sued by and be liable for (have to pay) the client: a sole proprietor IS the business--there is no legal separation between the two--so if the business is sued, that is suing the proprietor...or if the proprietor passed away, suing his estate.
2) The widow and other family members would not be personally liable for his debts--the most that is at stake are the assets in his estate (what they stand to otherwise inherit).
3) If the home is part of the estate, a lien could be placed on it or on other estate assets. The issue is, who owned the home and other assets, and how?
4) It is likely too late to do anything now to protect assets--once you know that you are or may be sued, the law does NOT let you transfer, etc. assets to shield them from creditors; doing so is seen as an illegal "fraud" on the creditors and can be reversed as a "fraudulent transfer." Planning to protect assets must be done *before* there is any known or suspected liability.
Your friend's father's widow needs to consult with a probate attorney, both to move the estate along (probate it) and to discuss the pending lawsuit, what it means, and how to respond to it. It is important to discuss in detail with a lawyer because it may be that some of the important assets are already owned in a way that will help protect them--the widow will need to go over what the assets are and how they are owned.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.