Can wewife I be held legally or financially responsible for a corporation debt that we are about to inherit shares in?

UPDATED: Oct 1, 2022

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Can wewife I be held legally or financially responsible for a corporation debt that we are about to inherit shares in?

My wife will inherit approx. 1/3 of the shares of a family farm corporation. The farm was incorporated in the 70s, the shares do NOT pay any dividends, no money is received by us. The corporation took out a large loan around 2005, signed by all officers of corporation, with the farm acreage as collateral. Her brother, after passing of their father his wife, is now president of corp., holding 55 of the shares, runs manages the farm. He says if we don’t sell out to him a great reduction in value of acreage, that we will be responsible for 1/3 of loan, even though we have never received any money from loan or from the farm operation.

Is this possible?

Asked on August 15, 2018 under Business Law, Indiana


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

No, the owners (shareholders) of a corporation are NOT personally liable or responsible the corporation's debts, regardless of how they acquired it (e.g. buying it; inheriting it; etc.)--that's the entire point of corporations, after all, to protect the owners from personal liability. You would only be liable IF you co-signed or guaranteed the loan; if not, you are not responsible for it.

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 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.

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