LLC Money and Debts

[anthonyjames]

Last year I had my brother setup an LLC in my name which I use to run a few of my online businesses. I did that to show no community money was used to start the business

Recently, due to my wife's lack of contributing to our household income, I've been forced to pull money out of the LLC accounts (including money being saved for LLC taxes) to keep the lights on at the house, literally. I've never drawn a salary from the LLC as it is not my primary line of work nor have I ever put $1 of our personal money in it. It is 100% self-sufficient. Every time I've pulled money out, I've marked the transfer as a "Personal Loan" so that it is not to be confused with just a draw from the business for personal use. We also have a per-nup that states any businesses I start are mine soley and the same for her.

Couple questions:

Is income from the LLC included in calculating child support before or after business expenses (inc'l taxes)? I'm assuming after.

Can I list money we owe to the LLC as outstanding community property debt?

[Anything4Her]

.... Difficult question. I would try it, but your businesses are likely to be judged community property, regardless of what you signed.

[cdavis]

Need to split the LLC would depend if pre-nup is valid or not. Income from the LLC will count for child support in most cases, it would be gross income minus qualifying expenses. The only thing I'm aware of that does not count is non cash expenses, like depreciation.

[anthonyjames]

Okay, thank you for your response. I don't know why the Pre-Nup would not be valid. We purchased it through Legal Zoom (I think), it was completely filled out and signed, dated and notarized.

We'll see.

[Fatheroffour]

Was the prenup signed before or after the wedding?

If before, how long before? If after, forget it as it's invalid.

Does your state recognize prenups?

Did either or both of you have legal representation?

And finally, very little in the law is set in stone. Everything is arguable because of the infinite number of circumstances peculiar to each case.

[anthonyjames]

We're in Texas and it was signed the day before we left on vacation to get married. Neither had representation.

Thanks for the advice.

[BartSimpson]

We're in Texas and it was signed the day before we left on vacation to get married. Neither had representation.

It is a very simple argument that it was signed under duress (immediately prior to the marriage) and without proper counsel (she didn't understand what she was signing).

Your pre-nup won't be worth the paper it's written on.

The LLC cannot shelter income or assets from a divorce. My guess is that piercing the LLC corporate veil will be a cakewalk because you are the only principle.

Don't have your brother do your divorce, either.

[Fatheroffour]

I agree with Bart. The prenup is fraught with several of the issues most commonly used to invalidate prenups.

[cdavis]

Most pre-nups are last minute and under conditions similar to yours, there is a chance it could be set aside but its far from certain. I would certainly try to enforce it. Your spouse would have to spend money fighting it and her attorney would maybe do something like settle for 25% of the business's value.

[BartSimpson]

Most pre-nups are last minute and under conditions similar to yours, there is a chance it could be set aside but its far from certain.

I'm pretty certain. I'm certain because of the caselaw in which these last-minute pre-nups are tossed out in the interest of justice. The duress created by having to sign a pre-nup document, after having spent the deposit on the wedding, and the embarassment of invited family and friends to a cancelled wedding, is easily seen to a layman. In this case, the wife was faced with going on vacation - or not going on vacation - when the hubby slipped that old piece of paper in front of her.

For the Pre-nup to be rock solid, the couple cannot have made any of the actual wedding plans. Caselaw shows that even setting the date can be problematic.

Further, lacking any proof of the understanding that this pre-nup would bar her from the assets gained during the marriage (proof as in her own attorney stating it to her), and the whole LLC shell game of sheltering his assets, the Judge is going to start fresh.

I admit there is a lot of grey area here, but the OP has some indicators that make his specific case apparent. Buying a cut-and-paste Pre-nup from a website is a long way from the real thing. And having your non-lawyer brother set up an LLC, also likely from a cut-and-paste package, is additional proof that the legal protections were simply a veneer to obscure matters from the Court.

If you're serious about legal matters, you have a lawyer do it. Not specifically directed at the OP, but when you play fast and loose - and cheap - with legal matters, it tends to crumble apart at the slightest challenge.

I would certainly try to enforce it. Your spouse would have to spend money fighting it and her attorney would maybe do something like settle for 25% of the business's value.

Hell yes, try to enforce it, but understand that as a component to a larger strategy. She will spend a lot less money fighting it than you will defending it - and why settle for 25% when she is entitled to 50%.

The OP needs a lawyer, he's up to his eyeballs in some issues that revolve around not using a lawyer to begin with.