September 16, 2016

Does A Spouse Have To Be Listed As A LLC Member For Liability Protection?

If an LLC protects a person’s personal assets from liability does a spouse have to be listed as a member to also be protected even if not involved in the business? Or can just the spouse running the business be listed?

– Carrie, Minnesota

Answer

A limited liability does not “protect” your personal assets by virtue of you being listed as a member. The LLC protects you because it isn’t you–its debts are its own.

Just as you are not responsible for your neighbor’s debts or my debts, you are not responsible for an LLC’s debts.

Think of a member of an LLC as a shareholder in a company. If I’m a shareholder in Microsoft, I’m not responsible for Microsoft’s debts. If I’m not a shareholder in Microsoft, I’m still not responsible for its debts. The reason I’m a shareholder is because I own a piece of the company and share in its profits.

Therefore, if you want your spouse to own part of the limited liability company, then she/he should be a member. If not, then they should not be a member.

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