Should I add my spouse to my LLC?

Limited liability corporations serve many purposes, but one of the most important is in the name. These business structures limit personal liability of the members of the LLC.

If you are considering adding your spouse to your company’s list of owners, liability would probably be one of your main concerns. You may also want to consider the action from an asset protection standpoint.

Limiting risk

As explained on FindLaw, one of the goals of an LLC is to protect the owners from certain types of obligations and risks affecting sole proprietors. For example, it would be difficult for creditors to access personal assets of LLC owners to settle professional debts.

However, your spouse could already have a certain amount of liability in legal terms, depending on the level of involvement in the company. If your spouse receives payments from the business, participates in it regularly or represents it to the public, joining the organization formally could make sense from a liability perspective.

Protecting assets

To balance concerns of liability limitation, you may want to consider the extent to which the LLC protects the assets it holds. Because it is generally good practice to give members above-zero-percent voting and profits rights, their memberships would represent material interests in the company.

Again, one of your goals in maintaining an LLC would probably be to separate personal assets from company assets. In the event of a family or estate law dispute, such a divorce or a will contest, the ownership structure of your company would probably have an important role in the division of assets.

As you can see, there is no generally applicable advice when it comes to adding a spouse to your LLC. Rather than generalize, it is usually more informative to consider potential conflicts, and then attempt to predict how the proposed ownership structures would affect and inform court decisions.