When starting a business, it’s important to choose the right legal structure. One option is to form a limited liability company (LLC). This type of company offers the protection of limited liability, while still providing the flexibility of a partnership.
However, if you’re married and forming an LLC, there’s an important legal requirement you need to be aware of: spousal consent.
What is spousal consent?
Spousal consent is a legal requirement in some states that requires the spouse of an individual forming an LLC to provide written consent to the LLC agreement.
Why is spousal consent required?
Spousal consent is required to protect both spouses in the event of a marital dispute. For example, if one spouse forms an LLC without the other’s knowledge or consent, the other spouse may be able to claim that the LLC’s assets are marital property and therefore subject to division in a divorce.
By requiring spousal consent, the state ensures that both spouses are aware of the LLC and agree to the terms of the LLC agreement.
Which states require spousal consent?
The requirement for spousal consent varies by state. In some states, such as California, spousal consent is not required. In other states, such as New York, spousal consent is required even if the LLC is formed by only one spouse.
If you’re forming an LLC and you’re married, it’s important to check your state’s requirements for spousal consent.
What does spousal consent involve?
Spousal consent typically involves signing a document that acknowledges the spouse’s awareness of the LLC and agreement to its terms. The document may also waive the spouse’s right to claim ownership or control over the LLC’s assets.
It’s important to note that spousal consent is not the same as a prenuptial agreement. Spousal consent only applies to the LLC agreement, while a prenuptial agreement covers all marital property.
Conclusion
Forming an LLC can be a great option for many businesses. However, if you’re married, it’s important to be aware of the requirement for spousal consent. By obtaining spousal consent, you can protect both spouses in the event of a marital dispute. Be sure to check your state’s requirements and involve your spouse in the LLC formation process to ensure that you’re both protected.