With that said, the business is an LLC. What point of an LLC is there, if not to protect it from personal liability? I am not attorney by any means, but that is kind of hard for me to understand.
I think I mentioned earlier that I was offered a buy-in to an LLC and I talked a lawyer about it because there were several things I wasn't clear on, so here's my understanding of some of these issues:
- An LLC protects you from personal liability in that you cannot be held personally responsible for a debt or oblication incurred by the LLC. In other words, a wronged person can sue the LLC, but cannot sue you personally.
- The LLC "ownership" is handled similar to "property". My boss has health problems, so my question to the lawyer was what would happen to his stake in the company if he died. Like any other property, it would pass on to his heirs (his W in his case). You can imagine how screwed up it would be for me to suddenly find myself joint owner of an architecture firm with someone who knows nothing about architecture, so this was a big concern. The resolution we came up with was to take out insurance policies on each other so if one died the policy would buy out the other's stake in the company. In other words, the deceased partner's shares would pass to the surviving partner, and the deceased partner's W would be compensated from the insurance claim.
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For instance, let's say the judge decides to give half of my portion of the business to W. so now W has 7.5% ownership of the business. How is a value placed on that?
In our case we had to pull the financials for the company going back 3 years and use that to determine the value of the company (for insurance purposes). It was a little trickier for us because the company has few hard assets, the real value comes from the current and future work potential. So past profits had to be looked at to determine the "worth" of the LLC.
Now as an extra wrinkle in all of this, I got hit with BD right before this was supposed to be finalized. I discussed it with the lawyer and he said I would have to reimburse W for 1/2 of my stake in the case of D. I ended up passing on the deal, decided there was too much downside risk not knowing if I was headed for D or not.
So in your case, and I'm really just guessing about this, but I would think that the judge would expect your W's lawyer to present financial information demonstrating what their opinion is on the value of your portion of the LLC. Then your lawyer will have to counter that with what you believe the value is (assuming you disagree with your W's assessment) and the judge will have to make a determination.
I am not a lawyer by any stretch of the imagination though, LOL! This is just stuff I talked to a lawyer about. Your sitch may be different, for example if you already owned your portion of the LLC before you were married then perhaps it wouldn't be considered a marital asset.
