Can wewife I be held legally or financially responsible for a corporation debt that we are about to inherit shares in?
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Can wewife I be held legally or financially responsible for a corporation debt that we are about to inherit shares in?
My wife will inherit approx. 1/3 of the shares of a family farm corporation. The farm was incorporated in the 70s, the shares do NOT pay any dividends, no money is received by us. The corporation took out a large loan around 2005, signed by all officers of corporation, with the farm acreage as collateral. Her brother, after passing of their father his wife, is now president of corp., holding 55 of the shares, runs manages the farm. He says if we don’t sell out to him a great reduction in value of acreage, that we will be responsible for 1/3 of loan, even though we have never received any money from loan or from the farm operation.
Is this possible?
Asked on August 15, 2018 under Business Law, Indiana
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
No, the owners (shareholders) of a corporation are NOT personally liable or responsible the corporation's debts, regardless of how they acquired it (e.g. buying it; inheriting it; etc.)--that's the entire point of corporations, after all, to protect the owners from personal liability. You would only be liable IF you co-signed or guaranteed the loan; if not, you are not responsible for it.
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