If I have an S-corp that has had lawsuits filed against it from 7 years ago, are my personal assets protected since the company is no longer in business but it is still active with the state?
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If I have an S-corp that has had lawsuits filed against it from 7 years ago, are my personal assets protected since the company is no longer in business but it is still active with the state?
If I sell my home and come into some income can I then be responsible for finances not collected on the lawsuits or does the corporate veil protect that income?
Asked on February 11, 2016 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
You cannot be sued simply because you are were an owner or shareholder of a corporation--no liability attaches to shareholders because their company was sued. You could be sued if you personally did something wrong (e.g. personally committed fraud); or if you personally guaranteed any debts or obligations; or if the S-corp. was not "legitimate"--i.e. it was just a shell or artiface to defraud creditors--or if you comingled personal and corporate assets to such an extent that the corporation did not effectively had an existence independent of you. (This last point would let creditors "pierce the corporate veil.") In these cases, your personal assets could be at risk, but otherwise, they would be protected.
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