What should be aware of if my son recently turned 18 and wants to sign a contract to start a new record label with an investor?
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What should be aware of if my son recently turned 18 and wants to sign a contract to start a new record label with an investor?
The investor is a 28 year old woman that claims the $100K that she is submitting was given to her by her father. She has no proof of this and no job. Can she legally be forced to show us some type of proof? Also, if she gets in trouble with the law with something like tax evasion, would my son be held partially responsible if he went into business with her? Would my husband and I also be legally responsible since he is under 21?
Asked on January 5, 2016 under Business Law, New York
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
1) The source of her money is legally irrelevant UNLESS it came from criminal activity. If your son suspects this is the case, he should *not* do business with her. Your son can ask for any proof/evidence he wants; she can refuse to provide it; and then your son could refuse to do business with her.
2) Parents are not responsible for adult (18 or older) child debts or actions (unless you a) participate in them; or b) sign something, like a guaranty, taking some amount of responsibility or liability).
3) Your son would not be criminally liable for her actions unless he in some way assisted her, conspired with her, etc. to commit them. Of course, if the business is used to do something illegal, like evade taxes or launder money, the business's assets could be seized.
Unless your son is a musical prodigy or has hugely valuable contacts (e.g. he's Rev Run's landscaper), why would a person want to invest $100k with an 18-year old? This seems very suspect. Your son may wish to rethink doing this if he can't come up with a compelling reason why she is doing this. If he insists on going ahead, at a minimum, he should create an LLC and the business and investment should be run through the LLC, and not him personally.
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