Legal Question in Wills and Trusts in Pennsylvania
Assett protection from sale of C corporation
As a shareholder in a privately held Michigan C corporation can I protect the proceeds that I receive for the sale of my stock by having it transfered into some sort of irrevocable trust or CRT? ($3-$4 Million)
I am concerned with potential liabilities that may arrise from any number of representations and warranties made by the management of the firm; even though I have no knowledge of any actual liabilities. There will be reps and warranties insurance but I will have no job or income if this money is vunerable to seisure.
1 Answer from Attorneys
Re: Assett protection from sale of C corporation
I am not sure why you are posting this question in the Pennsylvania forum. Michigan state law will dictate on this issue.
As far as general corporate law answer, if the company is a true C corporation and the company follows the rules of corporate compliance based on the state guidelines, (annual meetings, proper documentation, shares maintained etc.) then any creditors would not be able to pierce the corporate the veil and you as shareholder would not be liable for the acts of the corporation. Now there are many caveats because many times people believe they are "true" corproation but actually are not and in those cases you could be liable. Also if you are an officer or a board memeber there is a different standard.
As far as protecting assets in irrevokable trust, based on what you have stated that would not protect you from liable if it is found that the sharehiolders are liable. If you had any assets in your name they could be attached by creditors, the assets in the irrevokable trust although coming from the sale would not be touched that really does not matter.
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