Yesterday in Ontario we celebrated Family Day. Family is such an interesting thing to celebrate as there are those who feel they do not have much to celebrate in that department. Some of those who have that sentiment have no doubt experienced being dragged into business problems by other family members.
A few of the situations we see in our are of law that impact families are as follows:
1. Using the family home to finance a failing business. If your business is hopelessly in debt with no realistic plan to turn it around, why are you compounding that problem by putting your family’s home up as collateral for business loans?
2. Refusing to prepare a Will, then dying. Without a proper Will, ensuring continuing income from a family run business can be a problem. There inevitably is a period of time where the cash will not flow. That is a problem. You will die. Prepare a Will.
3. Having a family member incorporate a new company to carry on the same business as your company, that just had judgment obtained against it. Our firm is particularly familiar with this situation as we find ourselves often suing multi generations of families who have been looped into the debt of the original company at the request of another family member. Much like item 1, why are you bringing your parents, spouse and kids into the debt problem of your company?
Love your family. Don’t drag them into a bad business situation.
Inga B. Andriessen JD