Legal Question in Business Law in Texas

Re: Spousal Responsiblity in Self Employment

ORIGINAL QUESTION: Can a spouse be held responsible for legal and/or financial responsibilities of the other spouse�s business even if property is owned (home by one spouse, business by other) prior to marriage?

RESPONSE: The general rule is no. Exceptions may exist where the spouses are operating a business as a partnership or joint venture or both spouses are participating in the operation of the business. Property owned before marriage is separate property. Separate property owed by a spouse is not subject to the debts of the other spouse. Community property which is within the exclusive control and possession of one spouse is not subject to the debts incurred by the other spouse, unless the debt arises from a tort (such as a judgment arising from an automobile accident). In some circumstances all community property may be subject to certain debts such as necessaries and/or medical.

ORIGINAL QUESTION: Can a legal document be written to protect the spouse from any legal or financial recourse?

RESPONSE: The general rule is no, unless the property is gifted to another person prior to the time the debt is incurred. Retaining rights in gifted property to income or management may subject the property to debts. However, it is wise to reduce to writing all matters which will help define ownership and control.

ORIGINAL QUESTION: What can be done to an employer if caught paying someone who is not an official employee and does not report or withhold child support?

RESPONSE: If the company is owned solely by the employer, there is nothing improper with how money is spent (or squandered for that matter), so long as the employer complies with child support garnishment orders, tax laws, money laundering laws, etc. If the company is owned by others (such as multiple stockholders), the employer has a duty not to waste corporate assets. Therefore, in such instance, he might be liable to the company for the funds spent on unauthorized purposes.

Re: Spousal Responsiblity in Self Employment

To amplify Charles White's answer to the first question, the debts of the separate property business are community debts if incurred after the marriage. Just as the income from the business is community income.