Legal Question in Business Law in Utah

Family Business and Neglect

My Wife agreed to be a silent partner in her Fathers business many years ago when she was younger (she is 34 now). At the time she did not understand all the ramifications of possible ''defaults'' on loans, taxes...etc, and the senior partners never included her in any formal meetings, discussions or paperwork.

Over the years her Fathers health declined and he and his Wife (who I understand was also a partner in the corporation) neglected to pay owed state and most likely federal taxes.

The tax bills were apparently coming into my Wife's parents but they never responded to the Utah State Tax Commissions attempts to collect back taxes.

Both her Father and Mother failed to notify my Wife that they were not paying taxes (they made a concious decision to keep it a hidden fact).

So now her Father is dead and My Wife gets a bill for a sizeable tax debt.

The Family business has been closed, but the equipment (which is worth a small fortune is still sitting in the home shop that is/was the corporations property).

My question is this.

What rights does my Wife have in a matter like this ?

Can we have a lien filed on any assets that still belong to either the estate or her Mother to pay off any debts ?


Asked on 5/30/01, 6:00 pm

1 Answer from Attorneys
Alvin Lundgren Alvin R. Lundgren, L.C.

Re: Family Business and Neglect

This can be a complicated matter, and any simple response here cannot cover all of the potential ramifications. IF your wife was a true partner she would have received annual K-1 income/loss statements from the partnership. Thus she can establish her interest in the partnership. The partnership may have had an operating agreement, if not, the partnership is governed by the Utah Partnership Act -- either of which states the rights and responsbilities of partners, including what happens to the assets on the death or withdrawal of a partner. Your wife should be entitled to wrap up the partnership debts, including tax debts, by selling some of the assets. She may be entitled to a court order to force the sale if her mother is uncooperative.

IF you wife was not part of the decisions, nor if she had access to the books, and if she did not have the ability to act as a true partner she may be excluded from personal liability for the taxes.

The Utah Tax Comm. is not going to go away. This matter should be resolved once and for all, and the status of the partnership assets should be resolved while the mother is alive. There are a number of ways to resolve the debt, including a partial payment program.

Call for a free consultation about this matter.

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Answered on 6/25/01, 10:12 am


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