The incorporation of a business can be quite useful since it offers protection by making a legal distinction between the business’ assets and the personal assets of shareholders. If a corporation is jointly and solely owned by spouses, then it may seem like the business is part of the marital estate. This is not the case. A corporation’s assets are not considered marital assets even if the only shareholders are a married couple.
Doctor Rooter Supply & Service v. Laura McVay
Recently, the Fifth District Court of Appeal tested this rule when deciding the case of Doctor Rooter Supply & Service v. Laura McVay. Thomas Wall accused his ex-wife Laura of civil theft while they were married and joint shareholders of the Rooter business. After their divorce in 2012, Wall became the sole owner of the company and discovered after the finalization that McVay had taken $16,000 from their company when she was shareholder and office manager.
Wall sued McVay through the corporation for a series of allegations including civil theft. McVay asserted that the money was actually part of their marital assets and that she was simply taking an amount of marital assets and not committing civil theft. The trial court granted her a summary judgment in her favor, although that was not legally correct.
A Legal Error
Unfortunately, the Fifth District Court of Appeal decided that the trial court was wrong to award McVay a summary judgment. The key part of their decision was McVay’s assertion that the money she took was claimed to be marital property when that is not correct. A corporation owns its assets and although the corporation may be considered a marital asset, its earnings are not, according to the appellate court. Taking money from the business for personal use besides paying for services rendered or dividends could be considered civil theft. This is an important example to be referred to for any spousal jointly-owned incorporated businesses in the state of Florida.
If you are concerned about the rules and regulations surrounding business ownership and wealth management, contact a lawyer experienced in property division Dallas, TX relies on to examine your particular case. All cases are different but if the above case is similar to your own, you may be able to sue to recover the money or a sum for damages caused by civil theft.
Thank you to our friends and contributors at Scroggins Family Law, PLLC for their insight into family law.