Can I Get In Trouble Running My Business In My Wife’s Name?

“I’m running my business out of my wife’s name, and so nothing is in my own name in the business. Will that be safe in bankruptcy?”

That’s a tricky question because what you’re doing could be construed as being fraudulent. If your wife doesn’t have a significant stake in the business, if she’s not actively involved in running the business, if she’s not involved in the risk involved in managing the business, then it’s going to look like what you’re doing is hiding behind your wife, and that her ownership of that property is a sham.

Under those circumstances that entire transaction be considered a fraudulent conveyance that a trustee could sue in bankruptcy court to undo, and move the entire business organization into your name, and therefore sell it and realize some cash to pay creditors. That’s why if you’re going to run a business out of your spouse’s name, it’s very important that your spouse have an active and meaningful role in that business.