Breaking up is hard to do if LLC involved

Tribune Content Agency going to be used as an investment property for what we assume was a rental property business.

We’re also going to assume you were married and are now divorced. If that’s the case, one important factor is whether you put the home into the LLC before or after your divorce. If you put the property into the LLC before your divorce, the divorce decree should have dealt with the LLC and the disposition of the home. So, if you have some legal direction from your divorce decree as to who owns the LLC and the property it holds, that may give you some leverage to have your ex-spouse convey the property as required by the divorce decree.

Having said that, it may be that you are not divorced (yet?!) or were never married to your ex-partner in the first place. It’s also possible that there is no paperwork about the LLC other than the documentation that was used to create it.

As a member of the LLC, though not the managing member, you may have some rights, and some of those rights should be described in the operating agreement for the LLC. You should find the operating agreement and determine whether it contains a dispute resolution provision. That dispute resolution provision may give you the right to take some action, perhaps enough to prod your ex-partner into motion.

From a federal income tax perspective, it may matter if you received something of value for your property from the LLC. Most people, when they set up an LLC between spouses or friends, have the tax situation flow to the individuals. This would mean that whatever occurs on the tax side at the LLC level, those taxes owed would become the obligation of the members of the LLC.

You’ll need to check if your ex-partner ever filed a tax return for the LLC or even needed to file. Based on the way you phrased your email, we’re assuming that she probably did nothing other than create the

LLC and transfer your house into it. Now, as part of the unwinding, you may have to deal with a variety of tax issues, including the conveyance of your home to the LLC, any tax issues stemming from the time period the LLC owned the property and the conveyance of the property from the LLC back to you. You may need to consult your tax preparer, an accountant or an enrolled agent.

In our view, simply dissolving the LLC may not help that much. The LLC may no longer exist under the eyes of the state in which you live, but the home would still need to be transferred from the LLC (or the owners of the LLC) to you or someone else. The dissolution of the LLC won’t automatically return the home to you, and doing so could complicate matters. Once dissolved, the members of the LLC would effectively become owners of the property. Your expartner would own half the property, and you’d still have to deal with her to get her share.

While we agree that this wasn’t your smartest move, that doesn’t mean it has to cost you half of an asset you owned prior to the creation of this LLC. Please get the help you need to reclaim your property.