My wifes home health care business is an LLC so does that mean all our personal assets are protected?

June 16, 2007 4:56 AM

My wife owns a home health care business with some other nurses and she says that because it's a LLC, our home, 401k, and other personal assets are safe from being used in a judgement. Is it that simple? My wife who's been an RN for many years, has never even had nurses liability insurance (and still doesn't) so I'm not sure if she understands what her personal risks are as a nurse.
posted by qsysopr to law & government (7 comments total)

Mostly, yes. Though clearly all health-care personnel should have liability insurance.

Google term for you is "piercing the corporate veil".
posted by jellicle at 5:28 AM on June 16, 2007

If she carefully respects the dividing line between the LLC and her personal assets and responsibilities, and does all of the other things the law requires, the LLC will probably shield her from liability for the acts of other employees. In most states if not all, it will NOT shield her from liability for her own acts, which is probably her biggest exposure.

She should buy the insurance. It is usually dirt-cheap for nurses.
posted by megatherium at 5:48 AM on June 16, 2007

IANAL, but my understanding is that as long as your wife does not mix personal and business finances (ex., put your house up as collateral on a business loan) or do anything fraudulent, personal assets are safe from creditors. (this article seems to cover the basics.)

That said, insurance is a really good idea. Getting sued is very expensive.
posted by AV at 5:52 AM on June 16, 2007

Although she has the basic idea right, it's not that simple. If someone gets hurt, a lawyer is going to sue both the LLC AND the nurse that caused the damages. If the LLC has sufficient insurance to cover the damages, the nurse should be OK. In the event that the LLC does not have sufficient insurance, the nurse who made the mistake is facing some exposure. There are several defenses that might be raised, but the potential still exists for problems. Talk to an insurance agent about the best way to protect your assets (individual liability policy v. umbrella policies, etc.). IAAL, but not your lawyer.
posted by ajr at 6:52 AM on June 16, 2007

Your assets are probably safe from judgments or debts against the LLC, but not necessarily from malpractice judgments against your wife. My wife pays something on the order of $200 a year for nursing malpractice insurance. Seems worth it to me.
posted by the christopher hundreds at 6:53 AM on June 16, 2007

my ex-CEO was talking about something like this, and mentioned that he had 5 million dollars of personal insurance which covered anyone suing him for anything. He implied that it wasn't that expensive to have (but I think his idea of expensive and mine are fairly different). I wanted to ask him more about it, but unfortunately, someone changed the topic.
The lawyers will sue whomever they think has the most assets to seize.
posted by j at 8:40 AM on June 16, 2007

Slight derail--I am Registered Nurse, and I have been *many* times never to devulge whether or not I have liability insurance. Yes, there are ways if one really wants to figure out if you have it. But don't advertise it, (I'm saying for her personally, I realize you must have insurance for a business).

I believe it's in NY that you must have it and that all other places are optional.

You may want to talk with your home owner's insurance company. Sometimes they have optional insurance you can put on your home to help protect it from a malpractice suit. I was once offered this from State Farm. Something to think about.
posted by 6:1 at 9:31 AM on June 16, 2007