Recently we had a client ask us whether a parent has liability for the actions of their child.  After researching this issue, we thought that this valuable information on Parental Liability would be helpful to share.

Civil Parental Liability

In Indiana, a parent is liable for the actions of their child if those actions are done knowingly, intentionally, or recklessly and cause harm to a person or their property.  However to be liable, the parent must have custody of the child and the child must be living with the parent.  The limit of a parent’s liability is $5,000.  (See I.C. 34-32-4-1).  The purpose of this statute is to protect innocent victims from damages by irresponsible minors.

How long am I liable for my child’s actions?

A parent will only typically have liability for their minor child until the child reaches the age of majority, 18.

What happens if my child injures someone or something?

You may have insurance coverage if your child injures someone or something.  Typically both homeowners insurance and renters insurance provide coverage for both property damage and liability coverage.  These insurance policies usually cover damage that someone suffers while on your property, even if the injury was committed by another household.  Therefore, if your child injures someone or something, always check with your insurance company to see if you have coverage.

What about my minor driving a car?

Pursuant to I.C. 9-24-9-4, an individual who signs an application for a permit or driver’s license agrees to be responsible jointly and severally with the minor applicant for any injury or damage that the minor applicant causes by reason of the operation of a motor vehicle if the minor applicant is liable in damages.  However, when a minor turns 18, the individual who signed the minor’s application is relieved from the liability imposed under this chapter and subsequently incurred by the applicant operating a motor vehicle.

If you have any questions regarding Parental Liability, please contact one of our attorneys. We would love to help you.

*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.

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Does incorporation protect me from personal liability?

PART 2: HOW TO AVOID PERSONAL LIABILITY FOR BUSINESS DEBTS

If you own a business, you likely, at least partially, made the decision to form a corporation or a limited liability company (LLC) so that you wouldn’t be held personally liable for debts related to the business. However, sometimes courts will hold a corporation or an LLC’s owners, members, and shareholders personally liable for the debts of a business.  This is called “piercing the corporate veil.”

Typically “piercing the corporate veil” happens in one of two scenarios; when a business is closing and does not have enough assets to satisfy its outstanding debts, or when a business is sued and there is either no insurance or not enough insurance to satisfy the obligation arising from the lawsuit.

When a court evaluates whether to pierce the corporate veil, the court considers the following factors:

• Whether the company and its owners are distinct.
• Whether the company and the owner’s assets are kept separate.
• Whether the company’s actions were wrongful or fraudulent.
• Whether the company failed to follow corporate formalities.
• Whether the company was adequately capitalized.

If you have questions about how to protect your business or if you are ever personally sued for the debts of your business, you may need the help of a business attorney to defend yourself. The attorneys of Bloom Gates Shipman & Whiteleather, LLP have decades of experience defending businesses throughout Northeast Indiana.

If you need assistance or advice on how to avoid personal liability in a business, please contact us. We would love to work with you.

*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.

The post How to Avoid Personal Liability for Business Debts appeared first on Bloom Gates Shipman & Whiteleather.

Does incorporation protect me from personal liability?

Yes, incorporating your business does provide a layer of protection from personal liability.  However, it is important to keep in mind that there are times when that protection does not insulate you completely.  This is referred to as piercing the corporate veil. In this part one of our two-part segment, the broad duties and protection requirements for insulation are discussed.

Protection requirements:

There are primarily two requirements that must be followed in order to maintain corporate protection:

1) The Rule of the Prudent Person.  Board members are trusted individuals and this protection is provided as it is assumed that the board member will act reasonably for the best interest of the business.  The prudent person rule essentially states that board members are protected from personal liability as long as they act “as a reasonably prudent person under the same or similar conditions”. So basically, if your peers would think you acted contrary to your duty, then the protection may not be available.

2) Duty of Loyalty. As a board member, conflicts of interest should be avoided.  Therefore, the protection otherwise provided may not be there if actions or decisions are made to benefit yourself instead of the business.  Commonly, this occurs when a board member votes in favor of an action to provide himself or his family with financial gain or support a business venture he owns.  Keep in mind, while financial gain is a typical motive, it is not required to breach the duty of loyalty.

Risk Management:

Create bylaws which prohibit personal gain at the business’ expense or doing business with companies who benefit board members. Be sure to encourage board members to think through all key decisions and document decision reasoning in minutes.

If you need bylaw or incorporation assistance, please contact us. We would love to work with you.

Check back next week for part-two of this segment, which will address the other factors to consider in order to avoid piercing the corporate veil.

*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.

The post Does Incorporation Protect Me from Personal Liability? appeared first on Bloom Gates Shipman & Whiteleather.