• Last Updated:
  • Apr 19th, 2017 2:42 pm
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[OP]
Deal Addict
Nov 2, 2003
1065 posts
26 upvotes

ILA (independent legal advice)

I am signing up as a guarantor for my wife's business loan with BDC. i got a email that i need to get a "needs to get an ILA (independent legal advice) because I am is not a direct shareholder in the business."
how do i get one?
how much would it cost?
if you dont have an answer, dont repond to my thread.
I need answers, and thats why i use redflagdeals forums.
6 replies
[OP]
Deal Addict
Nov 2, 2003
1065 posts
26 upvotes
anybody who can help ;)
if you dont have an answer, dont repond to my thread.
I need answers, and thats why i use redflagdeals forums.
Deal Addict
Nov 22, 2015
2074 posts
1103 upvotes
ILA is provided by a lawyer.

A quick Google search seems to indicate that it'll cost around $400-$700
Deal Fanatic
User avatar
Apr 16, 2006
5865 posts
322 upvotes
junkone wrote:
Apr 18th, 2017 8:18 pm
anybody who can help ;)
Make sure you know what you are signing (this will be explained to you by your lawyer).

If your wife's business goes sideways, you (and likely your wife) could be personally on the hook for the business debt. If only she cosigns the loan and if the business fails, your assets may be protected from creditors. This would not be the case if you both cosign the loan; you would both be personally liable for the loan + interest + costs (if sued).

I know you want to have faith in your wife and in her business venture, and I truly hope it does go well for you guys, but speaking from experience, you may ultimately be better off having the family assets shielded by moving them into the name of the uninvolved spouse before starting the business and the involved spouse getting involved in that business. This way, in case it fails, you may still have a roof over your heads. It would also be more difficult for creditors to claim that the transaction was done to defeat their collection efforts when the transaction was done before any debt was accumulated and before the business even existed.

Speak to a lawyer and discuss your options with them. The reason why you need to get independent legal advice is because you are agreeing to be responsible for debt that you are likely not getting anything in return for (your wife or your company is). The bank needs to be sure that you are aware of the very significant consequences and jeopardy that you could be facing if the loan gets defaulted on.

If this is a company that has been in business for a while, why does the bank need you to co sign the debt all of a sudden? Why isn't your wife's personal guarantee on the business good enough anymore? This could be a sign that the bank has concerns with the financial health of the company and this is their way of helping to ensure their interests are protected (at the expense of yours). It may not be a bad idea to pay an accountant to review the company's books and tell you what state the company is in financially before deciding to co-sign. While you want to support a loved one in their venture, throwing your anchor onto a sinking ship is going to do little more than take you down with it.

If you haven't thought about any of the above, then I hope this post forces you to do so.

Food for thought (and not legal advice....go pay for some good legal advice from a lawyer who knows this area of the law...it's worth it).
[OP]
Deal Addict
Nov 2, 2003
1065 posts
26 upvotes
i am signing as a guarantor and i dont h ave a lot of assets between me and my wife. this is a first time loan for new business that my wife is starting.
if this business fails, i believe its my responsibility to clear any dues after all its only on paper that my wife is the owner as we will do the work together. my intention was to save myself some tax $$ as the business picks up. i have a full time job that pays the bills and did not want any conflict of interest with my employer.
i am thinking that i would join as a minority partner to save the lawyer fees now.
if you dont have an answer, dont repond to my thread.
I need answers, and thats why i use redflagdeals forums.
Deal Fanatic
User avatar
Apr 16, 2006
5865 posts
322 upvotes
junkone wrote:
Apr 18th, 2017 9:07 pm
i am signing as a guarantor and i dont h ave a lot of assets between me and my wife. this is a first time loan for new business that my wife is starting.
if this business fails, i believe its my responsibility to clear any dues after all its only on paper that my wife is the owner as we will do the work together. my intention was to save myself some tax $$ as the business picks up. i have a full time job that pays the bills and did not want any conflict of interest with my employer.
i am thinking that i would join as a minority partner to save the lawyer fees now.
OK, but you will presumably accumulate more assets between now and however many years from now, right?

Also, don't cheap out on lawyers. I know people hate spending money on them, but spending a little bit of money now up front could very well save you thousands and thousands of dollars later. If you've got enough money to open up a business, you've got enough money to hire a lawyer and do it right.

Good luck with the business.
Member
Feb 15, 2010
418 posts
229 upvotes
Surrey
I say go see a lawyer about this situation, as well as setting up/issuing another class of shares to yourself. You can issue a different class of shares to yourself that only pay discretionary dividends. So while the company is starting out, primary earnings will be paid to your wife as dividends. But as your company grows, or your situation changes, you can then decided to issue dividends to yourself to ensure a more optimal tax situation.

Additionally, having the shares now, while the company has no value, will prevent you from having to pay the fair value of those shares in the future.

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