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Can I give myself a severance package?

Grand Rapids, MI |

I am the president of a small incorporated business with one other shareholder. We have agreed that it is time to dissolve the corporation. Can we give ourselves severance packages?

Incorporation is in the state of Michigan.

Attorney Answers 4

  1. Best answer

    Depends, does the corporation have creditors?

  2. I agree with Mr. Berkus. The tax consequences are probably going to be the tricky part, so running this by a CPA is a very good idea.

    James Frederick

    ***Please be sure to mark if you find the answer "helpful" or a "best" answer. Thank you! I hope this helps. ***************************************** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state. I hope you our answer helpful!

  3. This is a complex question. The answer is yes you can, but depending on a variety of factors, there may be consequences. Please contact my office for more info and a consultation. - Reese Serra

    This advise is only being offered as a courtesy. We do not have an attorney-client relationship and I do not represent you. Additional, the advice I have provided was based on the limited fact pattern provided by you. If the facts differ, my advice may not be correct. If you live in Michigan and would like legal assistance with your issue, feel free to contact me: 586-615-0756 / (ADVERTISING MATERIAL)

  4. Beyond this you may also want to consider what your fiduciary duty to the company is. As president you may owe a fiduciary duty to the company, e.g., acting in the best interests of the company. If the potential severance package is seen as excessive or unwarranted you may be in breach of that duty. As always with these issues, seek advice from an attorney and present the full facts of the case along with the company's organizational documents so you can get an answer based on all the facts of your case.