Home > Legal > Research Legal Advice > Limited Liability Company (LLC) > Can I make my minor child the only member of an LLC?
-
Sign in with:
- Sign in
- Register
- Are you a Lawyer?
Can I make my minor child the only member of an LLC?
Asked almost 3 years ago - Phoenix, AZ
I am starting a small business mostly doing minor paperwork filing for a fee in Arizona where I also reside. I'd like to create the LLC with just my 10 year old son as the sole member but i am the registered agent & manager.
I will be doing all the work for the business and I may try and utilize him as an employee (filing, stapling, etc.) to take advantage of the tax benefits as this business will have mostly profit with little expenses.
Am I able to do this? And then at some point as manager I appoint myself as a member and maybe take him off?
My reasons are that I am trying to avoid a possible lawsuit down the road which probably will not happen but if it does I want to make sure that I can continue to have a business going that noone can come after.
Attorney answers (1)
No. Easy question.
Remember a minor lacks legal capacity to sign contracts. Therefore a minor lacks capacity to act as a member of an LLC. Also, a minor may not own property. Therefore, a minor may not be a member of an LLC. Are you saying that because the member would be a minor that no one could sue the LLC? Because this is circular reasoning. An LLC is an "entity" in the eyes of the law and the IRS. An LLC can therefore sue and BE sued. Having an LLC, if done correctly with proper capitalization, holding out, following the basic formalities, and the other requirements of an LLC, will then give you insullation from personal liability. But, the LLC can always be named in a law suit. (I had a client with a similar request once, and depending on your reasons, one solution in that case, where the goal was to set aside money for the minor's future needs, was to set up a trust with the trustee, an adult, serving as an LLC member in his/her capacity as a trustee, and the child was a beneficiary of the trust with the money being held in an account for the minor's education. Do not do this at home. Tax ramifications.)
Finally, do not employ your 10 year old son as it will be a violation of child labor laws. We all let our kids come in and if they are so inclined "help" with the photocopier or whatever holds their attention that day. I do not think I will go to jail for having a kid come in and file papers as long as they felt like it before needing an extended coolatta (sp?) break. But, do not employ the child. Then you'll be over in the criminal defense section of the web site.
Remember a minor lacks legal capacity to sign contracts. Therefore a minor lacks capacity to act as a member of an LLC. Also, a minor may not own property. Therefore, a minor may not be a member of an LLC. Are you saying that because the member would be a minor that no one could sue the LLC? Because this is circular reasoning. An LLC is an "entity" in the eyes of the law and the IRS. An LLC can therefore sue and BE sued. Having an LLC, if done correctly with proper capitalization, holding out, following the basic formalities, and the other requirements of an LLC, will then give you insullation from personal liability. But, the LLC can always be named in a law suit. (I had a client with a similar request once, and depending on your reasons, one solution in that case, where the goal was to set aside money for the minor's future needs, was to set up a trust with the trustee, an adult, serving as an LLC member in his/her capacity as a trustee, and the child was a beneficiary of the trust with the money being held in an account for the minor's education. Do not do this at home. Tax ramifications.)
Finally, do not employ your 10 year old son as it will be a violation of child labor laws. We all let our kids come in and if they are so inclined "help" with the photocopier or whatever holds their attention that day. I do not think I will go to jail for having a kid come in and file papers as long as they felt like it before needing an extended coolatta (sp?) break. But, do not employ the child. Then you'll be over in the criminal defense section of the web site.
