Estate Planning and Business Law

The Alter Ego Doctrine

Forming a California corporation can be seemingly as easy as filing the articles of incorporation with the Secretary of State and adopting boiler plate bylaws and other forming documents. However, down the line if there is a dispute and a lawsuit follows, many courts will look at the initial formation of a corporation to determine whether or not to "pierce the corporate veil" and make the shareholders of the corporation personally liable. It is therefore, critical to validly and properly form a corporation, and thereafter to maintain the corporate formalities in order to avoid giving rise to the presumption of "alter ego" or shareholder personal liability. Some of the factors that the courts look at in considering whether to pierce the corporate veil are whether the corporation was adequately capitalized at its inception, whether any personal funds were comingled with corporate funds and whether adequate documentation was kept regarding the observance of corporate formalities. Of course, if the shareholders have signed personal guarantees, they will be personally liable under most circumstances for the amount they personally guaranteed.

California Business and Estate Planning Attorney San Ramon, Contra Costa County

At Blackwell, Santaella & Jahangiri, LLP, our legal team is experienced in handling business, estate planning, probate, real estate and bankruptcy matters. We can carefully evaluate your situation. We suggest you take advantage of our low, flat-fee consultation where you can get answers to your questions. Please don't hesitate to contact a San Ramon, Contra Costa business and estate planning, probate or bankruptcy attorney at our firm by calling (888) 698-3951, or you can fill out our online case evaluation form.