Compliance Question of the Week
August 27, 2013
Aug. 27, 2013
We received a garnishment notice for a member who has a joint account and a business account. Are the funds in both accounts subject to the garnishment?
The general rule is that if the person to be garnished is the OWNER of the funds, not just a signer, the funds should be held. In practice, this means that if a business is organized as a sole proprietorship, the funds are held. If, however, the business is a corporation, LLC, LLP or partnership, the funds are not held. Similarly, if the person to be garnished is the custodian on an UTTMA account, the funds are not held. So in this example, the funds from the joint account would be garnished, but the funds in the business account, unless it is a sole proprietorship, would not be garnished.
Questions? Contact the Compliance Hotline: 1.800.546.4465, firstname.lastname@example.org.
Posted in Compliance.