Owning an LLC business and complications with....?

If your brother has not caused the peircing of the corporate veil (by commingling personal and business funds, for example), then he will not be responsible for the businesses debts. HOWEVER, most small business owners are not granted credit on a new business and they end up signing personally for loans and credit cards, thus peircing the corporate veil and defeating some of the purpose of the LLC. It sounds like your brother created the LLC but elected to be taxed as a Sole Proprietorship. Your in-law then has a claim. If the LLC is treated as a corporation, then she most likely will not have a claim. Also depends if your state is a community property state. Regardless of mine and other's opinions, you need to consult a tax attorney to determine the LLC's status and whether your in-law is an officer of the LLC.