Delaware LLCs and Marital Disputes: Demand Letters from Spouses and Co-Owners

Published: January 25, 2025 • Dispute Resolution

If you spend enough time around closely held businesses, you start seeing the same pattern: a Delaware LLC holding a very non-Delaware life. The owners live, work, and raise a family somewhere else. The money is earned somewhere else. The marriage thrives or falls apart somewhere else. But when the relationship cracks, the business suddenly becomes a Delaware problem, a family-law problem, and a business-governance problem all at once.

This article looks at demand letters in marital disputes involving Delaware LLCs: how they work, what rights they invoke, what they can realistically accomplish, and how co-owners and spouses should respond. The focus is on that awkward intersection where Delaware internal-affairs law meets home-state marital property law, with a particular eye on pre-litigation positioning.

Contents

Why So Many “Local” Marital Disputes Involve Delaware LLCs

The Delaware LLC as a family asset

Delaware LLCs are not just for venture-backed startups and institutional funds. They are used for:

family operating businesses (consultancies, service firms, professional practices through professional affiliates),
real estate holding companies,
online brands and e-commerce businesses, and
investment and side-project vehicles.

Often one spouse is the “business spouse” who forms and runs the Delaware LLC, while the other spouse has little day-to-day involvement but a very real economic stake. The LLC interests are frequently owned directly, but they might also be held through a revocable trust, a holding company, or a layered structure with several LLCs stacked together.

From a marital perspective, those membership interests are almost always part of the marital estate or subject to serious marital claims, even if the formation documents and certificates show only one spouse’s name.

Internal affairs vs. marital property

Two bodies of law collide in these cases.

Delaware law governs the internal affairs of the LLC: the rights and obligations of members and managers, the terms of the operating agreement, fiduciary duties (as modified by contract), and inspection rights under the Delaware LLC Act. If someone wants to assert classic “owner” rights—like books-and-records access as a member, or enforcement of the operating agreement—that fight is usually a Delaware-law fight.

The couple’s home state governs the marital property consequences of owning that Delaware interest. That includes:

whether the interest is separate or marital/community property,
whether appreciation during the marriage is marital,
what fiduciary duties spouses owe each other in managing marital property, and
how the interest will be divided or compensated at divorce.

Demand letters in this space usually straddle both worlds. They may address the LLC and its managers as such (Delaware hat), while also addressing the business spouse in their capacity as a spouse (home-state hat).

What a Delaware LLC Means for Information Rights

Member inspection rights as a starting point

Under the Delaware LLC statute, members and managers have contract-shaped but statutorily grounded rights to information. The operating agreement often elaborates on this, but even in the absence of generous contract language, members can usually request:

reasonably needed information about the LLC’s business and financial condition, and
other information material to the member’s rights and duties.

In practice, a member-spouse (the spouse whose name appears as a member) can use a demand letter to invoke these Delaware-law rights directly. That letter will:

identify the sender as a member,
state the purposes of the request (often: investigating management, valuing the interest, assessing potential claims), and
describe categories of information sought with enough precision that a court later could evaluate necessity and scope.

This is essentially the LLC analog to a corporate books-and-records demand, and Delaware courts are accustomed to seeing it as a pre-litigation tool rather than a nuisance.

When the spouse is not a member of record

Things are different when only one spouse is on the cap table. Delaware courts generally look to record ownership and contractual status, not to home-state marital presumptions, when deciding who has information rights as a member. A non-member spouse cannot simply write “I am a community-property co-owner under State X law, therefore I demand LLC records under Delaware statute.”

That does not mean they are powerless. It means their path to information runs through:

their spouse (as the record member),
the divorce court (which can order the member spouse to produce LLC information), and
in some cases, subpoenas to the LLC during discovery.

Demand letters from non-member spouses in this posture tend to address both the member spouse (asserting marital rights) and, more cautiously, the LLC itself (flagging that discovery and protective orders may be sought later). The LLC is not obliged under Delaware law to treat them as a member, but it will eventually be drawn into the process if the dispute proceeds.

Demand Letters from Spouses: Common Themes and Pitfalls

When the spouse is a member or manager

A spouse who is a member or manager of a Delaware LLC is in a stronger position to send a formal demand that looks, and reads, like a classic Delaware inspection request—with a marital twist.

Those letters typically:

Recite membership or managerial status and cite the LLC operating agreement and the Delaware LLC Act as the legal basis for the request.
Explain that the purpose includes evaluating financial performance, investigating suspected mismanagement or self-dealing, and valuing the interest in the context of marital dissolution or separation.
Ask for specific classes of information: operating agreements and amendments, financial statements, tax returns, bank statements, major contracts, records of distributions and capital contributions, and any inter-company agreements if the LLC sits inside a larger structure.

The marital layer enters when the letter explains that the member-spouse is not asking merely out of curiosity or idle second-guessing, but because of duties owed to the other spouse and the need to fulfill disclosure obligations in the family-law process. That context matters when the letter later shows up as an exhibit to a motion or a petition.

When the spouse relies on marital disclosure duties

If the spouse is not a member of record, their letter tends to be built on marital fiduciary concepts and home-state disclosure rules. It may say very little to the LLC itself and a great deal to the business spouse, articulating:

the view that the Delaware LLC interests are marital assets (or at least partly so),
the home state’s rules requiring full disclosure of assets and income in divorce proceedings, and
concerns that business structure and behavior are being used to conceal income or shift value out of the marital estate.

From a Delaware-law perspective, those letters are not “books-and-records demands.” From a family-law perspective, they are often seen as a reasonable attempt to avoid judicial micromanagement by first asking for the information informally.

The risk for the non-member spouse is in tone. If the letter reads as an attempt to threaten the LLC itself with remedies that only members can pursue, or as an attempt to bypass legitimate confidentiality concerns by insisting on direct access to trade secrets, it can provoke unnecessary resistance. If it instead invites a structured, attorney-to-attorney information flow—with room for protective orders and redactions—it is more likely to be taken seriously.

Co-Owners and Non-Spouse Members: Why They Care About These Letters

The ripple effect of marital demands on other members

In a multi-member Delaware LLC, other owners can find themselves unwilling spectators to a marital dispute. A demand letter from one member’s spouse raises several immediate concerns for them:

Confidentiality of business information. Non-spouse members may be wary of sensitive financials, customer data, or strategic plans flowing to someone they do not know and who may have interests adverse to the business, especially if they are contemplating litigation.
Stability of governance. They may be worried that the marital fight will spill into member meetings, deadlock votes, or distract management from day-to-day operations.
Risk of being pulled into discovery or ancillary litigation. Once one member’s divorce case begins, subpoenas to the LLC and its members often follow. Time and attention that should be spent on business suddenly go into responding to third-party requests and appearing at depositions.

Demand letters that recognize these realities and propose practical safeguards—such as providing information through counsel, using confidentiality agreements, or staging disclosure in phases—tend to go down better than letters that treat the LLC as a simple extension of the marital household.

The operating agreement as both shield and roadmap

The LLC operating agreement is not an afterthought in these situations; it is a roadmap and, to some extent, a shield. Well-drafted agreements will:

Spell out members’ information rights and the procedures for exercising them.
Describe what happens if a member’s interest becomes subject to a divorce or similar proceeding, sometimes including buy-sell provisions, valuation methods, and restrictions on transfers to ex-spouses.
Limit the rights of mere economic assignees—often the classification a former spouse ends up with—to distributions only, without participation in management.

When a marital demand letter arrives, non-spouse members and managers should dust off the operating agreement before reacting. The agreement may provide a framework for accommodating information needs without opening the door to full-fledged co-management by a spouse who was never intended to be part of governance.

The Charging Order: A Quiet but Important Detail

One concept that often surfaces in these disputes is the charging order. In most states, including Delaware, a charging order is the primary remedy available to a judgment creditor of an LLC member. It gives the creditor a lien on distributions that would otherwise flow to the member, without giving that creditor any governance rights.

In the marital context, this matters in two ways:

Where the divorcing spouse is not admitted as a member, courts sometimes treat them more like a creditor with an economic interest, enforcing their rights through allocation of distributions and other assets rather than by inserting them into LLC decision-making.
Where the divorcing spouse is also a judgment creditor—for example, after an unequal division of property or a judgment for breach of marital fiduciary duties—charging-order concepts can shape the enforcement strategy. The spouse may not care about voting rights in the LLC as long as they can reliably intercept cash flows.

Demand letters that reflect an understanding of this landscape can be more realistic. Rather than insisting on becoming a co-manager of the Delaware LLC, a spouse might focus on transparency and reliable payment streams, which are often more achievable and less disruptive.

Delaware LLCs, Choice of Law, and Home-State Judges

What Delaware cares about

When a dispute over LLC information and governance ends up in Delaware’s Court of Chancery, the judges there are focused on:

the language of the operating agreement,
the rights of members and managers under the LLC statute,
proper purpose and necessity when information rights are invoked, and
the internal affairs of the entity, not the marital dynamics that led to the fight.

A Delaware judge is not dividing marital property. They are deciding whether a member is entitled to certain records, whether managers have complied with contractual and statutory obligations, and whether equitable relief inside the entity (such as injunctions or appointment of a custodian) is warranted.

What the home-state court cares about

The home-state family court, by contrast, is focused on:

identifying and valuing marital or community interests in the LLC,
evaluating the business spouse’s fidelity to disclosure and preservation duties,
deciding whether to award a disproportionate share or fee shifting because of misconduct, and
crafting orders (including support and property division) that are enforceable in practice.

From that vantage point, the internal nuance of Delaware LLC law is important only to the extent it affects what can realistically be done with the interest. A judge may recognize that making a hostile ex-spouse a voting member of a multi-member LLC is a recipe for deadlock and instead award them a monetary claim secured by distributions.

Demand letters as bridges between the two courts

A carefully drafted demand letter takes both perspectives into account:

It is detailed and grounded enough that if a Delaware court later sees it attached to a books-and-records complaint, it looks like the work of someone using the “tools at hand” responsibly.
It also gives the home-state family judge a clean record of pre-litigation good faith: an attempt to gather information without disruption, to respect entity boundaries, and to resolve issues without immediate resort to judicial compulsion.

Poorly drafted letters do the opposite. They blend threats of Delaware remedies with home-state rhetoric in a way that suggests misunderstanding of both, and they make it easier for both courts to view the sender as overreaching.

Frequently Asked Questions

Can my spouse use Delaware law to block me from getting information about the LLC?

Delaware law can limit your direct rights as a non-member to demand information from the LLC itself, but it does not block you from obtaining information through your spouse and through your home-state court. If your name is not on the membership records and you have no contractual status under the operating agreement, the Delaware statute will not treat you as a member with inspection rights. However, family-law courts in your state typically require full disclosure of assets, income, and business interests. They can compel your spouse to obtain and produce relevant LLC records, and they can issue subpoenas directly to the LLC if necessary. Delaware’s internal-affairs doctrine does not give your spouse a blanket excuse to keep you in the dark about an asset that will be on the table at divorce.

If I am a member of a Delaware LLC, can I send a formal books-and-records demand as part of my divorce strategy?

You can, and in many cases it is a sensible step. As a member, you have contract-based and statutory rights to LLC information under Delaware law, subject to reasonable conditions and the “proper purpose” requirement. A pre-litigation demand letter crafted to meet those requirements can serve two purposes at once: it can obtain the data you need to value your interest and investigate potential misconduct, and it can create a favorable record if you later end up in the Court of Chancery or in your home-state family court. The key is to make sure the letter looks like a bona fide LLC inspection request, not just a divorce manifesto with a Delaware heading dropped on top. That usually means working closely with counsel who is comfortable in both arenas.

Can I become a member of my spouse’s Delaware LLC through the divorce?

Sometimes, but not always, and often not by way of a simple demand. The operating agreement usually controls who can be admitted as a member and on what terms, and those provisions are taken seriously. In many LLCs, interests can be assigned economically without conferring membership rights, and transfers of membership without the consent of other members are restricted. In a divorce, courts may award you the economic value of the interest without formally making you a member, or they may treat you as an economic assignee with rights to distributions but no vote. In a single-member LLC where your spouse is the only owner, a court has more room to reassign or divide that interest, but even then it will consider whether turning ex-spouses into co-owners is workable. Demand letters that insist on immediate admission as a member, regardless of the operating agreement, tend to run ahead of what courts are willing to do.

How should our Delaware LLC respond if a non-member spouse’s lawyer writes a broad demand letter to the company?

The safest approach is to respond in a way that is respectful of the marital process without compromising the LLC’s separate existence or its obligations to other members. That usually means routing communications through counsel, acknowledging that the LLC expects to be drawn into the divorce as a third party, and stating that it will respond appropriately to valid subpoenas or court orders. At the same time, the company can explain that it is not in a position to treat a non-member as if they had contractual or statutory inspection rights under Delaware law. It may be reasonable to cooperate in providing high-level information through the member spouse or through counsel, particularly if all members agree that doing so will avoid heavier-handed court involvement later. But the LLC should be wary of setting a precedent of handing internal records directly to non-owners simply because they ask.

What role does the operating agreement play in a marital demand letter?

The operating agreement is both a source of rights and a reality check. From the spouse’s perspective, it can reveal whether they are in fact a member, what information they are contractually entitled to, what transfer restrictions exist, and how buyouts are supposed to work. From the LLC’s and co-owners’ perspective, it sets boundaries around what must and must not happen when a member divorces. A well-written demand letter will quote the agreement accurately, highlight provisions that support the sender’s requests, and acknowledge provisions that may complicate their preferred remedy. A letter that misstates the agreement or ignores inconvenient sections is easily undermined later, and can damage credibility with both the LLC and any court that reviews it.

Can my spouse’s creditors or ex-spouse break into the Delaware LLC through veil-piercing or reverse veil-piercing?

Courts are reluctant to disregard the separateness of a Delaware LLC. Veil-piercing and reverse veil-piercing are extraordinary remedies, generally reserved for situations where the LLC has been used as a mere instrumentality and where honoring its existence would sanction a clear injustice or fraud. Routine use of company accounts for personal expenses, casual commingling between entities, or failure to keep proper records can move a case closer to that line, but they do not guarantee that a court will pierce. In the marital context, most judges prefer to protect the rights of other members and creditors by staying within the framework of property division, charging orders, and distribution rights, rather than collapsing entity boundaries. Demand letters that threaten veil-piercing at every turn, without a careful factual basis, may therefore be taken less seriously than letters that focus on more realistic, near-term remedies.

How do charging orders affect what a demand letter can achieve?

Charging orders are a reminder that in many cases, the most effective relief is financial rather than managerial. If you are a spouse seeking to secure your share of value from a Delaware LLC, the ultimate goal may not be to sit in member meetings but to receive a reliable stream of payments or a lump-sum settlement. A demand letter that acknowledges this and focuses on transparency, valuation, and enforceable payment arrangements is often more persuasive than one that insists on voting rights in a business you have no desire to run. Conversely, if you are on the receiving end, it is worth recognizing that offering a clear, well-structured financial resolution—grounded in actual numbers—can be a powerful way to defuse demands for direct control.

My spouse formed a Delaware LLC but we live in a community property state. Does Delaware control everything?

No. Delaware controls the internal affairs of the LLC—how it operates, what its members and managers can and cannot do under the operating agreement and Delaware statute, and how internal disputes are resolved. Your community property state controls what happens between the two of you when your marriage ends. That includes whether the LLC interest is treated as community property, how its value is apportioned, and what duties your spouse had in managing that community asset. A demand letter can, and often should, acknowledge both frameworks. It might explain that while the LLC itself is governed by Delaware law, the economic interest in it is subject to community property rules that require full disclosure and fair division. Recognizing both halves of that reality is more accurate—and more effective—than pretending one set of rules excludes the other.

Should we try to resolve Delaware LLC issues in Delaware or in our local family court?

It depends what you are trying to resolve. If the dispute is about internal LLC matters—admission of members, enforcement of the operating agreement, alleged breaches of fiduciary or contractual duties by managers—Delaware is usually the proper forum. If the dispute is about which spouse owns what, how much the LLC interest is worth, and how its value should be allocated as part of the marital estate, your local family court is the natural venue. Many disputes involve both layers. In practice, lawyers often use demand letters and negotiation to see whether internal LLC issues can be handled consensually, so that the family court can focus on valuation and division without wading deep into Delaware governance issues. Litigating in both forums at once is possible, but expensive, and is usually reserved for cases where the business itself is large enough to justify the complexity.

Is it ever a good idea to ignore a Delaware-focused demand letter and wait for “real” litigation?

It is rarely a good idea to ignore a serious demand letter simply because it mixes Delaware citations with marital rhetoric. A thoughtful response does not commit you to any particular outcome; it signals that you are taking the issues seriously and are willing to explore reasonable paths forward. Ignoring the letter, by contrast, often pushes the sender toward filing suit—in Delaware, in family court, or both—sooner than they otherwise might. It can also make it harder to argue later that you were acting in good faith. Even if you ultimately decline to provide everything requested, articulating your position in writing, and doing so in a way that respects both Delaware internal-affairs principles and home-state marital realities, preserves options and credibility.

Delaware LLCs give families real flexibility in building, owning, and protecting businesses. They also add a layer of complexity when marriages strain or end. Demand letters are the first place where those complexities get tested. Handled poorly, they are just opening shots in a long and expensive war. Handled carefully, they can be the first step toward a resolution that respects both the entity and the people whose lives and livelihoods it represents.