I would second “fat_lazy_union_…” statement that you really shouldn’t ever try to get serious legal advice on a blog.” That being said, I am going to wade in for a little.

First: Investing in an house for your mom will not offset some of the amount your sister’s husband would get in separation. The assets used to purchase or as part of the purchase are considered assets owned in common in a marriage. That means he will get ‘consideration’ for the amount used in that purchase. This could me a greater share of your sister’s pediatric dental practice.

I assume that your sister wants to get free and clear of her soon to be ex-husband, in particular when it comes to financial dealings. If not, I would recommend trying to separate the businesses as much as possible, so that she retains her business wholly. I am assuming that both businesses are operated as a separate registered legal entity, and that both businesses were formed when they were married. If it is, and they were, his using the HELOC from the house to meet payroll could be a legal issue (blurring the separation be entities)… might be useful.

My suggestion would be to treat the separation/divorce as a separation of businesses. Considering that hers is doing better and is probably valued more than his business, she should expect to have to sacrifice something else to maintain sole ownership (which she should try to do). First establish a value on both businesses by themselves (do not consider any loans/HELOCs etc at this point). You can’t get into his missed opportunities at this point either because that can become a go-nowhere situation. Once the respective values are established, the $55K loan from the sister’s business should be shown as a value owed the sister’s business from the husbands business. This may help offset the greater valuation of the sister’s business. Likewise deal with the HELOC being used to meet his payroll. That money is owed back to the marriage by the business. It may help to also offset the greater valuation of her business. The sister may have to eat the $55k owed her business and her portion of the HELOC that he took out, in order to preserve her sole ownership of her pediatric dental practice upon divorce. She may also have to sacrifice part of other shared assets, to preserve the sole ownership, but I would recommend that she strive to maintain the sole ownership. Having shared ownership in a business with someone who sounds as financially irresponsible as he, is not a very pleasant experience. This is where the missed opportunities on his side etc can be used to justify why she wants sole ownership of the business she created.