Hal was recently laid-off from his high-tech job and now wants to start a new business. He
wants to open retail jewelry store in San Francisco. He knows nothing about managing his own
business. Hal has a total of $50,000 in savings and excellent credit. Hal also owns his own
home worth $500,000. His home is encumbered by a $300,000 1st mortgage. Hays mother,
Carol, is a prominent, semi-retired doctor who is willing to help Hal start his business. Carol's
income has allowed her to acquire much fine jewelry over the years. She knows, from personal
experience, many distributors of fine jewelry. Accordingly, she is somewhat of an expert on the
subject. Carol "gave" Hal $100,000. She told him that he could "pay it back whenever he was
able." Carol lives in Seattle and Hal lives in San Francisco. Hal is aware, from speaking to
Carol, that the jewelry business is risky and that many new jewelry stores don't show a profit for
the first few years. Hal also knows that many jewelry stores fail. Hal comes to you for legal and
financial advice. He tells you that he wants to structure his business in the simplest way possible,
but that he also wants to protect himself from personal liability. Moreover, he wants to protect
or "benefit" his mother to the greatest degree possible. Has tells you that his mother is a
high-income individual who pays a great deal of income tax.
Discuss Hal's options.