#40 · 2026-09-15 · Legal term
Piercing the corporate veil
Piercing the corporate veil can reach an owner's assets when misuse of the corporation satisfies the governing state's demanding standard. Commingling and asset diversion matter here; mere insolvency or sole ownership is not enough by itself.
Rule to remember
Veil piercing is an exceptional disregard of an entity's separate legal existence to hold an owner liable for an entity obligation.
Key elements and checks
- Apply the governing state's test.
- Examine misuse of separateness, including commingling or domination.
- Connect that misuse to the required fraud, wrong, or injustice.
In the source’s words
“courts have a strong presumption against piercing the corporate veil”
Cornell Wex — Piercing the corporate veil
No single factor automatically establishes liability, and state formulations differ.