Business issue with a family member..?

a family member approached me regarding a business. They would invest it and I would provide the labor. They invested 200,000 into the business acct.everything was agreed verbally, nothing is on paper. we agreed to share profits and losses. Now they want their money back I agreed to make payments monthly onbehalf of the company to pay the amount they requested w/interest. but she wants me and my heirs to be personally liable incase something were to happen to the corporation (Inc). now she says you either sign the agreement that you are personally liable for or i am going to take you to court.!
what case does she have?? and what choices do I have???
Please help!!!

why do you think this person has 200k to invest? They are adept at ballbusting and leaving people to cleanup the mess. Contact a small business attorney and they will help you solve this problem immediately. You are a fool if you sign the documentation for personal liability without consulting a lawyer. Also, an investment is just that, an investment. What this person provided was not a loan in the eyes of the law as there is no material documentation giving "life" to the loan. You have a strong case, but do not be foolish enough to deal with this person as a family member until you have protected yourself in the business sense. And remember, unless you are embezzling or doing something illegal, having her take you to court is a good thing!

Something bad has definitely happens?

Money is not the real issue here. Talk it out. Try to save the relationship first.

Talk to your family nicely and asked them why they did this to you? try to resolve it as a family member instead of business partner.

Hope that you can savour the relationship which I felt is the most important in this case

I took business law a couple years ago in university, and I know that a corporation is a separate legal entity, so there's no personal liability. You have to officially register it, though. You're in a big mess since you didn't do anything on paper. I'm not so sure I follow what's going on, but I think you should see a lawyer to discuss your options before it gets much worse.

This is why you should never do business with family members.

Who did the incorporation? What state was the entity incorporated in? Who was named as owners, officers, etc. in the incorporation? Was there any formal partnership documents drawn up?

In most states a corporation is a living entity (just like a person), however corporate structures protect the invididual owners in the event the company goes belly up.

You need to check your state corporation laws, and have an attorney tell you what they mean.

Also, I don't know of any state where heirs can be held accountable for errors and omissions of the parents.

Get youself a good attorney and tell your cousin (or whoever it is) that you will see her in court. This sounds like intimidation to me.