Legal question for farmers

Richard G. · Dec 26, 2011

Can a farmer form an LLC (Limited Liability Corp) to protect personal property and assets from lawsuits?
Thanks, Richard

MFPoor · Dec 26, 2011

Yes.

Personally, I prefer s-corp.
GOD bless TAXES

MSD · Dec 26, 2011

A good lawyer can still get through an LLC.

Mike (WA) · Dec 26, 2011

Yes, you can, but unless you're a pretty big operator, I don't think its worth the trouble. The technique is to own the real estate as an individual, lease it to the LLC, and realize some benefit on self employment tax. But some try to have EVERYTHING owned by the LLC, which, of course, is just a kill shot to your foot: then, the LLC is obviously just a sham, and the corporate veil can be "pierced".

So the LLC has to own some classes of assets, usually the cattle and machinery, which are then subject to liability.

Best method for most is to make your insurance benefits more attractive than your assets. Liability insurance isn't all that expensive. Make the amount higher than your net worth, and the lawyers will generally be content with that.

John T · Dec 26, 2011

Im a retired "farmer" so I will post my opinion regarding your question. YES A FARMER CAN FORM ONE I recently prepard one for a farmer client here in Indiana, there are limitations on liability advanatges (like a Corporation has) but its easier to establish with less administrative headaches.

Like I usually post when legal questions are asked here, lay opinions are all well and good and well intentioned, but when it comes to high dollar potential high risk decisions, I in good faith have to recommend you consult a local professional before making a decision.

Best wishes, God Bless and Happy New Year

John T

glennster · Dec 26, 2011

i use llc's and land trusts. all propertys are held in trusts. the llc corps manage the propertys. then open lines of credit on the propertys to do an"equity strip" so the propertys look fully leveraged. s copr will also work.

Ray · Dec 26, 2011

An LLC protects you from nothing,same as a trust.People selling them give a lot of false info out.The protection is limited,just another hoop for a lawyer to go through to get to your money.A corporation or good liability insurance works best.

kyhayman · Dec 26, 2011

I looked long and hard at it, ended up doing what MikeWA recommended and added liability insurance instead. A lot less headaches. Insurance adjuster told me that if you have a couple of million in liability insurance you will definitely get the A team in terms of legal help should you be sued. A 2M dollar rider on top of my basic 500K general farm liability policy was less than 500 dollars per year.

MarkB_MI · Dec 26, 2011

If you form an LLC, it doesn't stop someone from suing both your company AND YOU. I'm not saying there are no advantages to forming an LLC, only that it does not completely eliminate your personal liability for actions you take in the course of farm activities.

Liability insurance is a very good idea for any businessman.

Legal question for farmers

Richard G.

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MFPoor

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MSD

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Mike (WA)

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John T

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glennster

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Ray

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kyhayman

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MarkB_MI

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