Farm Law and Ag Law Blog

  4 types of LLCs that can benefit farm operations TAGS:  RISK MANAGEMENT   FARM SUCCESSION   FARM OPERATIONS Tom J. Bechman LIMIT LIABILITY: Especially farms that operate semitrucks, even to haul their own grain, may want to consider separate LLCs for liability reasons, says lawyer John Schwarz II. If you don’t already operate your farm business through limited liability companies, see if one or more of these would work for you. Darrell Boone  | May 07, 2020 John Schwarz II, Royal Center, Ind., is a practicing lawyer and a farmer. He strongly believes in limited liability companies as a great way to structure your farm business. An LLC limits personal liabilities and provides other benefits. So why don’t more farmers use them? “The main reason is fear,” Schwarz says. “People fear things that sound complicated, and if you want to see farmers head for the door, just mention the dreaded words ‘more paperwork.’” Related:   Get your farm ready to 'play defense' But Schwarz says set

Using multiple LLC's can drastically increase the liability protection for a farm.  This article discusses the layout of doing so.  First though:  I generally hate disclaimers, but I find it necessary to state a few.    First, this article is for general information only and is written for the benefit of fellow farmers to consider in structuring their farms.   Second, state laws vary, and this article is not state specific.   Third, if you feel the need to comment on whether you disagree or that I’m wrong, please first go to:   https://www.extension.purdue.edu/extmedia/ppp/ppp-91.pdf .    It is an excellent publication from Purdue that is in line with what I am writing about in this article and gives some real life examples.    In the last article, I wrote about how liability insurance is a necessity, but with the trends in jury verdicts, it may not be enough to save the farm.    In other words, you could get a judgment against your farm for more than the policy limits

If there is one thing I wish I could get clients to understand is the fact that even if your farm has liability insurance, you are likely under insured with your current liability coverage.    Essentially, if you have a million dollars of coverage, or several million, the coverage is peanuts now days.   How big a bag of peanuts? Well, here in Indiana we recently had a whopping 35 million dollar verdict against a defendant for causing an accident that left the plaintiff a quadriplegic.   Similar verdicts have been handed down across the country as of late.    You can read about it here:   https://www.theindianalawyer.com/articles/45836-recent-35m-verdict-is-among-largest-indiana-jury-personal-injury-awards    As one attorney stated “ jurors are increasingly less offended by requests for million-dollar-plus verdicts”    Whoa.   Wasn’t it not too long ago society was up in arms about a woman in Texas getting several million for being burned by hot coffee?   It sure was.   But,

FARMING AS A SOLE PROPRIETOR PUTS YOUR FARM AT RISK From time to time, non-farm friends of mine will invite me to a casino.    Casinos really are not my cup of tea, and I remind them that my gambling each year is putting seed in the planter, and I have far more money at stake than I could ever take to the casino.                If you think about it, we as farmers each year have, just to name a few, the following risks:   weather, weeds, prices, plant disease, etc.    These are referred to as “production risks” and, simply stated, each year we take on these risks that we accept are just part of farming.    As to these risks, farming as a sole proprietor, S-corp, C-corp, or other entity, has no bearing on these risks.                Now, let’s consider other risks that are what I would call “operational” risks.    These risks exist as part of a secondary layer of risk.    For example, injury or death to an employee, accidents occurring on roads that cause injury or death, che