In theory, a corporate structure means your personal assets are beyond the reach of
creditors and lawsuits. In practice, however, it s much murkier.
Most credit institutions will insist on personal loan guarantees, whether the farm is
incorporated or not, says accountant Geoff Garland, so setting up a farm corporation may
not actually help you protect personal assets if the farm gets into trouble.
He also suggests keeping the value of reduced legal exposure in perspective. Incorporating
may help other businesses curb their liability, but for farmers, most of the
risk of injury or damage is to themselves or to their own property, to to the public or
to employees.
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Moore meanwhile is skeptical about whether corporate liability protection can be
trusted. Liability reasons I think are the biggest lie about incorporating, says Moore.
Any lawyer worth his salt will list everyone remotely involved to the case, including
the corporation, you personally and your Aunt Emma.
Sinker meanwhile says that in today s world, liability is a serious concern and should
be considered. There s lots of litigation out there to go around, he points out. It s
becoming more common for farms.
More and more legislation pertaining to agriculture is being created and in more populated
areas of the country, there s more conflict between farmers and urbanites. If you are a
sole proprietor, and you have a good insurance broker, your liability insurance should protect
you, says Sinker. Being incorporated just adds another layer that the claimant has to
go through to get at your personal assets.
