Should Your Farmland Be Owned by an LLC?
A limited liability company avoids several issues that arise if the land is individually owned
By Linda M. Danielson, attorney, Ruder Ware, L.L.S.C.
Many farm operations are conducted through a legal entity, such as a corporation, partnership or limited liability company (LLC). Yet, in many cases, the land used in the farming operation is owned by individuals rather than an entity.
There are several reasons why it is better for the land to be owned by an LLC set up for such a purpose.
If you own real property personally and someone is injured on it, you may be liable to that party. The best protection is having the correct types and amounts of insurance.
However, what if the damages exceed the available insurance? In that case, your other assets (except for certain exemptions) would have to be used to pay the portion of the damages not covered by insurance.
In contrast, if the real property is owned by an LLC, then generally only its assets are available to satisfy obligations; assets owned by the LLC members (owners) personally should not be at risk.
Under Wisconsin law, a member or manager of an LLC is not personally liable for an LLC liability merely by virtue of being a member or manager (although a member or manager’s acts or conduct other than as a member or manager can create personal liability).