My family owns a farm in Ware Shoals SC USA. The farm has been in operation since before I was born. It has never been under a business LLC or incorporated. It is mostly under two names, the grandparents names. The thing is my Dad is cosigner on all the loans of the farms. If the farm goes bankrupt we could lose two houses and our land right??? Can we protect ourselves in case of bankruptcy by making the farm a LLC? How much does it cost? I saw in some cases it was like 120 to file it and like 30 for the name. Then a yearly fee after all that. I want to protect our family members. This needed to be done years ago. Thanks
You won't want an LLC to protect against bankrupcy. I would look into creating a different corporate entity. Some kind of shell cooperation or so.
You should really consult an attorney, but is the houses and land were pledged as part of the loan, or the loan was on that property and houses, they have a lien against them and can't be protected by forming a different entity. If they were not pledged assets, your father is still liable for repayment in case of a default. Even if he was to put non-pledged assets into a new entity, he will still be an asset owner (shareholder) and his assets can be used to repay the debt. Depending on the exact nature, structure, and type of loan (it isn't clear) there may be some things that can be done to give some protection (maybe a homestead exemption) but the banks position is going to be that they loaned the money based on your fathers guarantee of repayment and the assets he owned at the time of the loan.
right, since everything is in place now there is really nothing to do. You would have to set up an LLC and get new loans, but your dad would be the personal guarantuer anyway. The LLC is there to protect from being sued, not going bankrupt. If you guys are worried about someone slipping on a cow pie and sueing you for everything you are worth, then you may want to look into a LLC
Okay that is good info. We are having financial issues big time. Cows eat a lot, food costs a lot and we are not making enough milk to hardly cover costs. They dropped the price per hundred(pounds) they give us again....
Agree with that. It's always good to incorporate if you don't want to put your personal assets on risk.