The Limited Liability Company (LLC) business structure is a relatively new entity option that didn’t exist until Wyoming established the first LLC statute in 1977. All fifty states now have laws that allow businesses to formally organize as an LLC. While a model statute for LLCs exists, only a handful of states adopted the model law while other states chose to create unique LLC statutes. Nonetheless, state LLC laws share common attributes and many farm businesses have chosen to organize as an LLC. The last U.S. Census of Agriculture indicates that LLCs are now nearly as common as corporations for farm business structures. In this presentation, we examine LLC laws in the Midwestern farming states and analyze the usefulness of the LLC for farm businesses. Part one identifies common provisions in LLC statutes in the Midwest. In part two, we focus on the liability, taxation, and management flexibility benefits of the LLC structure and review recent legal developments in those areas. Part three involves a discussion of the adoption of the LLC structure for agriculture and its unexpected usefulness for estate and business planning. We conclude that while farms that utilize the LLC structure can benefit from the limited liability protections and tax options conferred by LLC statutes, the estate and business planning benefits are equally and perhaps more important for farm families.
|Conference||2019 National Farm Business Management Conference|
|Presentation Type||20-Minute Presentation|