Insurance and Entity Protection in Agritourism Sector
Explore the crucial legal aspects of insurance and entity protection in agritourism, including the role of insurance, use of business entities like LLCs, LLC operating agreements, setup tasks, and insightful tips from Andrew Branan, JD, an Extension Assistant Professor at NCSU.
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Presentation Transcript
Agritourism Legal Issues Part 4: Insurance and Entity Protection Andrew Branan, JD Extension Assistant Professor Department of Agriculture and Resource Economics North Carolina State University rabrana2@ncsu.edu
Role of Insurance Provides coverage for claims of injury Pays for (and makes most tactical and settlement decisions in) litigation Premises Liability policy likely insufficient Covers injuries that occur on a farm from visitors However, typically not priced to the risk of active agritourism Do not invite public onto farm without discussion with insurance contract provider Will likely require an adjustment in premium
Use of Business Entities Limited Liability Company Liability protection (protect personal wealth, land) (separate business from land) Contract between owners Income Management Equity Buy-Sell (Manage the D s: Death, Disability, Divorce, Disaster, Disagreement, Disengagement
The LLC Operating Agreement A Contract between contributors of assets Restricts who can be members Member vs. Assignee Dictates voting requirements for decisions Manager Voting and Non-voting Units Dictates triggers for buy-sell Farming Heir Option to Purchase Who may buy and when Appraisal procedure Price and payment terms (seller finance option) For existing S Corps, use Stock Purchase Agreement
LLC Set-Up Tasks Sketch plan, get accountant and lender sign-off Form entity with Secretary of State (after Jan 1) Get EIN (tax ID) Open bank account Elect S form 2553? (save on payroll tax) Re-title over-road equipment with DMV Update Contracts (or record DBA s) Update FSA payment entities For Land, update PUV within 60 days
THANKS FOR INVITING ME! Robert Andrew Branan Extension Assistant Professor Department of Agriculture and Resource Economics North Carolina State University rabrana2@ncsu.edu
