I can't emphasize enough the importance of follow-up after you incorporate. Lend some attention to this scenario. A trucker calls me saying that he had incorporated through us two years ago and he and his truck had just had an accident. He wanted to know if he was protected.
On a perfectly sunny day, an elderly lady had run a red light in town. The trucker was proceeding legally, at a safe speed. She was killed. He was expecting to be sued any day.
He then explained to me that he had never transferred the truck into the company name, and his authority was still in his personal name, also. Is it likely he'll be sued personally? Yes.
Since he owns the truck in his own name and also owns the family farm, his incorporation probably won't protect him at all. You see, asset protection is a matter of legal details. If a company had owned the truck legally, the company would be sued. If the company was sued for millions of dollars it would go bankrupt, owning just one truck. His corporation would have saved him from personal liability. But the fact that he incorporated and never changed his title and his authority over to the company name gave the lawyers on the other side the right to take everything he owns
What could he have done to protect himself? The concept is simple, and has been perfected by many of America's wealthiest people, it's sometimes called "segregating your assets."
Basically, you place the truck in a separate entity than the farm. To do that you form an LLC or a corporation and then legally transfer the title into the company name.
" If the truck is owned by a separate company, then each lawsuit can be encapsulated into that single entity. That is the legal theory. The practical way to put it is: If one truck goes down, it doesn't take everything else with it.
Doing your own title work can be a hassle and take valuable time away from your trucking. There are service companies that will transfer your title for you for a reasonable fee. There are two trade associations for these types of companies with members from all across the country. These people are real experts at getting your paperwork handled and they are friendly and dedicated to the truckers they serve.
Protecting your assets is something you have to do all the way. Going halfway just doesn't cut it. But if you do it right it can make a world of difference, should disaster hit. There are many service companies who can help you.
Incorporating for asset protection
If you own just one truck and you drive it too, you can't get asset protection by incorporating because you'll be sued as the driver personally. You might get tax breaks from incorporating, and other benefits, but not asset protection.
Single truck owner-operators who own no other major assets have no need to protect themselves from liability because they have nothing to lose (legally).
Single truck owner-operators who own a home should find out about their state's homestead laws. Their home may be protected under these laws, or it may not! If their home is not protected, they should consider forming a company to hold title to their home. That way, if they are sued personally, the asset owned in the company name will be separate property.
Single truck owner-operators that own other major assets that are not protected by homestead laws, such as land or rental homes or a farm should consider forming an entity to hold title to their major assets. That way, if they are sued personally, the assets owned in the company name will be separate property.