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Zachary
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Trucking Company-Asset Protection. I am retired Military living

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Trucking Company-Asset Protection. I am retired Military living in Bexar County TX and have been a company Over the road driver for 8 years. I just purchased a truck free and clear and I am leasing on to a carrier. My concern is asset protection. I have a home in Georgia, Texas and property in Alaska. I spend half the year in TX and the other in Alaska. I grew up in and I still vote in Alaska. My commerical drivers License is TX.
I am currently a sole Proprietorship. Is it good protection to establish my trucking company as an S Corp. Hold all my equipment in an LLC leasing to the S Corp and lastly place my personal assets in a trust? Alaska has some pretty good asset protection trust. Or do you think this is all over kill? As you know an accident in the transportation industry can be unforgiving and take all that you worked so hard to achieve if you are not protected. How should I protect myself and which should I absolutly do first. Thanks Danny
Submitted: 1 year ago.
Category: Business Law
Expert:  Zachary replied 1 year ago.
Hi,

Thank you for your question. You are correct in that a trucking accident can cause your personal liability to be very high. This is because you are personally driving and therefore will be personally responsible for whatever happens.

So, lets say that you get into an accident and have a judgment against you for $2m, which insurance for some reason or another does not cover. Your personal assets will be liable to pay this judgment. Your homestead will not be liable. However, almost everything else will liable to satisfy the judgment.

You have identified the way to protect your assets in that you need to have separate ownership. Placing your second house (Alaska) in a trust will protect it from liability. Placing ownership over the truck in an S Corp is not really going to do anything for you as far as asset protection in a personal injury case. It will simply mean the S Corp will also get sued.

It will have tax advantages to it though, so the structure of setting up the S Corp leasing to the LLC which employs you and then acts as an independent contractor to the carrier is a good structure for tax purposes and protection from liability for breach of contract claims, but not for personal injury claims.

The tax advantages we are speaking of come with compliance costs though which make them somewhat cumbersome and not worthwhile unless you are making more than $500K per year (cost of hiring the accountant and paying the franchise taxes will amount to more than you save in tax savings unless you make more than that amount).

So, I would say you only need to have the LLC, which owns the truck and pays you. Plus the trust which holds your personal property (and savings/retirement).

If you have this structure, along with adequate insurance, it will protect you from losing your personal assets.

Please let me know if you have any questions. Please also kindly consider rating my answer positively so that I am compensated by the website for my work on your question. Rating does not cause an additional charge and will not prevent us from further working together on your questions.

Best Regards,
ZDN


Zachary, Attorney
Category: Business Law
Satisfied Customers: 3838
Experience: Internationational Commercial Attorney
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