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Loren, Attorney
Category: Legal
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Experience:  30 years experience representing clients.
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I am a member of a bridge club that has essentially no assets

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I am a member of a bridge club that has essentially no assets and no liabilities. Some members think we should obtain nonprofit corporation status under state law (although they can't offer any reason for doing so). Should we? What's the point?
Thank you for using JustAnswer. I am Loren, a licensed attorney, and I will do whatever I can to answer your question and provide excellent service.

There really is not a reason to incorporate unless your club is generating income and needs to file a tax return. The other reason to incorporate is so that the members are protected from civil liabilities against the club. I can not imagine what sort of claims a bridge club would generate to protect yourselves from.

Otherwise, with no assets or liabilities, no income and no claims, I do not see a reason presented why you would need to incorporate the bridge club.

I hope this is helpful. If you have more follow up questions please let me know. It is never a problem.

Thank you.

Customer: replied 3 years ago.

My understanding is that members couldn't be responsible for club liabilities anyway. Am I wrong?

No, that is correct. No liability for a general member who has no decision making authority.
Customer: replied 3 years ago.

1) What about a director's liability for a decision made by the board?

2) Given that our club has no assets, would incorporating provide any protection anyway? (I'm remembering doctrine about undercapitalization and "piercing the corporate veil.")

Generally, no liability for officers and directors without a showing of misconduct.

Unless, the club needs to enter into contracts with third parties, without assets or income, I do not see any exposure to liability to protect from.

Customer: replied 3 years ago.

Sorry--I wasn't clear. What if the club commits a tort (say a slip and fall in the hall negligently rented for a tournament)? Would incorporating protect the directors even if the corporation had no assets to cover the claim?

When you rent a hall the owner will make the club purchase liability insurance for the event. However, the directors would not normally have personal liability for any claims.
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