CFI, best way to protect personal assets.

[check six]

I have my CFI but make a living as an engineer. I am going to do some CFI work. What is best way to protect personal assets with respect to liability as CFI for students.

1. Flight instruction company for aircraft used has insurance for liability of PIC and students.

2. I have a corporation that exists that protects against lawsuits to my personal assets. I have read articles by attorneys that say that judges will favor piercing that corporate vail if it is only used to protect personal assets.

3. CFI insurance.

Thanks,

Check Six.

 

[midlifeflyer]

I have my CFI but make a living as an engineer. I am going to do some CFI work. What is best way to protect personal assets with respect to liability as CFI for students.

1. Flight instruction company for aircraft used has insurance for liability of PIC and students.

2. I have a corporation that exists that protects against lawsuits to my personal assets. I have read articles by attorneys that say that judges will favor piercing that corporate vail if it is only used to protect personal assets.

3. CFI insurance.

Thanks,

Check Six.

There are a few things to realize about #2.

The first is that nothing prevents suing you for your actions. If a FedEx driver runs someone over, that person can sue the FedEx driver directly. That driver is not worried about it because FedEx will protect the driver by paying. That means your corporation does not protect you from suit. It also means that #1 and #3 are only as good as the amount of insurance being provided. A $2 Million smooth policy is obviously better than $1 Million with a $200,00 per seat limit.

If the corporation was set up to own and protect your assets so that you don't have any worth suing over (how about your salary?). well you still have a significant asset. You own the shares of stock in the company. If there's a judgment against you, in many states your judgment creditor can take the company.

The third is about piercing. I don't think judges like to pierce, but the typical personally-owned corporation whose sole purpose is to protect assets makes it pretty easy. Legally speaking, a corporation or LLC is a separate legal "person." Is it doing any business in its own name? Do you treat it as separate from you? Or do you treat it as your personal fund? When you take money from it, do you sign a promissory note and actually pay it back?

There are definitely asset protection strategies with can be effective to carious degrees, but there is no panacea. If it's important to you, it's time to sit down with a good estate planning/asset protection lawyer.