Legal Question in Civil Litigation in Utah

Re: Unincorporated organizations - can they be sued?

(1) How is an organization as "unorganized" as ours treated under the law? Since you do not have any corporate protection the organization will most likely be treated as either a partnership or a business association of unknown form. The problem you have is that your members and individual assets in addition to organization assets may be at risk if you or any of your members were sued.

(2) If we insure every volunteer member against liability will the assets of the organization be at risk? The assets of the organization are not at risk unless the liability limit of the insurance policy is exceeded, or unless you do not have protection for some act under the terms of the policy.

(3) When an organization is unincorporated does a legal entity exist separate and apart from its collective members? Not necessarily. It is however possible and the law does recognize some forms of business entities which are not formally incorporated or otherwise organized, however even if recognized they rarely provide much protection. Plus the cost to prove the existence of the entity can exceed liability in some cases. The smartest thing to do is to get organized formally in a personal liability protection oriented entity. If you can qualify for a charitable organization there are a lot of benefits. If you cannot or for some reason choose not to go the charitable route, you can organize as a Limited Liability Company (LLC) for a modest investment and get individual liability protection. The assets of the LLC would still be liable if you were sued, but there would not be personal liability.

If you want more information, please call me. (801) 876-4422