Incorporation Myths

Limited Liability Protection?

Limited liability protection is generally first among the legal “benefits” used by attorneys to convince a church to incorporate. However, limited liability protection is, for a number of reasons, largely a phantasm promulgated by (you guessed it) the legal profession, and fails to take into account significant trends in tort law in recent years.

The American Bar Association has hosted “Tort & Religion” conferences since at least 1989 in which they instruct attorneys in the finer points of how to target incorporated “religious organizations” and “pierce the corporate veil.”

Incorporation does little if anything in the way of actually protecting the church. The legal reality is that a church cannot be sued and brought into court until it incorporates.

A church “is not an entity recognized in law.” If the court cannot legally recognize it, it cannot be sued.

A church is not subject to the jurisdiction of any court. However, should a church incorporate it most certainly may be sued.

Incorporation becomes the nexus of government jurisdiction to the incorporated church.

One of the legal attributes that seldom if ever is discussed by the attorney is:

• A corporation may sue and be sued.

How they can sell that as a “benefit” is hard to comprehend.

The Fox Guarding the Henhouse

One thing attorneys will never discuss is just who offers the “protection” to the corporation. The answer is the State. Is this wise or prudent?

Even decades ago when the State was openly cordial to the church it would be hard to argue from Scripture that the church should seek its “protection” from the State.

But in post-Christian America when the State has grown openly antagonistic toward biblical Christianity, is it smart to seek State “protection”? That would be like asking the fox to guard the henhouse (or in biblical vernacular, the wolf protecting the sheep)!

Read the next post on Church Incorporation Problems.