If you own real estate, chances are you have purchased insurance to protect your assets against damage or loss. But have you taken the necessary steps to protect your assets against lawsuits or probate?
If you own rental properties, there is likely a nagging fear in the back of your mind about being sued by one of your tenants. And if there isn’t, there probably should be. It’s a major risk.
And while it may be heartbreaking to think about, there is always a chance your death could trigger a family feud over your home or other real estate investments.
Two common estate planning tools for real estate asset protection include limited liability companies (LLCs) and trusts:
LLC: If you have income-producing property, then an LLC probably makes sense for you, since it protects your personal assets from lawsuits or claims that result from your ownership of the real estate. LLCs may also offer privacy since the property can be listed in a company name, not in your name directly. However, there are strict guidelines to maintain the LLC properly so the planned for protections remain intact. It’s not difficult with the help of legal counsel.
Trusts: There is only one way to completely avoid the court process known as probate for purposes of passing real property to loved ones, and that is via a revocable living trust (RLT). These trusts can be changed without consent of the beneficiaries and are very flexible. In addition, I can provide you with vehicles by which the trust can last for multiple generations if so desired. The major benefit of the revocable trust, besides control of what happens to your assets after your death, is that an RLT keeps your real property out of the hands of the Court and totally within the control of your family.
You can also use a combination of LLCs and trusts to protect real estate assets if you have a combination of primary residence, vacation and rental properties. It is important to consult with a lawyer who can help you decide on the best course of action for your individual circumstances. by Debra Koven Law Offices of Debra L. Koven debrakovenlaw.com