If you own real estate, chances are you have purchased insurance to protect that asset against damage or loss. But have you taken the necessary steps to protect it against lawsuits or probate?
Two common estate planning tools for real estate asset protection include limited liability companies (LLCs) and trusts. Here are some pros and cons for each:
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. LLCs also offer owners privacy since the property is listed in a company name, not the name of the owner. However, you must be sure you maintain the LLC properly so its protections remain intact.
Trusts. If you own vacation home property that you do not rent out on a regular basis, then a trust may be a better choice for you. There are several options: a Qualified Personal Residence Trust (QRPT) is an irrevocable trust (meaning it cannot be changed without the consent of the beneficiaries) that allows an owner to use the property for a fixed term, and then pass the property on to heirs. A revocable trust (which can be changed without consent of the beneficiaries) is more flexible and, if you choose a dynasty trust, can last for multiple generations.
Property owners can also use a combination of LLCs and trusts to protect real estate assets if they have a combination of primary residence and rental properties. An estate planning lawyer can help you decide on the best course of action for your individual circumstances.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0041.