Asset Protection & Entity Structuring

[John Gomez]

I currently own two SF rental properties as well as my primary residence. Everything is currently in my name. I would like to setup an LLC for each of the rental properties and create a trust and put all property into it. I am looking for some recommendations on the best way to do this or suggestions on if this is the best way to structure. Go it alone by using legal zoom or similar to create LLC's and then have an attorney create the trust? I know there are some all encompassing services out there but they are quite expensive. I am also wondering if having properties in an LLC creates an opportunity for a Business LOC for another investment property.

[Sean Morrison]

Disclaimer: I am an attorney, but I am not your attorney. This is not legal advice, just friendly information.

Just a further comment on the primary residence. There's really not much benefit to packaging that with the rental properties and the costs are pretty high. In order to move it to an LLC, you would need to deed the property to the LLC, which gets into due-on-sale issues with the mortgage company (see the many threads on that issue). As an LLC, you could lose any homestead exemptions for property taxes. Insurance rates (both homeowners and flood insurance) could go up significantly. But if you want to do it because you have significant liability concerns, then talk to an attorney first.

As for a trust, the primary benefit will be for probate purposes, so talk to an estate planning attorney about that.