Utah Properties in Family Trust or an LLC?

[Mark Taylor]

Hello BP community, My parents would like to start buying rentals as a way to transfer wealth. My siblings and I would also like to invest so that we can build the portfolio faster. The long term strategy is to buy and hold 10 or more properties and pass them from my parents to my siblings and one day to our kids. Would you form a family trust or an LLC for our strategy? Thanks so much! Mark Taylor of Bountiful, Davis County, Utah

[Cody Backus]

James Miller hit the nail on the head. If you choose to transfer wealth through real estate, the Revocable Living Trust is a great tool to ensure that the properties do not have to go through probate (a formal or informal legal proceeding) to be transferred on to the next generation. However, as James mentioned, the RLT does not provide asset protection. LLCs on the other hand are great for asset protection, and Utah is one of the few states that allows what is called a "Series" LLC. The Series is designed to reducing your cost and administration head aches in creating a new LLC for each property while still providing isolated asset protection for each property. Finally, because you do not want to limit your asset protection by putting an LLC into a trust (because then it becomes single-member and your asset protection is reduced, you would use a Transfer on Death document that transfers that property into the trust when your parents die, this way while they are alive, they can get maximum asset protection and avoid probate. As a Utah attorney at Breglio Law Office, we create this sort of structure for our clients on a regular basis. We can discuss this with you and determine if it is the best way to accomplish your goals.