When to transfer a rental to a Living Trust

Question

Hello,

I recently finished my first deal on a buy & hold and will have it rented soon.   Separately I already have a living trust setup for general estate mgt.   A few questions I have are a) Should I deed the property to the trust and does this protect me from potential litigation b) How to do this - is it as simple as filing a document and recording it with the county and does it affect dwelling insurance c) what are the pros/cons and d) does it create any headaches when the time comes to sell the property?  thanks in advance.

Ruth Ann Morris · Answer

We set up the trust after the purchase.  Our lawyer transferred the deed.  We are currently trying to figure out what we need to do for the two places we just bought.  I need to talk to my lawyer to see what we need to do.  So, I don't have the answer for that one for you.

Jon Quigley · Answer

@Ruth Ann Morris thanks.  So the main reasoning would be the reason for a Living Trust in the first place, which is for the asset to stay out of probate in case of death.  But not liability protection.  OK makes sense.   Did you just fill out a Warrenty Deed or did the purchase itself deed the property to the Trust, if I may ask.

Ruth Ann Morris · Answer

We own rental property in a revocable living trust.  We just sold one of the properties and it created no problems.  From contract to close was less than a month. We also have had no problems with insuring it.  I don't think deeding it to the trust is going to protect you from litigation though.