How and when should I set up an LLC or Family trust?

[Jeff Lundeen]

My market is Utah, but I'm also interested in long distance properties if the numbers work. I understand that setting up an entity is very important to reduce liability and for potential tax benefits. When is the ideal time to set up an LLC? I don't want to set one up prior to having my first deal, unless this is part of the actual deal, because it seems like setting up an entity is a form of procrastinating instead of actually acting on finding a deal. I see the benefit of having the LLC already in place, but I assume that one can be created fairly quickly once a deal is under contract.

[Rob Hakes]

@Jeff Lundeen It seems that the method some attorneys are starting to use is once the property is purchased in your name, then transfer the property into a Trust and list the LLC as the beneficiary. The beneficiary will hold the liability, but beneficiary info is typically not publicly listed.

According the Garn-St Germain Act, a bank cannot trigger 'due on sale' if the change of ownership is into a trust with the beneficiary not changing.  So it is a little gray area, but because of this, if the bank saw the name transferred into a trust and they don't have access to the beneficiary info they may not go down that road. 

This is how I set up a few of my out of state properties and it was pretty slick.  More than likely, as long as the mortgage gets paid, it should never be a problem, nor would the bank have any incentive to call a performing note.

Also not a lawyer!