Trust

[Maria Vogel]

Do you all have a Trust that owns your rental properties? I have an LLC-but have not switched the homes into the name of the LLC. I feel lost on how to do this. I have called a lawyer wanted to charge me $1200 and wouldn't even really say what he was going to do for me.

My 401k person at DA Davidson said I should have a trust in case something happens to me. I don't even know where to start. Both with moving the houses into the LLC and if I need a trust.

My CPA said I need a separate LLC for every house but then I have to file taxes for each one! That seems pretty complicated!

[Delia Lopez]

There are so many ways to set up entities to hold property and so many pros and cons to each. As only you know your plans only you can decide. Are you going to hold and manage rentals? Rehab and sell? 

I had to redo my mom's entities she had paid a lawyer to set up her Trust and LLC's and retitle her properties into said entities. After reading "Lawyers are Liars" and going over all the trust docs and LLC's etc. I discovered her lawyer made one of the common "mistakes" mentioned the lawyers do. He created the ABC LLC and titled her property to the ACB LLC on the quit claim. I find it difficult to imagine how that could be accidentally done as mush of these trusts come out of software so the name is typed in and spit out the same everywhere. I don't know what she paid but she got ripped off. I was glad we discovered it while she was alive so we could fix the problem more easily.

That said I trust no one completely and research everything to try to know what it all means BEFORE I do anything. LLC's can be useless. In every state except WY single member LLC's do not seem to have any asset protection value. If you do not do all the annual formalities and keep things separate same deal. Trusts do not have annual fees and I have read each property can and should be owned by a different Trust. Once you have a good Trust template you can print them up yourself for each property you purchase. WY allows series Trusts like series LLC's and if all the properties owned by the various trusts are managed by the same LLC you need only one account for all the properties owned in the series, if you are managing your properties in your state you may want to have an LLC there as the management company. However if you are starting out and have no assets to protect if you have the property owned by a trust or LLC you have to get a lawyer and can not represent yourself. Legal fees ad up quick and they can compel you to settle.

I can not imagine having to pay for an LLC and have a separate account for each property. It is bad enough to have one for each series of properties.

That said search on Trust or LLC here and you will see it is an area where many have different ideas and the strategic set up between them seems to be different depending on which "expert" designed the strategy for asset protection or probate or? I am very curious if anyone knows the "why" on how the set ups are different.

Our properties are all owned by trusts and managed by a LLC with a LLC as Trustee and a family trust as beneficiary (family trust is a grantor WQST) so we have only 5 LLC's with operating agreements and all the annual crap that goes with them, resolutions, meetings, etc. The corporate books and paperwork (YUK)! We also have insurance and an umbrella liability policy on top of the mess. It is complicated, but it has grown into this over 3 decades and many properties.