best entity for silent partner as property owner

[Paul Winchell]

My father and I are in the process of selling a house in Hawaii and using the proceeds to invest in one or more rental properties (likely in Michigan).  The house is currently owned entirely by my father's trust, and because it will be part of a 1031 exchange, that ownership will carry through.

I have a partial stake in the investment through an agreement between us, but to keep it's tax protection within the trust, on paper it has remained entirely owned by the trust.

While this is technically an investment property, my dad has used it part time as a second home and part time as a rental.  It never made any real money from an investment perspective, just helped offset some of the costs and qualified it for 1031 (this property is already subject to another 1031 from the sale of a condo in Hawaii).  

May dad has given me full control of handling all of the investment going forward and would just like to act as a silent partner, receiving some minimal returns on his portion of the investment but does not want to worry about the day to day operations or even purchasing or selling decisions.

So my question is -- what are some good options to structure the partnership that allows us to meet the terms of the 1031 exchange by keeping the purchased properties in the name of my dad's trust, allows me administrative control over activities regarding the property with minimal effort from my dad in terms of paperwork, etc. and that allows a good way to disperse and reinvest shares of the profits. Should I create an LLC as a "management" company to handle the operations. Should the rentals themselves be put in an LLC (as a holding for asset protection separate from or including the management side)? I've had one lawyer suggest two LLCs -- one just to hold the properties for asset protection and a second to handle operations. A CPA suggested just one for management with the property held by the trust. Another suggested that we immediately move the property to an LLC partnership and use that to both hold and manage the properties.

I'm now stuck in analysis paralysis and can't decide what to do.  So I'm hoping the community can help offer some insight if anyone has managed a similar situation or has some expertise.

Of course the usual caveats apply -- I understand that this is just a forum and no-one is offering legal advice.  I'm just trying to get some ideas so that when I talk to the CPA's and lawyers, I have a better sense of direction and the right set of questions to ask.

Many thanks in advance for everyone's time and knowledge!  

--Paul Winchell