LLC or trust?

[Kristi C.]

I am new to real estate and rentals. I bought a duplex last year in July and it's rented out now. I am wanting to know about LLC and trusts. I was wanting to make an LLC, but someone who is a landlord here said to just put the property into a trust because it is cheaper and provides the same protection as an LLC. Then another landlord told me not to bother with LLC or trusts because they only provide a false sense of protection because I can still be sued personally regardless.

I live in KY. Could someone help me understand what the difference is in protection via LLC or trusts? Do I need one, both, neither?

I'm wanting to buy more property and I want to make sure I have this figured out beforehand.

Also, can I file my own paperwork for LLC and/or trusts or do I have to consult with a lawyer? I would prefer to file my own if I can.

I currently do have home insurance for landlords through Allstate.

[Will Barnard]

This is just not true. Having an entity does not remove you from liability and there are many ways of how you could still get sued. Keep in mind that liability protection from an LLC is inside liability only, and not outside liability.
What that means is if you drive drunk and kill someone, you will be sued for everything you own, INCLUDING your LLC which owns an asset. However, if you get sued because a tenant falls off the porch, they can only sue the LLC and its holdings, and not you personally, UNLESS - negligence is involved. In that same example, if the tenant sent you a letter stating that the proch was unsafe because it lacked a railing and you did nothing about it, then they fell, guess what? You AND your LLC will be sued. This is one of many ways the corporate veil can be pierced.

If you plan to be a landlord, it is often recommended by legal and accounting professional to use an LLC AND have proper insurance. Keep your books cortrect, operate in a professional manner and do not comingle personal and business funds. Also, do not act in a negligent manner.