Talk to your accountant.Make sure you understand what your tax liability actually is if you don't do an exchange.The way I understand it, all the money has to be spent on the replacement property within the 180 days. 

The LLC is a great tool which provides liability protection, and is very accessible for cheap. 

Another option would be put them in your personal name and get an umbrella liability policy. 

They say this will help me get approved for unsecured biz loans and help separate my personal from business liability.

Making mistakes on someone else's property can destroy your family relationship and could open you up to some serious liability.

I naturally want to limit my liability.

There may not be any personal liability for the original note, but a foreclosure lawsuit against the heirs would, in my opinion, show up on credit.If the heirs did not want the property, they could have disclaimed any interest in the asset in the probate process.

Just do a transfer and do not take any liability under your personal ownership. 

And what liability does this mean for the small business owner?

I do not want to deal with the liability of allowing tenants to use the fireplace, so we have a clause in the contract that stipulates that the fireplace is not operational and is never to be used by tenants.