You can protect your real estate through a number of different strategies. For starters, you probably already have purchased property insurance to protect your assets against loss or damage. Your first line of defense in litigation should be liability insurance. It’s important to make sure that the personal umbrella liability coverage amount that’s at least equal to your net worth.
Which Steps Should You Take to Protect Your Real Estate From A Lawsuit or Probate?
Do you have a lingering sense of fear about your rental properties at the back of your mind? Do you find yourself wondering if a disgruntled tenant is going to sue you? If not, you probably should start thinking about it. It’s a significant risk.
Although it might be a heartbreaking thing to think about, there’s always the chance that your death might trigger a family feud over the home, vacation house, or any other of your real estate investments. There are two major estate planning tools for estate protection: Trusts and limited liability companies (LLCs).
Limited Liability Companies
A limited liability company may make more sense if you have a property that generates revenue. An LLC will protect your assets from claims and lawsuits that could result from your ownership of the property. LLCs also provide the owners with additional privacy since the real estate is listed in the name of the company, and not on their names directly. However, you need to be sure that you can maintain the LLC properly so that the given protections can remain intact. But with the right Ogden estate planning attorney, this is not too difficult.
A trust is usually a better choice if you have a vacation home property that you don’t rent out regularly. With trusts, you have a number of options including:
- Qualified Personal Residence Trust (QRPT): This is an irrevocable trust that cannot be changed without the beneficiaries’ consent. It allows the owner to use the property for a fixed term, where it’s then passed on to the heirs. This option is commonly used to reduce the size of an estate for purposes of estate tax.
- Revocable Trust: This is a type of trust that can be changed without the beneficiaries’ consent and is considerably more flexible, and if you opt for a dynasty trust, it could last for multiple generations. Aside from controlling what happens to your assets after the grantors are dead, the key benefit with revocable trusts is that it will keep your assets out of the Court after you’re gone, and have it within the control of your family.
You can also have a combination of trusts and LLCs designed to protect your real estate assets if you have both rental properties and a primary residence. An Ogden estate planning attorney can help you choose the best course of action based on your particular circumstances.
If you have any questions, call our offices today and set up an appointment. We will sit down with you and have a Legacy Planning Session, where we will discuss the best strategies to ensure your legacy of love and financial security lives on in your family.
Thanks to our friend and estate planning attorney in Ogden, Michael Haslam, for his insight on how to protect your real estate investments with estate planning strategies. Michael is the founding attorney at Voyant Legal. He helps families in Farmington, Ogden, Layton, Bountiful and surrounding Utah areas create estate plans and elder law plans to protect their families and assets. Visit the website to learn more about the law firm.