Real estate is a valuable long-term investment that can bring in substantial income if you use high-end properties as rentals. However, it is essential that you properly protect your real estate investments for yourself and your family. Whether your total investment is a modest home in the suburbs or a string of rental properties that are a source of passive income, you should use estate planning strategies to protect your assets.
There are two things that put your real estate assets at risk. First, a lawsuit from an angry tenant could strip you of some or all of your assets. Secondly, the probate process could fragment your family as they disintegrate into a frenzy after your death. The emotions associated with the loss of a loved one can cloud rational thought and exacerbate an already tedious process.
Fortunately, there are some estate planning tools that will really help you in both of these instances. Not only will this allow you to privately divvy up your estate as you wish, you can keep the information away from public scrutiny. The probate process is part of public records, meaning that your loved ones could fall prey to predators going after their inheritance.
Limited Liability Companies, or LLCs, are an effective tool to manage your rental and income-producing real estate. You can form an LLC that owns the property, rather than taking title under your own name. As such, the property will not be listed under your name when you purchase it. And, if someone sues the owner, it is the company rather than your personal assets that are at stake.
Living trusts are an equally viable option, depending on your circumstances. There are various types of trusts available, and your estate planning attorney can help you choose which suits your circumstances best. For many people, a combination of a revocable living trust and LLCs is the ideal strategy to protecting their investments. There are also tax benefits associated with certain trusts as well.
If you have real estate property that you need to protect, make an appointment with an estate planning and asset protection attorney today. Protect your personal assets from lawsuits and your family from the heartaches that can follow from the loss of a loved one.
Thanks to our friend, trusts and estate planning attorney in Carpinteria, Neal Bartlett, for his insight on estate planning strategies to protect your real estate investments. Neal is the founding attorney at Bartlett & Herrington, PC. He helps families in Carpinteria, Montecito, Ventura and Santa Barbara create estate plans and elder law plans to protect their families and assets.