I have 2 properties, one paid in cash, another with a mortgage. Both under my name (no LLC, Sole Prop).I'm working on a 3rd. As I build my portfolio I need to begin thinking about what should happen if something tragic happens. Any idea?
Posted Jul 26, 2017, 11:49 PM UTC
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Nice, if they are under your name and you 1031 them in your life time, when your children inherit the property they will get a step up to market value.
Thanks!
Why don't you hold your properties in an LLC ?
Long ago, when I was saving for my first sub-50k house and getting started, I asked a lawyer for a consultation. He told me not to waste money with a LLC yet due to yearly fees, more expensive tax preparation, and difficulties getting a mortgage without "business credit" or history, and getting a mortgage at a much higher rate than personal. Basically it was going to be very difficult to make money starting off. Told me to come back when I have 5 or more properties
Both houses were cash deals and I cash out refinance the first at 4.35% and will cash out on the second for my 4th property this winter.
Maybe he thought I would fail, or felt bad for taking my money. Who knows.
Hmmm I would consider consulting with a accountant. I would advise anyone looking to get into renal business to use an LLC. One of the advantages it allows you to separate your business from your personal finances, in case of failure. I could see some advantages in your situation, you could make your children part of the LLC. You need to talk to someone in person about your specific situation, because questions they will have are not appropriate for this environment.
Thank you
Would just like to chime in and agree with with u/thumbtacker. I would speak to an attorney about forming an entity (whether LLC, S-Corp, C-Corp, or LLP, or even a series LLC) which takes into account what happens upon your death, or the death of any of your potential beneficiaries (including spouse and children, and potentially what happens if a child dies and leaves a surviving spouse you dislike but grandchildren you do like).
You would need to speak with your lender about this also, as transferring your property to an entity would likely allow them to kick in the acceleration clause, even if they usually don't do that. You may need to obtain a subordination agreement to allow you to transfer to the entity, or assign your obligations under the mortgage or deed of trust.
have you consulted an estate attorney? that's the way to go here.
No, but I can.l do that. Thank you
Yeah, if you have enough property/net worth for this to be an important question, you can't really afford not to consult one.