So we got into this business slowly, as one does. Originally purchased with mortgages, one at time, in our own name, etc.

Over time we moved to cash purchases, still in own name.

Set up a website in a DBA name.

Finally set up a couple of LLCs and transferred ownership of most places (all those without mortgages - only one left!) into the LLCs. One of the LLCs is the old DBA name.

Then set up a trust to own the LLCs for estate purposes for the kids.

So the one LLCs is pretty well-known. It has a website and our vehicles have signs on them (needed it to get on the island during Covid shut-down!) Also all old tenants just know about it. And my email addresses have the name of it as part of address!

So now I think that LLC should not own houses, but should be the management arm. Transferring the houses it owns to another LLC would not be a big deal, I don't think: you don't have to pay transfer tax on those kinds of deed changes.

What am I not seeing? I will of course contact the attorney who drew up the wills and trust, just thought I'd ask the hive mind here.

NO, we can't manage for others. In NC you need a broker's license.

What's your end goal? Sounds like asset protection.

The folks who already know that you own the houses will still know that you own the houses. If there is litigation anywhere in the future, any competent lawyer will easily trail the leasing LLC back to the owning LLC and then back to you.

LLCs do not provide protection negligence and/or criminal activity. They exist to limit non-managing partners' liability to the amount they have invested. In this case, your property is the limit of your investment, and you are the only person who has anything.

Bottom line for successful asset protection:

1) Know and follow the law.

2) Respond timely to legitimate repair requests.

3) Buy $3-5 million in liability insurance. Should cost less than $1,000 / annually.

No, the LLCs are not for asset protection. They are for estate purposes. I am not leaving all to all - the kids are getting getting individual LLCs, and the properties they own. This helps them avoid endless probate. That's the only reason, really, and sometimes, it helps to say to someone, "The company rules are..." that sort of thing. But property ownership is an open book here, and so is the ownership of each LLC. So asset protection is really insurance and doing a good job as much as possible.

It's just that I use the one LLC to do all the day-to-day work, and it's still my email domain, etc. So I thought if I kept this LLC alive but used it as the management side, makes lots of things easier.

I would create another LLC to hold the property.

Just another name to put on the lawsuit. Personally, I'd have everything under one LLC and in that LLC, I'd have a massive liability umbrella policy. If you split it up, you weaken the insurance and may need multiple policies for each LLC because insurance won't cover entities not named on the policy. With multiple LLCs, make sure all names are listed on the policy.

Place the properties into a trust

Have the LLC manage the property

You become the employee of the LLC

W,

Too quick...

Probate was simple when my parents died.

My generation saved a huge tax bill by

-testamentary trust (I don’t know the current inheritance limits) the entire legal bill was $6000.

-stepped up basis. Keeping the assets in my name means my children will inherit my assets at their date of death value. If they sell quickly for that amount the sale will be tax free. The depreciation schedule also starts over at the DOD value.

If I add their name while I am alive and they sell after my death they will pay tax on the gain from the price *I* bought at years ago, and on the depreciation I took.

If the LLC owns the property...I don’t know.

Houses are owned by LLCs which are owned by Trust.

Don't be afraid of a small tax bill.

Say that earned income is $10,000 in management fees. If you earn $10,000 and put it in a Solo 401K - is it fair to say that the company offer some type of retirement match as a benefit? Say 5% match. Suddenly your LLC is loosing money. Yes you end up having to pay some limited taxes on your earned income. But all that money that you earned is headed to your retirement account.

That is the reason why we put up with the day in and day out hassles - the end prize is retirement. Sure cash flow is nice.......make sure you have money for groceries, but I am not doing this for milk money.

W, your title to this thread is not on point.

You are strategizing successor planning and I imagine that the best choice method depends on each individual involved.

Sisco, already have the successor stuff set up, as noted. Trust owns LLCs, kids are beneficiaries of the Trust and the LLCs get distributed according to terms of trust.

Perhaps you could just change the sole member LLC to a multi-member with the other member being your successor.

Not worried about the veil! That can be pierced with two seconds of internet research.

Ray, it's not a sole member. We are both members (husband and wife.)

Don't need a loan.

There is money to be made by being able to structure deals so you can owner finance. A trust does just that. You can do it so the married couple are the beneficiaries and upon your demises - there are back up beneficiaries - your kids.

I can't answer your question directly, but overall wonder about giving one LLC to each family member. Have you asked your family members if this is what they want....to own rental property? Why not simply state that upon your death, all assets are to be liquidated and the proceeds split according to a formula you've devised? One other option would be to have all within the trust but say "Pete gets the deed to the property at 123 Main St, Suzie gets the deed to the property at 344 Jackson, etc."

My beneficiaries do not want a rental property...they are not landlords. They don't want the hassle of tenants, repairs, etc. I've written a document for my wife that has all key aspects of the business, listed 3 realtors I trust to sell the houses (in case some of them should die or move), and she knows our attorney and tax person.

We did not form the LLCs as a safety net. We knew quite well that they don't/won't protect us from liability in many cases, we heard Al Aiello speak many times.

So yes, we have general business liability and personal umbrella policies.

We formed them to separate the ownership of the houses to more easily leave them to the kids. Here, kid#1, you get this LLC, and kid#2, you get that one. Kid#3 gets other stuff.

Then we put them all in a trust with a pour-over will so the instructions for the above to happen are spelled out. Simple estate plan. That's all done.

The reason for leaving them separately is that two kids are already landlords and one would like to be. They are all adults. They've all seen the freedom it gives us, and I've taken two of them to Boot Camps and Conventions, too. (The oldest lives out of the country.)

We can also add property to each LLC (or sell some!) without having to re-write the will/trust. Which was what drove the idea in the first place: we had a will in place leaving deeds here and deeds there but it was quickly outdated.