We have a rental property(A) we purchased in Florida. It was cash deal and titled and deed to our family trust formed in California. We have a property B under my name that we would like to put it in LLC we formed recently. What to do? (no loans involved for either properties.)
1) Want to protect property A: Should we transfer it to LLC?
2) If "yes" to question 1, Should we do a Quit Claim Deed? Or Warranty Deed?
3) Property B is under my name, I would like to transfer it to this LLC to minimize the liability. Which one should i do? Quit Claim Deed or Warranty Deed?
4) We'd like to make sure that all rental properties (if resolved) to go under the Family Trust
How do we ensure that if something happened to us.
You need to spend some money to hire an estate planning attorney to review what you have, to consider the other facts that you may not realize are important, and prepare a plan based on a professional interview, not a free posting on Avvo. You have two properties and the means to hire an attorney. No one can say if you current Family Trust was validly formed or funded. Quitclaim versus Grant deed makes absolutely no difference under your facts. Transfering from a trust to an LLC from a Trust but then wanting the trust to control makes no sense. You and property B and "we" in property A may not have identical interests. Hire a lawyer and get a quality analysis. Download free forms from the internet and pay the consequences later.
At first glance it seems like the first answer you got to your questions spent a lot of time telling you to hire a lawyer and get it done right and you might be inclined to disregard his advice, but it was really good advice, and before you are through, I hope you do just that. Having said that, I will try to address your questions, only to suggest that you check my suggestions with the attorney you finally do hire to actually deal with these issues.
It appears you still live in California, which is a community property state. You should, therefore, hire a California attorney to review your existing trust and determine whether its provisions are appropriate to your current situation. The estate tax laws have recently been significantly changed, and this alone suggests a review of the trust would be appropriate.
Property A is currently owned directly by your family trust, and you have expressed a concern about a greater degree of protection from liability. Since the property is a rental, I am assuming you are concerned about liability as a landlord. Placing the property in a title holding LLC and having that LLC hire the rental agent in Florida should afford the other assets in your family trust a greater degree of protection from landlord liability. Talk to the lawyer coordinating your planning about where the LLC should be formed. The Florida LLC act contains language that would permit a holding company formed in another state to hold title to the property in Florida without qualifying to do business there and paying Florida fees. California may not be the best place to form that LLC either, as it has a unique fee structure of its own, but ask your estate planning attorney. If he or she wishes I will assist on this aspect, and can be contacted through my firm's website.
The same considerations will apply to rental property B, although you haven't told us where it is located. Different states have different laws, and if the property is not in a state which permits out-of-state holding companies to function without qualifying, you may be more or less forced to form your LLC in the state where the property is located. Minnesota would be an example of a state that does not permit unregistered out-of-state LLC holding companies.
The first answer to your question indicated that whether a quit-claim or warranty deed to place the property in the LLC was a non-issue. I agree, but would at the same time warn you that you need to get advice on whether you need a rider to your title insurance, or perhaps a new policy, when you transfer the property to an LLC.
Your questions indicate that you have issues which require the attention of an experienced estate planning attorney in the state where you reside, and that attorney can, if needed, get assistance of other counsel in forming the LLC(s). Good luck - your issues do have good solutions, and can be resolved at reasonable cost.
I urge you, in the strongest possible terms, to hire an attorney to create your trusts or other entities, and to advise you on the relative merits and disadvantages of any choices you make.
Asset protection is a different beast from estates. Often the goals conflict or are even mutually exclusive. There's not enough information in your post to give a qualified answer which wouldn't constitute malpractice.
It's very tempting to look at forms, or books or even online sites such as *cough* Legalzoom, and think that one can do these things for yourself. The problem is, trusts and estate planning get complicated rapidly, and the consequences of even a few words out of place, or a wrong decision when setting these up, can be disastrous. I had a client this week have a horrible experience with Legalzoom, and I was so irritated by it that I blogged here:
Please, don't be penny wise and pound foolish. You can save a lot of money now doing things for yourself, but at the long-term cost, potentially, of losing everything.
Mr. Ridley is licensed to practice law throughout the state of CA, with offices in Ventura and Los Angeles Counties. He is also licensed to handle bankruptcy matters throughout the California Central District: Los Angeles, Ventura and Santa Barbara Counties. His phone number is (805) 244-5291, and his email address is firstname.lastname@example.org . His website for more estate, bankruptcy and business information is www.ridleylawoffices.com .
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