Generally, assets do not just transfer to an LLC on formation. If you want to transfer real property you generally will need to transfer the deed to the LLC. This transfer may not be allowed under the lending documents and may trigger a due-on-sale clause. Moreover, this transfer may trigger a taxable event for the members.
As for this LLC, you must have a clear operating agreement. I discussed the importance of operating agreements here http://www.avvo.com/legal-answers/my-boyfriend-wants-to-add-me-to-his-business--how--132716.html.
You should speak with a local attorney regarding your issue. Contact people you know and trust for referrals. If you have no referrals, contact your local bar association for their referral program. Good luck.
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It does not sound like there will be an automatic transfer. It will probably require a deed to transfer the property from the name of the individuals who own it to the LLC. You also might want to check the mortgage, not just the note, to make sure that there are no prohibitions on transferring the property into an entity. Furthermore, especially if you are concerned about tax implications, you should consult with a lawyer, since your scenario raises the possibility of realty transfer tax. Realty transfer tax can be imposed even on transfers of real estate from individual LLC members to the LLC.
In addition to your exposure for local transfer tax on this transfer, you need to also work with the estate tax planning implications. If you are setting up this LLC as a family limited partnership you need to be aware that the IRS has been extremely active in contesting these transactions. You need to have an experienced estate planning attorney guiding you and being involved in the structuring of this strategy. If not, you are a tax lawsuit waiting to happen.
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