Quote:
Originally Posted by vreihen16
I'm also paying cash. When we bought our current house, the bank took care of the title/insurance details for us. Without a bank at the table this time, I want to confirm that I don't need to buy the "lender's" coverage in addition to the owner's coverage to have complete coverage.
Trusts are used in estate-planning, where the assets are placed in a trust's name. If you want to change ownership, you can modify the trust without having to file deed/tax changes that cost $$$$ (and ironically voids your title insurance coverage). Plus, it allegedly avoids inheritance taxes in states/amounts where it is applicable.
An LLC is more frequently used in commercial real estate as a liability shield, so that claims against one property cannot go after others. I know that all of the commercial real estate investors here use them, and I have read that they are also used in some residential situations.
Anyway, since I'm not even positive that I will still be alive to build on this lot and we have no kids to inherit it, I want to consult with a RE attorney to see what makes the most sense with the possibility that I will be on the hook for liability on a piece of land that's a day's drive away from me that may wind up being flipped and never built on.....
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Exactly this. When my father passed he had his property in a living trust that transferred to us kids immediately upon his death with no probate or taxes (about a million dollars worth of land, so under the fed limit too) - it was a super easy process. Then we got the property assessed and that allowed us to reestablish our tax base. So if we for instance decide to sell - we would not owe capital gains on the difference from the $900 per acre he paid for it to the $6,500 per acre (or more) it assessed at now. That is obviously a HUGE savings.
Since there are 2 owners, we also created a LLC to hold the property in so as to protect each of us from anything happening on the land AND protecting the land if anything happens to either of us individually. We cash rent the land, so this is also the vehicle where the renter pays to and we get paid from the LLC directly. Adds some nice layers of protection for us and from each other. Requires some yearly partnership filing and crap like that - but it is all pretty easy and we have been happy with the arrangement.
We also set up some partnership rules (who can write checks, limit for both to have to sign them, etc.) so gives a lot of peace of mind.