When creating an estate plan in Anaheim, it is important to walk through each of your assets step by step, carefully considering your options for each one. One such asset may include a family vacation home or a rental property. With vacation homes in particular, issues often do not arise until the property passes down to the second generation. At that point, there may be multiple owners of the same property. These owners have to try to find a way to agree about how the property should be managed, used, or held.
Fortunately, tools that are more efficient exist for handling a vacation property when creating your Anaheim estate plan. One such tool is to place the property into a limited liability company, or LLC. LLCs have the unique benefit of combining the tax advantages of a partnership with the liability protection of a corporation. Holding a rental or vacation properly in an LLC may be a wise aspect of your overall estate plan.
Why are LLCs worth considering for holding title to your vacation home? The following are four examples:
- An LLC may limit your personal exposure to lawsuits by people who rent the property, as well as your creditors. Ideally, the creditor who sues you will be limited to reaching only the property that is held in the LLC.
- An LLC can have restrictions and rules built into the Operating Agreement that control how and when ownership of the property may change hands, as well as the general use and operation of the house. This is useful when multiple family owners have an interest in the home.
- The Operating Agreement can also contain the rules for handling disputes among owners, deciding who can use the property at what times, and what should happen if one party wants to sell their interest but another one does not.
- LLCs are generally easy to set up and maintain, requiring fewer formalities than a corporation.
Whether or not an LLC is the right choice for your estate plan depends on the unique circumstances surrounding the property and your family. To learn more about this and to keep up to date on other helpful tips for popular estate planning questions, follow us on Facebook!