Orange County California

Trust Attorneys


If you are fortunate enough to own a second home for investment purposes, it is important to incorporate that asset when creating your estate plan. Investment properties can provide valuable income to their owners for many years. Failing to plan for a rental property, however, could lead to substantial difficulties for your loved ones when it comes time to administer your estate. Fortunately, there are many excellent options available during the estate planning process.

Common Ways of Handling Rental Properties in an Estate Plan

When you meet with your attorney during the estate plan creation process, he or she will go over the list of all your assets and make recommendations accordingly. Your investment property is no different. While there are several ways to handle this type of asset, the following are three of the more common:

  1. Leave the property to your beneficiaries under the terms of your will. During your lifetime, the home will continue to be owned in your name.
  2. Place the property into a living trust. During your lifetime and while you are of sound mind, you can be the trustee of the trust. This means that you will maintain control over the rental property in just the same manner as you did when it was held in your name individually. The assets within the trust, including the income from the rental property, are also for your benefit while you are living—meaning you will not have to sacrifice that income for estate planning purposes.
  3. Consider setting up a limited liability company (LLC) to hold title to the real estate. In some cases, your attorney may suggest that an LLC be incorporated into your estate plan. An LLC offers similar benefits to a living trust, with an added bonus of liability protection. This may come in handy if you have frequent turnover in renters or renters who you worry may sue you for any reason. It is important to note, however, that using an LLC in this manner could potentially have tax consequences and should, therefore, be discussed with a tax professional before proceeding.

If you own an investment property, it should be considered carefully when creating your estate plan. There are several planning options available to you. Choosing which option is right for your needs requires guidance from a knowledgeable professional. At the Law Office of James F. Roberts & Associates, APC, we are well-versed in estate planning for individuals and families who own rental properties. We encourage you to reach out to us by phone, email, or online chat to get started.

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