Investing in rental property through an LLC or land trust is a smart move, offering protection against personal liability. At atCause Law Office, we understand the importance of seamlessly transferring your property from an LLC to a trust. Let's explore the process with expert guidance.
The Strategic Approach to Property Ownership
Owning investment property, especially rental properties, comes with its challenges. To shield yourself from personal liability in property-related disputes, it's recommended to use protective structures like LLCs or land trusts. These entities not only provide confidentiality but also offer a layer of protection against potential disputes.
The Estate Planning Dilemma: LLC to Trust Transition
As you plan for the future, the question arises: how do you put a property owned by an LLC into a trust? The answer is straightforward—through a business assignment. Similar to a personal property assignment, this legal document transfers ownership from the LLC to your trust, paving the way for efficient estate planning.
Key Steps in the Transition
Review Your Operating Agreement: Ensure your LLC's operating agreement allows for the transfer of membership interest to a trust. At AtCause Law Office, we emphasize the importance of having a comprehensive operating agreement that includes a permitted transfer section.
Business Assignment to Trust: Execute a business assignment, transferring the membership interest from the LLC to your trust. This step sets the groundwork for the trust to own the membership interest for estate planning purposes.
Update Schedule of Members: Following the assignment, update the schedule of members in your LLC's operating agreement. This ensures accurate documentation of the ownership transition from individuals to the trust.
Maintain a Detailed Ledger: Keep a ledger tracking membership unit changes. This helps maintain clarity about when units transfer from one member to another, especially relevant during the transition to a trust.
Resolution and Consent: Formalize the membership change with a resolution or unanimous consent. This step provides written confirmation of the membership shift, securing the legitimacy of the transfer.
Update Organizational Documents: If your LLC is listed with the Department of Corporations (such as sunbiz in Florida), update the organizational document to reflect the change in members or managers.
Corporate Transparency Act Consideration
Stay informed about the Corporate Transparency Act, particularly if your LLC was created before January 1, 2005. Depending on exemptions and your entity's formation date, registration regarding ownership may be required.
At atCause Law Office, we recommend consulting with our experienced Florida Estate Planning Attorneys for a seamless LLC to trust transition. Contact us at 727-477-2255 for personalized assistance tailored to your estate planning needs.
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