Establish a Revocable Living Trust
A trust is a special legal entity that can receive, manage, and own assets, including private residencies and commercial properties. Revocable living trusts have many advantages.
- Since they are revocable, they afford their grantor significant flexibility. For as long as you remain alive, you have the right to retain use of trust assets and to modify the terms and conditions of the trust as you see fit.
- Perhaps most importantly, any assets bequeathed through a trust are considered non-probate assets and can be passed on to heirs outside of the ordinary probate process.
Create a Limited Liability Company
Your attorney might recommend establishing a limited liability company (LLC) to hold the rental or investment properties. LLCs are similar to trusts, as they allow their primary owner to move assets into and out of the company at will. Additionally, LLCs can shield properties from certain legal claims.
However, you should only place assets into an LLC after consulting an attorney since LLC-owned properties could incur additional tax liabilities.
Sell the Properties
Rental properties can be serious income-generating assets, but they are sometimes more trouble than they are worth. Under certain limited circumstances, selling a property provides an opportunity to provide heirs with a significant cash gift—a gift that is comparatively easy to distribute among multiple beneficiaries.
However, California has laws governing the sale and repurposing of rental properties, and you should speak to an experienced lawyer before opting to place an apartment complex or condominium on the market.
