Companies of any kind shouldn’t buy homes. I understand that you’re not saying they should and you’re saying that the information here is simply inaccurate, but I’m changing the subject and saying it shouldn’t happen.
perhaps, but attorneys have made it such that any developer that doesn't buy different properties/ homes/projects in different LLC names is a complete moron. if one were to buy properties all in the same name whether personal or a single LLC, the liability on one property can take down EVERYTHING else. a medical student walking by that gets a load of bricks dropped on him because the brick mason didn't secure his platform securely would be just the type of freak accident that would put a developer in the poor house even if the liability really shouldn't be tied to the developer who had no role in the screw up, in this scenario.
additionally, without the LLC any lawsuit, no matter how frivolous, can attach to one's personal belongings/home. not fair or fun.
I agree overall that lawsuits capable of ruining people, except for gross acts of negligence, shouldn't be allowed or a concern, but in the current clown world we live in they are
I’m not very smart…can you tell me for about this? I expect to have my mortgage paid off this year and I’m very concerned about passing property to my kids, so any sources you can give me would be appreciated. I’m very financially ignorant.
This is going to be general because there are specific laws in each state regarding these entities. I suggest you consult with an attorney to set one up.
In basic terms, a trust is a corporation type that is used to manage assets (property, money, etc) for a beneficiary. The trustee makes all decisions, and as long as they are to the benefit of the beneficiary, their decisions are final and unappealable. (E.g. if you sell a house and make a million dollar profit that stays with the trust or perhaps buys other properties under the trust, your beneficiary can't complain because as the trustee you are managing it as you see fit, and these are all potential benefits. However, then taking that million dollars for a personal bender in Vegas is something the beneficiary can take you to court for mismanagement over. )
The benefit of this is that you can generally set the beneficiary and reset it at any time, and change trustees as needs arise. So if you are leaving it to your child and you manage as a trustee, once the time comes for you to pass on, you leave instructions with the court that the child becomes the trustee and s/he can then set a new beneficiary and manage the trust.
The benefit is that, here, the trust is the owner and only the "manager" changed. No taxes are due on personal inheritance, e.g. like when the house is transferred from your name to his or hers. The downside is that there alwys has to be a beneficiary. If your child has no beneficiary to post when you pass on, they manage a terminated trust for their own benefit.
An LLC on the other hand functions much looser. Its a pass through corporate entity that can simply change membership. So you and spouse are members, then you can reassign membership to your children when the time comes and, again, nothing changed hands, so there isn't a tax penalty upon death.
The main difference is that in most states, trusts have tax protections on income - e.g. anything contributed to a trust isn't taxed or isn't as heavily taxed, where an LLC simply passes any tax burdens onto the membership.
The huge gulf between states and the variabilities are in how you can use funds/assets in a trust. Some states are heavily restrictive in what a trustee can do. Other states basically assume its yours until you're dead and it's not their business.
Companies of any kind shouldn’t buy homes. I understand that you’re not saying they should and you’re saying that the information here is simply inaccurate, but I’m changing the subject and saying it shouldn’t happen.
perhaps, but attorneys have made it such that any developer that doesn't buy different properties/ homes/projects in different LLC names is a complete moron. if one were to buy properties all in the same name whether personal or a single LLC, the liability on one property can take down EVERYTHING else. a medical student walking by that gets a load of bricks dropped on him because the brick mason didn't secure his platform securely would be just the type of freak accident that would put a developer in the poor house even if the liability really shouldn't be tied to the developer who had no role in the screw up, in this scenario.
additionally, without the LLC any lawsuit, no matter how frivolous, can attach to one's personal belongings/home. not fair or fun.
I agree overall that lawsuits capable of ruining people, except for gross acts of negligence, shouldn't be allowed or a concern, but in the current clown world we live in they are
If you are smart, a trust is what you used to buy your property. In some states, trusts have been gutted and they instead use LLCs.
It is how you transfer weath through generations.
If you want to control for actual for-profit companies owning homes, take the profit out of it if they are owned for less than 5 or even 10 years.
I’m not very smart…can you tell me for about this? I expect to have my mortgage paid off this year and I’m very concerned about passing property to my kids, so any sources you can give me would be appreciated. I’m very financially ignorant.
This is going to be general because there are specific laws in each state regarding these entities. I suggest you consult with an attorney to set one up.
In basic terms, a trust is a corporation type that is used to manage assets (property, money, etc) for a beneficiary. The trustee makes all decisions, and as long as they are to the benefit of the beneficiary, their decisions are final and unappealable. (E.g. if you sell a house and make a million dollar profit that stays with the trust or perhaps buys other properties under the trust, your beneficiary can't complain because as the trustee you are managing it as you see fit, and these are all potential benefits. However, then taking that million dollars for a personal bender in Vegas is something the beneficiary can take you to court for mismanagement over. )
The benefit of this is that you can generally set the beneficiary and reset it at any time, and change trustees as needs arise. So if you are leaving it to your child and you manage as a trustee, once the time comes for you to pass on, you leave instructions with the court that the child becomes the trustee and s/he can then set a new beneficiary and manage the trust.
The benefit is that, here, the trust is the owner and only the "manager" changed. No taxes are due on personal inheritance, e.g. like when the house is transferred from your name to his or hers. The downside is that there alwys has to be a beneficiary. If your child has no beneficiary to post when you pass on, they manage a terminated trust for their own benefit.
An LLC on the other hand functions much looser. Its a pass through corporate entity that can simply change membership. So you and spouse are members, then you can reassign membership to your children when the time comes and, again, nothing changed hands, so there isn't a tax penalty upon death.
The main difference is that in most states, trusts have tax protections on income - e.g. anything contributed to a trust isn't taxed or isn't as heavily taxed, where an LLC simply passes any tax burdens onto the membership.
The huge gulf between states and the variabilities are in how you can use funds/assets in a trust. Some states are heavily restrictive in what a trustee can do. Other states basically assume its yours until you're dead and it's not their business.
This is incredible. Thank for taking the time to explain this.